UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2001

Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification Number
- ----------- ----------------------------- ---------------------

1-14174 AGL RESOURCES INC. 58-2210952
(A Georgia Corporation)
817 West Peachtree Street, N.W.
Suite 1000
Atlanta, Georgia 30308
404-584-9470

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of June 30, 2001.

Common Stock, $5.00 Par Value
Shares Outstanding at June 30, 2001 ..................................54,807,072

AGL RESOURCES INC.

Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 2001

Table of Contents

Item Page
Number Number
- ------ ------

PART I-- FINANCIAL INFORMATION

1 Financial Statements (Unaudited)

Condensed Statements of Consolidated Income...................... 3
Condensed Consolidated Balance Sheets............................ 4
Condensed Consolidated Statements of Cash Flows.................. 6
Notes to Condensed Consolidated Financial Statements............. 7

2 Management's Discussion and Analysis of Results of
Operations and Financial Condition.................................. 15

3 Quantitative and Qualitative Disclosure about Market Risk........... 30

PART II-- OTHER INFORMATION

1 Legal Proceedings................................................... 31

2 Changes in Securities and Use of Proceeds........................... 31

3 Defaults upon Senior Securities..................................... 31

4 Submission of Matters to a Vote of Security Holders................. 31

5 Other Information................................................... 31

6 Exhibits and Reports on Form 8-K.................................... 32

SIGNATURE........................................................... 33

Page 2 of 33

PART 1 -- FINANCIAL INFORMATION

AGL RESOURCES INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED
JUNE 30, 2001 AND 2000
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

Three Months Nine Months
----------------------------- -----------------------------
2001 2000 2001 2000
---- ---- ---- ----

Operating Revenues $ 175.7 $ 131.8 $ 821.1 $ 474.2
Cost of Sales 37.0 11.6 342.1 96.9
----------------------------- -----------------------------
Operating Margin 138.7 120.2 479.0 377.3

Other Operating Expenses 97.6 81.8 318.0 267.9
----------------------------- -----------------------------
Operating Income 41.1 38.4 161.0 109.4

Other (Loss) Income (3.1) (1.8) 44.3 17.5
----------------------------- -----------------------------
Income Before Interest and Income Taxes 38.0 36.6 205.3 126.9

Interest Expense and Preferred Stock Dividends
Interest expense 20.4 13.3 67.5 37.9
Dividends on preferred stock of subsidiaries 2.8 1.5 5.9 4.6
----------------------------- -----------------------------
Total Interest Expense and Preferred
Stock Dividends 23.2 14.8 73.4 42.5
----------------------------- -----------------------------
Income Before Income Taxes 14.8 21.8 131.9 84.4

Income Taxes 5.5 7.9 47.8 30.7
----------------------------- -----------------------------
Net Income $ 9.3 $ 13.9 $ 84.1 $ 53.7
============================= =============================

Earnings per Common Share
Basic $ 0.17 $ 0.26 $ 1.55 $ 0.97
Diluted $ 0.17 $ 0.26 $ 1.54 $ 0.97

Weighted Average number of Common
Shares Outstanding
Basic 54.6 54.2 54.3 55.5
Diluted 55.2 54.2 54.7 55.6

Cash Dividends Paid Per Common Share $ 0.27 $ 0.27 $ 0.81 $ 0.81

See notes to condensed consolidated financial statements.

Page 3 of 33

AGL RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
(UNAUDITED)

June 30, September 30,
ASSETS 2001 2000
- -------------------------------------------------------------------------------------------------------------
Current Assets

Cash and cash equivalents $ 4.5 $ 2.0
Receivables
Gas (less allowance for uncollectible accounts of $5.1
at June 30, 2001 and $3.1 at September 30, 2000) 44.1 29.9
Other (less allowance for uncollectible accounts of $8.6
at June 30, 2001 and $5.2 at September 30, 2000) 12.0 13.4
Unbilled revenues 3.8 1.7
Inventories
Natural gas stored underground 91.2 27.7
Liquefied natural gas 3.8 2.1
Materials and supplies 5.6 6.2
Other 1.3 1.2
Other current assets 12.1 15.5
- -------------------------------------------------------------------------------------------------------------
Total current assets 178.4 99.7
- -------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment
Utility plant 2,965.6 2,371.5
Less accumulated depreciation 988.6 791.8
- -------------------------------------------------------------------------------------------------------------
Utility plant - net 1,977.0 1,579.7
- -------------------------------------------------------------------------------------------------------------
Non-utility property 88.7 88.2
Less accumulated depreciation 34.4 30.4
- -------------------------------------------------------------------------------------------------------------
Non-utility property - net 54.3 57.8
- -------------------------------------------------------------------------------------------------------------
Total property, plant and equipment - net 2,031.3 1,637.5
- -------------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
Unrecovered environmental response costs 213.2 164.6
Investments in joint ventures 96.1 78.8
Goodwill, net of amortization of $2.9 153.3 -
Other 82.2 39.3
- -------------------------------------------------------------------------------------------------------------
Total deferred debits and other assets 544.8 282.7
- -------------------------------------------------------------------------------------------------------------
Total Assets $2,754.5 $ 2,019.9
=============================================================================================================

See notes to condensed consolidated financial statements.

Page 4 of 33

AGL RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
(UNAUDITED)

June 30, September 30,
LIABILITIES AND CAPITALIZATION 2001 2000
- --------------------------------------------------------------------------------------------------------
Current Liabilities

Short-term debt $ 259.0 $ 141.2
Accounts payable - trade 64.0 34.0
Other accrued liabilities 14.3 20.2
Interest 18.7 21.5
Wages and salaries 22.8 15.3
Deferred customer collections 8.9 -
Current portion of long-term debt 45.0 20.0
Customer deposits 12.8 1.8
Other current liabilities 54.8 30.8
- --------------------------------------------------------------------------------------------------------
Total current liabilities 500.3 284.8
- --------------------------------------------------------------------------------------------------------
Accumulated Deferred Income Taxes 274.3 249.6
- --------------------------------------------------------------------------------------------------------
Long-Term Liabilities
Accrued environmental response costs 144.8 111.7
Accrued postretirement benefits costs 34.4 31.9
Accrued pension costs 11.0 6.7
- ------------------------------------------------------------------------------------------------------
Total long-term liabilities 190.2 150.3
- ------------------------------------------------------------------------------------------------------
Deferred Credits
Unamortized investment tax credit 22.2 23.2
Regulatory tax liability 18.0 15.5
Other 9.1 11.3
- --------------------------------------------------------------------------------------------------------
Total deferred credits 49.3 50.0
- --------------------------------------------------------------------------------------------------------
Capitalization
Long-term debt 845.0 590.0
Subsidiaries obligated mandatorily redeemable
preferred securities 219.7 74.3
Common stockholders' equity, $5 par value,
shares issued of 57.8 at June 30, 2001
and September 30, 2000 728.1 687.1
Less shares held in treasury, at cost
3.0 at June 30, 2001 and 3.8 at September 30, 2000 (52.4) (66.2)
- --------------------------------------------------------------------------------------------------------
Total capitalization 1,740.4 1,285.2
- --------------------------------------------------------------------------------------------------------
Total Liabilities and Capitalization $ 2,754.5 $ 2,019.9
========================================================================================================

See notes to condensed consolidated financial statements.

Page 5 of 33

AGL RESOURCES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 2001 AND 2000
(IN MILLIONS)
(UNAUDITED)

Nine Months
---------------------------
2001 2000
- ------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities

Net income $84.1 $53.7
Adjustments to reconcile net income to net cash flow from operating activities
Depreciation and amortization 76.5 63.4
Deferred income taxes 25.6 29.1
Equity in earnings of investments in joint ventures (28.5) (11.2)
Gain on sale of Utilipro (10.9) -
Other (1.0) (4.1)
Changes in certain assets and liabilities
Receivables 6.0 14.7
Accounts payable 8.0 (1.3)
Deferred customer collections 8.9 -
Purchased gas adjustments 9.1 1.0
Customer deposits 11.0 (5.5)
Accrued taxes (5.7) (18.6)
Inventories (65.8) 32.9
Accrued interest (2.8) (13.7)
Gas cost credits - (36.6)
Environmental response costs (15.5) (1.3)
Other-net (0.2) (8.3)
- ------------------------------------------------------------------------------------------------------------
Net cash flow provided by operating activities 98.8 94.2
- ------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Borrowings of long-term debt 300.0 -
Issuance of trust preferred securities 145.4 -
Net payments and borrowings of short-term debt 117.8 137.0
Net sale (purchase) of treasury shares 12.7 (53.3)
Payments of long-term debt (20.0) (50.0)
Dividends paid on common stock (41.6) (40.7)
- ------------------------------------------------------------------------------------------------------------
Net cash flow provided by (used in) financing activities 514.3 (7.0)
- ------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Acquisition of Virginia Natural Gas, net of cash acquired (539.7) -
Sale of Utilipro 17.7 -
Cash received from (provided to) joint ventures 10.8 (10.4)
Utility plant expenditures (96.9) (111.2)
Non-utility property expenditures (8.5) (8.1)
Retirements, net of removal costs and salvage 4.0 10.9
Other 2.0 (1.3)
- ------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (610.6) (120.1)
- ------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 2.5 (32.9)
Cash and cash equivalents at beginning of period 2.0 32.9
- ------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $4.5 $0.0
============================================================================================================
Cash Paid During the Period for
Interest $71.6 $51.6
Income taxes $16.4 $20.2

See notes to consolidated financial statements.

Page 6 of 33

AGL RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Nature of Our Business

AGL Resources Inc. is the registered public utility holding company for:
. Atlanta Gas Light Company ("AGLC"), a natural gas local distribution
utility;
. Virginia Natural Gas, Inc. ("VNG"), a natural gas local distribution
utility;
. Chattanooga Gas Company ("Chattanooga"), a natural gas local
distribution utility;
. Sequent Energy Management, LLC ("Sequent"), formerly AGL Energy
Services, Inc. ("AGLE"), an asset optimization and wholesale trading
and marketing company;
. Global Energy Resources Insurance Company ("GERIC"), a captive
insurance company;
. AGL Services Company ("AGSC"), a service company established in
accordance with the Public Utility Holding Company Act of 1935
("PUHCA");
. AGL Capital Corporation, a financing subsidiary; and
. Several other non-utility subsidiaries.

AGL Resources Inc. and its subsidiaries are collectively referred to as "AGL
Resources."

Effective October 1, 2000, AGL Resources acquired all of the outstanding common
stock of VNG, a wholly-owned subsidiary of Consolidated Natural Gas Company and
an indirect subsidiary of Dominion Resources, Inc. for a purchase price of
approximately $540 million, including $7.5 million of transaction fees.

The acquisition of VNG was accounted for as a purchase for financial accounting
purposes and, as a result, VNG's operations were consolidated with AGL Resources
beginning October 1, 2000. The excess purchase price over the fair value of the
assets acquired and liabilities assumed was allocated to goodwill, which is
being amortized over 40 years. The allocation of the purchase price and
acquisition costs to the assets acquired and liabilities assumed is preliminary
at June 30, 2001, and is subject to change.

With the addition of VNG's customer base of approximately 238,000, AGL Resources
is now the second largest natural gas-only distributor in the United States,
serving more than 1.8 million customers. VNG is headquartered in Norfolk,
Virginia, and serves customers in the Hampton Roads region of southeastern
Virginia.

Effective March 2, 2001, AGL Resources sold substantially all of the assets of
Utilipro, Inc. ("Utilipro") to Alliance Data Systems Corporation for $17.7
million, resulting in a pre-tax gain of $10.9 million, which was recorded as
Other Income.

During the three-month period ended June 30, 2001, GERIC, a wholly owned captive
insurance company, was established to optimize AGL Resources' and its
subsidiaries' insurance risk and related cost structure. AGL Resources
anticipates that GERIC will accomplish this by providing stabilized insurance
costs and coverage flexibility by gaining direct access to the reinsurance
market without increasing AGL Resources' risk retention levels.

In the opinion of management, the unaudited condensed consolidated financial
statements included herein reflect all normal recurring adjustments necessary
for a fair statement of the results of the interim periods reflected. These
interim financial statements and notes are condensed as permitted by the
instructions to Form 10-Q, and should be read in conjunction with the financial
statements and the notes included in the annual report on Form 10-K of AGL
Resources for the fiscal year ended September 30, 2000. As a result of the
seasonal nature of a portion of AGL Resources' businesses, the results of
operations for the three-month period are not necessarily indicative of results
of operations for a twelve-month period.

Page 7 of 33

1. Nature of Our Business (continued)

Management makes estimates and assumptions when preparing financial statements
under accounting principles generally accepted in the United States of America.
Those estimates and assumptions affect various matters, including:

. Reported amounts of assets and liabilities in our Condensed
Consolidated Balance Sheets as of the dates of the financial
statements;
. Disclosure of contingent assets and liabilities as of the dates of the
financial statements; and
. Reported amounts of revenues and expenses in our Condensed Statements
of Consolidated Income during the reported periods.

Those estimates involve judgments with respect to, among other things, future
economic factors that are difficult to predict and are beyond management's
control. Consequently, actual amounts could differ from our estimates.

Certain amounts in financial statements of prior years have been reclassified to
conform to the presentation of the current year.

2. Significant Accounting Policies

For a summary of AGL Resources' accounting policies, please refer to AGL
Resources' Annual Report on Form 10-K for the year ended September 30, 2000.

Rate Structure

As required by the Georgia Public Service Commission ("GPSC"), in July 1998,
AGLC began billing marketers for each residential customer's distribution costs
in equal monthly installments. As required by the GPSC, effective February 1,
2001, AGLC implemented a seasonal rate design for the calculation of each
residential customer's annual Straight Fixed Variable ("SFV") capacity charge,
which is billed to certificated marketers and reflects the historic volumetric
usage pattern for the entire residential class. Generally, this change should
result in residential customers being billed by the certificated marketers for a
higher capacity charge in the winter months and a lower charge in the summer
months. This requirement has an operating cash flow impact, but does not change
AGLC's revenue recognition. As a result, AGLC continues to recognize its
residential SFV capacity revenues for financial reporting purposes in equal
monthly installments. Any difference between the billings under the new seasonal
rate design and the SFV revenue recognized is deferred and will be reconciled on
an annual basis. As of June 30, 2001, AGLC had deferred customer collections of
approximately $8.9 million (included as a current liability in the Condensed
Consolidated Balance Sheet and excluded from the Condensed Statements of
Consolidated Income) related to the difference between the billings under the
new seasonal rate design and the SFV revenue recognized.

VNG and Chattanooga continue to employ rate structures that include both fixed
customer charges and volumetric charges that recover costs through gas usage.

Page 8 of 33

2. Significant Accounting Policies (continued)

Regulation of the Utility Business

The Virginia State Corporation Commission ("VSCC") regulates VNG with respect to
rates, maintenance of accounting records and various other matters. Consistent
with AGLC and Chattanooga, generally the same accounting policies and practices
utilized by non-regulated companies are utilized by VNG for financial reporting
under accounting principles generally accepted in the United States of America.
However, sometimes the VSCC orders an accounting treatment different from that
used by non-regulated companies to determine rates charged to VNG's customers.
Additionally, at the consummation of the VNG acquisition, AGL Resources
registered with the Securities and Exchange Commission as a holding company
under PUHCA, as amended.

Additional significant accounting policies effective October 1, 2000 as a result
of the acquisition of VNG include:

Revenue Recognition

Revenues from sales and transportation services are recognized in the same
period in which the related volumes are delivered to customers. Revenues from
VNG's business are based on rates approved by the VSCC. The Company bills and
recognizes sales revenues from residential and certain commercial and industrial
customers on the basis of scheduled meter readings. In addition, revenues are
recorded for estimated deliveries of gas, not yet billed to these customers,
from the meter reading date to the end of the accounting period. For wholesale
and other commercial and industrial customers, revenues are based upon actual
deliveries to the end of the period.

Cost of Sales

VNG charges its customers for the natural gas they consume using purchased gas
adjustment ("PGA") mechanisms set by the VSCC. Under the PGA, VNG defers
(included as a current asset or current liability in the Condensed Consolidated
Balance Sheets and excluded from the Condensed Statements of Consolidated
Income) the difference between the utility's actual cost of gas and the amount
collected from customers in a given period. Subsequently, VNG either bills or
refunds to its customers the deferred amount.

Depreciation Expense

Depreciation for VNG is computed by applying composite, straight-line rates
approved by the VSCC to the investment of depreciable property. The composite
straight-line depreciation rate was approximately 2.8% for utility property
excluding transportation equipment as of June 30, 2001.

Allowance for Funds Used during Construction ("AFUDC")

Construction projects in Virginia are financed with borrowed funds and equity
funds. The VSCC allows VNG to record the cost of those funds as part of the cost
of construction projects on AGL Resources' Consolidated Balance Sheets and as
AFUDC in the Statements of Consolidated Income. AFUDC for VNG is calculated
based upon a rate authorized by the VSCC.

Page 9 of 33

2. Significant Accounting Policies (continued)

Inventory

VNG's gas inventories are stated at the weighted average costing method.
Materials and supplies inventories are stated at lower of average cost or
market.

Chattanooga changed its costing method for its gas inventories from last-in,
first-out to weighted average cost effective October 1, 2000. In management's
opinion, the weighted average inventory costing method provides for a better
matching of costs and revenue from the sale of gas and is more consistent with
AGLC and VNG. Because Chattanooga recovers all of its gas costs through a PGA
mechanism, there was not a cumulative effect resulting from the change in the
inventory costing method.

Goodwill and Other Intangible Assets

During July 2001, the Financial Accounting Standards Board issued SFAS 142,
"Goodwill and Other Intangible Assets". Under SFAS 142, goodwill amortization
ceases when the new standard is adopted. The new rules also require an initial
goodwill impairment assessment in the year of adoption and annual impairment
tests thereafter. AGL Resources is permitted under the rules to adopt this
Statement effective October 1, 2001 or defer adoption until October 1, 2002.
Once adopted, goodwill amortization of approximately $4 million on an annualized
basis will cease. AGL Resources has not yet determined if any impairment charges
will result from the adoption of this Statement. At this time, AGL Resources
anticipates the adoption of these rules, effective as of October 1, 2001.

3. Earnings Per Common Share and Common Stockholders' Equity

Basic earnings per common share are computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per common share reflect the potential dilution
that could occur when common share equivalents are added to common shares
outstanding. Diluted earnings per common share are calculated quarterly and the
number of incremental shares to be included at year-end is the weighted average
of each quarterly calculation. AGL Resources' common share equivalents are
derived from performance units whose future issuance is contingent upon the
satisfaction of certain performance criteria and stock options whose exercise
prices were less than the average market price of the common shares for the
respective periods. Performance units totaling 11,601 qualified as common stock
equivalents as of June 30, 2001. There were no performance units that qualified
as common stock equivalents as of June 30, 2000. Included in the weighted
average number of common shares outstanding are 547,542 and 9,442 incremental
shares that qualified as common stock equivalents for the three-month periods
ended June 30, 2001 and 2000, respectively, because the exercise prices of those
options were less than the average market price of the common shares for the
respective periods. Also, included in the weighted average number of common
shares outstanding are 367,333 and 17,494 incremental shares that qualified as
common stock equivalents for the nine-month periods ended June 30, 2001 and
2000, respectively, because the exercise prices of those options were less than
the average market price of the common shares for the respective periods.

During the three-month periods ended June 30, 2001 and 2000, AGL Resources
issued 362,837 shares and 139,653 shares of common stock out of treasury,
respectively, under ResourcesDirect, a direct stock purchase and dividend
reinvestment plan; the Retirement Savings Plus Plan ("RSP Plan"); the Long-Term
Stock Incentive Plan ("LTSIP"); the Long-Term Incentive Plan ("LTIP"); and the
Non-Employee Directors Equity Compensation Plan ("Directors Plan"). During the
nine-month periods ended June 30, 2001 and 2000, AGL Resources issued 744,646
shares and 447,578 shares of common stock out of treasury, respectively, under
ResourcesDirect; the RSP Plan; the LTSIP; the LTIP; and the Directors Plan.

Page 10 of 33

4. Accounting for Derivative Instruments and Hedging Activities

In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133, as
amended by SFAS 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities" establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. AGL Resources adopted SFAS 133 on
October 1, 2000. For the three-month and nine-month periods ended June 30, 2001
AGL Resources recorded an unrealized gain of $.9 million and an unrealized loss
of $.3 million, respectively, related to derivative instruments.

5. Environmental Matters

Before natural gas was widely available in the Southeast, AGLC manufactured gas
from coal and other fuels. Those manufacturing operations were known as
manufactured gas plants ("MGP"), which AGLC ceased operating in the 1950s.
Because of recent environmental concerns, AGLC is required to investigate
possible environmental contamination at those plants and, if necessary, clean up
any contamination.

AGLC has been associated with nine MGP sites in Georgia and three in Florida.
Based on investigations to date, AGLC believes that some cleanup is likely at
most of the sites. In Georgia, the state Environmental Protection Division
("EPD") supervises the investigation and cleanup of MGP sites. In Florida, the
U.S. Environmental Protection Agency has that responsibility.

By March 31, 2001, AGLC had obtained approval from EPD of Corrective Action
Plans for the nine Georgia MGP sites. In addition, AGL Resources recently
entered into a Consent Order for cleanup of the MGP site in St. Augustine,
Florida, and received a Record of Decision for one portion of the MGP site in
Sanford, Florida. As these cleanup options and plans continue to develop and the
cleanup contracts are entered into, AGLC should be able to provide a more
specific estimate of the likely costs of its MGP program. Although the range of
costs for each site has been refined as a result of greater certainty in the
cleanup alternatives, at this time there still remains considerable variability
in available cost estimates. By estimating, where possible, AGLC's share of
investigation and cleanup costs at these sites, AGLC believes that the remaining
cost of future actions at its MGP sites will be within a range of $144.8 to
$186.6 million. AGLC cannot at this time identify any single number within this
range as a better estimate of its likely future costs, because its actual future
investigation and cleanup costs may still be affected by a number of
contingencies that cannot be quantified at this time. Consequently, as of June
30, 2001, AGLC has recorded the lower end of the range, or $144.8 million, as a
liability and a corresponding regulatory asset.

AGLC has two ways of recovering investigation and cleanup costs. First, GPSC has
approved an environmental response cost recovery rider. This rider allows the
recovery of costs of investigation, testing, cleanup, and litigation. Because of
that rider, AGLC has recorded a regulatory asset for actual and projected future
costs related to investigation and cleanup, to be recovered from the rate payers
in future years. During the three-month and nine-month periods ended June 30,
2001, AGLC recovered $3.4 million and $10.1 million, respectively, through its
environmental response cost recovery rider. The regulatory asset increased by
$12.0 million as a result of additional expenses incurred.

The second way AGLC can recover costs is by exercising the legal rights AGLC
believes it has to recover a share of its costs from other potentially
responsible parties, typically former owners or operators of the MGP sites. AGLC
has been actively pursuing those recoveries. There were no material recoveries
during the three-month and nine-month periods ended June 30, 2001.

Page 11 of 33

6. Segment Information

AGL Resources is organized into two operating segments: Utility and Non-utility.
Management evaluates segment performance based on net income, which includes the
effects of corporate expense allocations. There were no material inter-segment
sales during the three-month and nine-month periods ended June 30, 2001 or 2000.

Three Months Ended June 30, 2001 June 30, 2000
- ------------------ -------------------------------------------- -----------------------------------------

(Dollars in Millions) Utility Non-utility Total Utility Non-utility Total
-------------- ------------ -------------- ------------ ------------- -------------

Operating Revenues $175.5 $0.2 $175.7 $125.6 $6.2 $131.8
Depreciation and
Amortization 22.8 2.3 25.1 17.1 2.9 20.0
Interest Expense 13.6 6.8 20.4 11.1 2.2 13.3
Interest Income 0.1 0.2 0.3 0.1 - 0.1
Equity in the Net Loss of
Joint Ventures - (7.3) (7.3) - (1.9) (1.9)
Income Tax Expense (Benefit) 13.4 (7.9) 5.5 10.0 (2.1) 7.9
Net Income (Loss) 16.1 (6.8) 9.3 18.1 (4.2) 13.9
Capital Expenditures 30.4 6.3 36.7 70.5 4.6 75.1

Nine Months Ended June 30, 2001 June 30, 2000
- ----------------- -------------------------------------------- -----------------------------------------

(Dollars in Millions) Utility Non-utility Total Utility Non-utility Total
-------------- ------------ -------------- ------------ ------------- -------------

Operating Revenues $812.8 $8.3 $821.1 $442.7 $31.5 $474.2
Depreciation and
Amortization 68.0 7.6 75.6 53.0 9.3 62.3
Interest Expense 34.8 32.7 67.5 34.0 3.9 37.9
Interest Income 0.3 0.5 0.8 0.3 0.2 0.5
Equity in the Net Income of
Joint Ventures - 28.5 28.5 - 13.3 13.3
Income Tax Expense (Benefit) 55.3 (7.5) 47.8 29.3 1.4 30.7
Net Income (Loss) 87.6 (3.5) 84.1 52.0 1.7 53.7
Capital Expenditures 96.9 8.5 105.4 111.2 8.1 119.3

Balance as of June 30, 2001 September 30, 2000
- ------------- -------------------------------------------- -----------------------------------------

(Dollars in Millions) Utility Non-utility Total Utility Non-utility Total
-------------- ------------ -------------- ------------ ------------- -------------

Identifiable Assets $2,596.3 $62.1 $2,658.4 $1,866.3 $74.8 $1,941.1
Investments in Joint Ventures - 96.1 96.1 0.4 78.4 78.8

Page 12 of 33

7. Debt

In connection with the acquisition of VNG, AGL Resources established a $900
million commercial paper program through AGL Capital Corporation, a 100% owned
financing subsidiary. AGL Resources' commercial paper consists of short-term
unsecured promissory notes with maturities ranging from overnight to 270 days.
AGL Resources' commercial paper program is fully supported by bank back-up
credit lines. On October 6, 2000, AGL Resources issued $660 million in
commercial paper, the proceeds of which were used to finance the VNG acquisition
and to refinance existing short-term debt. The outstanding balance of short-term
debt as of June 30, 2001, was $259.0 million. The weighted average interest rate
on short-term debt outstanding was 5.5% and 6.3% for the three-month and
nine-month periods ended June 30, 2001, respectively.

On October 6, 2000, AGL Resources Inc., and AGL Capital Corporation entered into
a Credit Agreement with several lenders ("Lenders") for whom SunTrust Bank
("SunTrust") is acting as Administrative Agent. Pursuant to the Credit
Agreement, the Lenders agree to make available to AGL Capital Corporation, upon
demand, up to $900 million (the "Revolving Commitment"). This Credit Agreement
has been entered into in support of AGL Resources' commercial paper program. The
Revolving Commitment may be borrowed, repaid and reborrowed in the form of
Eurodollar loans, adjustable rate loans (based on SunTrust's Prime Rate, or
based on the Federal Funds Effective Rate plus .5%), letters of credit (up to
$50 million), or, in certain circumstances, fixed rate loans for a defined
period agreed upon by AGL Capital Corporation and the Lenders. The Revolving
Commitment expires on October 5, 2001 (the "Revolving Termination Date"). Loans
outstanding on the Revolving Termination Date, up to a maximum aggregate
principal amount of $200 million, may be converted into Term Loans. All Term
Loans will mature in one installment on the date that is one year from the
Revolving Termination Date. Currently, there are no outstanding loans under the
Credit Agreement.

In May 2001, the Revolving Commitment limit was reduced to $450 million.

On February 23, 2001, AGL Capital Corporation, as Issuer, AGL Resources Inc., as
Guarantor, and the Bank of New York, as Trustee, issued $300 million of senior
notes ("Senior Notes") under an indenture dated February 20, 2001. The Senior
Notes bear interest at an annual rate of 7.125%. Interest is payable on January
14 and July 14, beginning July 14, 2001 with interest accruing from March 1,
2001. The Senior Notes mature on January 14, 2011. AGL Resources fully and
unconditionally guarantees the Senior Notes. The proceeds from the issuance were
used to refinance a portion of the existing short-term debt under the commercial
paper program.

Management believes available credit will be sufficient to meet working capital
needs both on a short-term and long-term basis. However, capital needs depend on
many factors, and AGL Resources may seek additional financing through debt or
equity offerings in the private or public markets at any time.

8. Preferred Securities

On May 14, 2001, AGL Capital Trust II, a Delaware statutory business trust
sponsored by AGL Capital Corporation, issued $150 million of Trust Preferred
Securities ("Trust Preferred Securities"). The liquidation amount is $25 per
Trust Preferred Security, and each Trust Preferred Security pays quarterly cash
distributions at an annual rate of 8%. Distributions are payable on February 15,
May 15, August 15, and November 15 of each year, commencing August 15, 2001. The
Trust Preferred Securities are fully and unconditionally guaranteed by AGL
Resources, and mature on May 15, 2041, but can be redeemed in whole or in part
from time to time on or after May 21, 2006. Accordingly, the fees and expenses
related to this offering are being amortized over the five-year call period. The
proceeds from the issuance were used to refinance a portion of the existing
short-term debt under the commercial paper program.

Page 13 of 33

9. Pro Forma Data

The following unaudited pro forma financial data has been prepared as if the
acquisition of VNG took place on October 1, 1999, the beginning of AGL
Resources' fiscal year. This pro forma financial data is presented for
informational purposes and is not necessarily indicative of future operations
(in millions, except per share data).

Three Months Ended Nine Months Ended
June 30, 2000 June 30, 2000
--------------------- ---------------------

Revenue $ 164.7 $ 663.5
Net Income $ 5.8 $ 50.3
Earnings per Common Share - Basic $ 0.10 $ 0.89
Earnings per Common Share - Diluted $ 0.10 $ 0.89

10. Subsequent Event

On July 26, 2001, Georgia Natural Gas Company, an indirect wholly owned
subsidiary of AGL Resources, filed a lawsuit on behalf of SouthStar against
Dynegy Marketing and Trade, a subsidiary of Dynegy, Inc. Management does not
believe this action will have a material adverse effect on AGL Resources'
consolidated financial statements.

(The remainder of this page was intentionally left blank.)

Page 14 of 33

ITEM 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 allows public companies to
provide cautionary remarks about forward-looking statements that they make in
documents that are filed with the Securities and Exchange Commission ("SEC").
Forward-looking statements in our Management's Discussion and Analysis include,
but are not limited to, statements about the following:

. Deregulation;
. State and Federal regulation;
. Business prospects;
. Industry trends;
. Concentration of credit risk;
. Environmental investigations and cleanups;
. Quantitative and qualitative disclosures about market risk;
. Virginia Natural Gas acquisition;
. Propane operations; and
. Changes required by the Public Utility Holding Company Act of 1935
("PUHCA").

Important factors that could cause our actual results to differ substantially
from those in the forward-looking statements include, but are not limited to,
the following:

. Industrial, commercial, and residential growth in the service
territories of AGL Resources and its subsidiaries;
. Changes in price and demand for natural gas and related products;
. Impact of changes in state and federal legislation and regulation on
both the gas and electric industries;
. Effects and uncertainties of deregulation and competition,
particularly in markets where prices and providers historically have
been regulated, unknown risks related to nonregulated businesses, and
unknown issues such as the stability of certificated marketers;
. Concentration of credit risk in certificated marketers;
. Industry consolidation;
. Impact of acquisitions and divestitures;
. Changes in accounting policies and practices issued periodically by
accounting standard-setting bodies;
. Interest rate fluctuations, financial market conditions, and economic
conditions, generally;
. Uncertainties about environmental issues and the related impact of
such issues;
. Impact of changes in weather upon the temperature sensitive portions
of the business; and
. Other factors and the related impact of such factors.

Nature of Our Business

AGL Resources Inc. is the registered public utility holding company for:

. Atlanta Gas Light Company ("AGLC"), a natural gas local distribution
utility;
. Virginia Natural Gas, Inc. ("VNG"), a natural gas local distribution
utility;
. Chattanooga Gas Company ("Chattanooga"), a natural gas local
distribution utility;
. Sequent Energy Management, LLC ("Sequent"), formerly AGL Energy
Services, Inc. ("AGLE"), an asset optimization and wholesale trading
and marketing company;
. Global Energy Resources Insurance Company ("GERIC"), a captive
insurance company;
. AGL Services Company ("AGSC"), a service company established in
accordance with PUHCA;
. AGL Capital Corporation, a financing subsidiary; and
. Several other non-utility subsidiaries.

AGL Resources and its subsidiaries are collectively referred to as "AGL
Resources."

Page 15 of 33

Nature of Our Business (continued)

AGLC conducts its primary business, the distribution of natural gas, throughout
most of Georgia. Chattanooga distributes natural gas in the Chattanooga area of
Tennessee. VNG distributes natural gas in the Hampton Roads region of Virginia.
The Georgia Public Service Commission ("GPSC") regulates AGLC; the Tennessee
Regulatory Authority ("TRA") regulates Chattanooga and the Virginia State
Corporation Commission ("VSCC") regulates VNG. Sequent provides asset
optimization and engages in wholesale energy trading and marketing services for
AGL Resources' regulated and unregulated operations, as well as for unaffiliated
retail gas marketers.

As of June 30, 2001, AGLC, VNG, and Chattanooga comprised substantially all of
AGL Resources' assets, revenues, and operating income. The operations and
activities of AGLC, VNG, Chattanooga, and Sequent, collectively, are referred to
as the "utility." The utility's total other operating expenses include costs
allocated from AGSC. The non-utility segment includes operating expenses of AGSC
which, along with the associated costs of financing, are allocated to all
operating business units.

As of June 30, 2001, AGL Resources owned or had an interest in the following
non-utility businesses:

. SouthStar Energy Services LLC ("SouthStar"), a joint venture among a
subsidiary of AGL Resources and subsidiaries of Dynegy Holdings, Inc.
and Piedmont Natural Gas Company. SouthStar markets natural gas and
related services to residential and small commercial customers in
Georgia and to industrial customers in the Southeast. SouthStar began
marketing natural gas to customers in Georgia during the first quarter
of fiscal 1999 under the trade name Georgia Natural Gas Services;
. AGL Investments, Inc., which directly or indirectly owns or manages
certain non-utility businesses including:

. AGL Propane Services, Inc. ("Propane"), which has a 22.36%
ownership interest in US Propane LLC ("US Propane"). US Propane
owns approximately 36% of Heritage Propane Partners ("Heritage
Propane") which engages in the sale of propane and related
products and services throughout the United States; and
. AGL Networks, LLC ("AGL Networks"), which was formed on August
15, 2000 for the purpose of partnering with other
telecommunications companies to serve Atlanta's rapidly growing
demand for high-speed network capacity. On April 17, 2001, the
GPSC voted unanimously to grant AGL Networks' Competitive Local
Exchange Carrier License, which grants AGL Networks the rights to
construct last-mile connectivity and provide dark fiber network
services in the state of Georgia.

. AGL Peaking Services, Inc., which owns a 50% interest in Etowah LNG
Company, LLC ("Etowah"), a joint venture with Southern Natural Gas
Company. Etowah was formed for the purpose of constructing, owning,
and operating a liquefied natural gas peaking facility;
. AGL Capital Corporation, which was established to finance the
acquisition of VNG, refinance existing short-term debt and provide
working capital to AGL Resources and its subsidiaries through a
commercial paper program, the issuance of debt and securities and
other financing mechanisms; and
. GERIC, which was established to optimize AGL Resources' insurance risk
and related cost structure. GERIC will accomplish this by providing
stabilized insurance costs and coverage flexibility by gaining direct
access to the reinsurance market without increasing AGL Resources'
risk retention levels.

Page 16 of 33

Results of Operations

Three-month Periods ended June 30, 2001 and 2000
- ------------------------------------------------
In this section, the results of operations for the three-month periods ended
June 30, 2001 and 2000 are compared.

Operating Margin Analysis
- -------------------------
(Dollars in Millions)

June 30, 2001 June 30, 2000 Favorable/(Unfavorable)
-------------------- -------------------- -------------------------------
Operating Revenues

Utility $175.5 $125.6 $49.9 39.7%
Non-utility 0.2 6.2 (6.0) (96.8%)
-------------------- -------------------- ------------
Total $175.7 $131.8 $43.9 33.3%
==================== ==================== ============
Cost of Sales
Utility $36.9 $11.3 ($25.6) (226.5%)
Non-utility 0.1 0.3 0.2 66.7%
-------------------- -------------------- ------------
Total $37.0 $11.6 ($25.4) (219.0%)
==================== ==================== ============
Operating Margin
Utility $138.6 $114.3 $24.3 21.3%
Non-utility 0.1 5.9 (5.8) (98.3%)
-------------------- -------------------- ------------
Total $138.7 $120.2 $18.5 15.4%
==================== ==================== ============

Utility. Utility operating revenues increased $49.9 million and cost of sales
increased $25.6 million primarily due to the following factors:

. Total average customers for the three-month period ended June 30, 2001
as compared to the same period last year increased from 1,542,000
customers to 1,800,000. The increase is attributable to the addition
of approximately 235,000 customers as a result of the VNG acquisition;
. VNG contributed operating revenues of $43.1 million and incurred cost
of sales of $24.6 million;
. Chattanooga's operating revenues decreased $4.5 million and cost of
sales decreased $4.2 million as a result of fewer large commercial and
industrial customers due to higher natural gas prices and declining
economic conditions;
. Sequent's operating revenues increased $7.5 million and cost of sales
increased $8.2 million as a result of increased asset optimization
sales activity during the three-month period ended June 30, 2001; and
. AGLC's operating revenues increased $3.7 million as a result of the
pipeline safety replacement program.

The utility operating margin increased to $138.6 million for the three months
ended June 30, 2001 from $114.3 million for the same period last year. The
increase of $24.3 million was a result of the addition of VNG, wholesale energy
services activity, and customer growth, as noted above.

Page 17 of 33

Results of Operations (continued)

Non-utility. Non-utility operating revenues decreased to $.2 million for the
three months ended June 30, 2001 from $6.2 million for the same period last
year. Non-utility cost of sales decreased to $.1 million for the three months
ended June 30, 2001 from $.3 million for the same period last year. The decrease
of $6.0 million in operating revenues was primarily due to the sale of Utilipro
and the change in reporting for Propane as a result of the transaction with
Heritage Propane in August 2000. As a joint venture, Propane is accounted for
under the equity method and its financial results are now reported in other
income rather than operating revenues and cost of sales. Non-utility operating
margin decreased to $.1 million for the three months ended June 30, 2001 from
$5.9 million for the same period last year. The decrease of $5.8 million was the
result of the factors noted above.

Total Other Operating Expenses Analysis
- ---------------------------------------
(Dollars in Millions)

Three Months Ended
-----------------------------------------
June 30, 2001 June 30, 2000 Favorable/(Unfavorable)
------------------- ------------------- --------------------------------
Total Other Operating Expenses

Utility $99.0 $75.4 ($23.6) (31.3%)
Non-utility (1.4) 6.4 7.8 121.9%
------------------- ------------------- -------------
Total $97.6 $81.8 ($15.8) (19.3%)
=================== =================== =============

Total Other Operating Expenses
- ------------------------------
Total other operating expenses increased to $97.6 million for the three months
ended June 30, 2001 from $81.8 million for the same period last year, an
increase of 19.3%.

Utility. Utility total other operating expenses increased $23.6 million as
compared with the same period last year primarily due to expenses related to VNG
not incurred in the three months ended June 30, 2000. The variances were
primarily reflected in the following areas:
. An increase of $11.1 million in operating and maintenance expenses
related to VNG;
. An increase of $3.7 million in depreciation expense related to VNG;
. Goodwill amortization of $1.0 million related to the acquisition of
VNG;
. An increase of $1.7 million in taxes other than income related to VNG;
. An increase of $2.1 million related to outside services as a result of
new business initiatives.

Non-utility. Non-utility total other operating expenses for the three-month
period ended June 30, 2001 were a result of AGSC allocating to all operating
business units both expenses incurred and an associated cost of financing.
Non-utility total other operating expenses decreased $7.8 million as compared
with the same period last year primarily due to the following:

. A decrease of $2.5 million in total other operating expenses related
to the Propane joint venture which is now accounted for under the
equity method of accounting as compared to the consolidation method of
accounting;
. A decrease of $5.6 million in operating expenses related to the sale
of Utilipro;
. These decreases were offset by an increase of $.8 million as a result
of expenses related to AGL Networks.

Page 18 of 33

Results of Operations (continued)

Other Income (Loss)
- -------------------
Other losses totaled $3.1 million for the three months ended June 30, 2001,
compared with other losses of $1.8 million for the same period last year. The
increase in other losses of $1.3 million is primarily due to the following:

. A increased loss of $1.3 million related to SouthStar operations;
. A expense of $1.4 million as a result of writing down assets held for
sale;
. A loss of $1.3 million related to the Propane joint venture that is
now accounted for under the equity method of accounting as compared to
the consolidation method of accounting in the prior year;
. These items were offset by increased income of $1.4 million related to
inventory carrying costs as a result of increased gas storage
balances; and
. An increased income of $1.2 million as a result of a reclassification
related to Sequent asset optimization activities.

Interest Expense and Preferred Stock Dividends
- ----------------------------------------------
Interest expense and preferred stock dividends increased to $23.2 million for
the three months ended June 30, 2001 from $14.8 million for the same period last
year. The increase of $8.4 million was primarily a result of increased amounts
of debt outstanding during the period related to the issuance of the Senior
Notes, Trust Preferred Securities, and the commercial paper program that was
used primarily to finance the acquisition of VNG.

Income Taxes
- ------------
Income tax expense decreased to $5.5 million for the three months ended June 30,
2001 from $7.9 million for the same period last year. The decrease in income
taxes of $2.4 million was due primarily to a decrease in income before income
taxes of $7.0 million compared to the same period last year. The effective tax
rate (income tax expense expressed as a percentage of pre-tax income) for the
three months ended June 30, 2001 was 37.2% as compared to 36.2% for the same
period last year.

Net Income
- ----------
For the three-month period ended June 30, 2001, net income was $9.3 million or
$.17 per basic and diluted share. For the three-month period ended June 30,
2000, net income was $13.9 million or $.26 per basic and diluted share. The
decrease in net income of $4.6 million was a result of expenses incurred in
fiscal 2001 related to the operations of VNG that were not present during the
same period last year, goodwill amortization from the acquisition of VNG,
increased interest expense, net losses related to SouthStar, and the absence of
Utilipro's losses.

Core Earnings
- -------------
For the three-month period ended June 30, 2001, core earnings (net income
excluding one-time items) were $9.3 million or $.17 per basic and diluted share.
For the three-month period ended June 30, 2000, core earnings were $13.9 million
or $.26 per basic and diluted share. During the three-month periods ended June
30, 2001 and 2000 there were no one-time items recorded. The decrease in core
earnings of $4.6 million was a result of expenses incurred in fiscal 2001
related to the operations of VNG that were not present during the same period
last year, goodwill amortization from the acquisition of VNG, increased interest
expense, net losses related to SouthStar, and the absence of Utilipro's losses.

Page 19 of 33

Results of Operations (continued)

Nine-month Periods Ended June 30, 2001 and 2000
- -----------------------------------------------
In this section, the results of operations for the nine-month periods ended June
30, 2001 and 2000 are compared.

Operating Margin Analysis
- -------------------------
(Dollars in Millions)

Nine Months Ended
------------------------------------------
June 30, 2001 June 30, 2000 Favorable/(Unfavorable)
------------------- ------------------- ------------------------------
Operating Revenues

Utility $812.8 $442.7 $370.1 83.6%
Non-utility 8.3 31.5 (23.2) (73.7%)
------------------- ------------------- -------------
Total $821.1 $474.2 $346.9 73.2%
=================== =================== =============
Cost of Sales
Utility $341.9 $88.1 ($253.8) (288.1%)
Non-utility 0.2 8.8 8.6 97.7%
------------------- ------------------- -------------
Total $342.1 $96.9 ($245.2) (253.0%)
=================== =================== =============
Operating Margin
Utility $470.9 $354.6 $116.3 32.8%
Non-utility 8.1 22.7 (14.6) (64.3%)
------------------- ------------------- -------------
Total $479.0 $377.3 $101.7 27.0%
=================== =================== =============

Utility. Utility operating revenues increased $370.1 million and cost of sales
increased $253.8 million primarily due to the following factors:
. Total average customers for the nine-month period ended June 30, 2001
as compared to the same period last year increased from 1,523,000
customers to 1,794,000. The increase is attributable to the addition
of approximately 238,000 customers as a result of the VNG acquisition;
. VNG contributed operating revenue of $300.0 million and incurred cost
of sales of $199.4 million. There were 3,632 degree days actually
incurred by VNG during the nine-month period ended June 30, 2001 as
compared to the 30-year normal degree days for the nine-month period
ended June 30, 2001 of 3,313;
. Chattanooga's operating revenues increased $30.0 million and cost of
sales increased $30.2 million as a result of 3,408 degree days as
compared to 2,639 degree days during the same period last year and
higher natural gas commodity costs during the nine-month period ended
June 30, 2001; and
. AGLC's operating revenues increased $32.0 million and cost of sales
increased $23.0 million as a result of higher transportation revenues
and costs related to increased marketer demand during the nine-month
period ended June 30, 2001 as compared to same period last year.
. Sequent's operating revenues increased $8.2 million and cost of sales
increased $1.2 million as a result of increased trading activities
related to asset optimization during the nine-month period ended June
30, 2001 as compared to same period last year.

The utility operating margin increased to $470.9 million for the nine months
ended June 30, 2001 from $354.6 million for the same period last year. The
increase of $116.3 million was a result of the addition of VNG, increased asset
optimization activity associated with Sequent, colder weather and customer
growth, as noted above.

Page 20 of 33

Results of Operations (continued)

Non-utility. Non-utility operating revenues decreased to $8.3 million for the
nine months ended June 30, 2001 from $31.5 million for the same period last
year. Non-utility cost of sales decreased to $.2 million for the nine months
ended June 30, 2001 from $8.8 million for the same period last year. The
decrease of $23.2 million in operating revenues and $8.6 in cost of sales was
primarily due to the sale of Utilipro and the change in reporting for Propane as
a result of the propane transaction with Heritage Propane in August 2000. As a
joint venture, Propane is accounted for under the equity method and its
financial results are now reported in other income rather than operating
revenues and cost of sales. Non-utility operating margin decreased to $8.1
million for the nine months ended June 30, 2001 from $22.7 million for the same
period last year. The decrease of $14.6 million was the result of the factors
noted above.

Total Other Operating Expenses Analysis
- ---------------------------------------
(Dollars in Millions)

Utility $297.2 $242.4 ($54.8) (22.6%)
Non-utility 20.8 25.5 4.7 18.4%
------------------- ------------------- -------------
Total $318.0 $267.9 ($50.1) (18.7%)
=================== =================== =============

Total Other Operating Expenses
- ------------------------------
Total other operating expenses increased to $318.0 million for the nine months
ended June 30, 2001 from $267.9 million for the same period last year, an
increase of 18.7%.

Utility. Utility total other operating expenses increased $54.8 million as
compared with the same period last year primarily due to expenses related to VNG
not incurred in the nine months ended June 30, 2000. The increase in expenses
from VNG were partially offset by lower labor costs, continued implementation of
cost controls, continued work management process improvements, and other savings
as a result of AGL Resources' operational excellence initiatives. The variances
were primarily reflected in the following areas:

. An increase of $30.8 million in operating and maintenance expenses
related to VNG;

. An increase of $10.7 million in depreciation expense related to VNG;

. Goodwill amortization of $3.0 million related to the acquisition of
VNG;

. An increase of $7.3 million in taxes other than income related to VNG;
and

. An increase of $1.9 million in operating and maintenance expense
related to Sequent.

Non-utility. Non-utility total other operating expenses decreased $4.7 million
as compared with the same period last year primarily due the following:

. A decrease of $8.1 million in total other operating expenses related
to the Propane joint venture which is now accounted for under the
equity method of accounting as compared to the consolidation method of
accounting;

. A decrease of $8.1 million in operating expenses related to the sale
of Utilipro;

. These decreases were offset by a $1.8 million increase related to AGL
Networks;

. An increase of $6.3 million in outside services related to new
business initiatives; and

. An increase of $2.9 million in unaffiliated marketer related reserves.

Page 21 of 33

Results of Operations (continued)

Other Income
- ------------
Other income totaled $44.3 million for the nine months ended June 30, 2001,
compared with other income of $17.5 million for the same period last year. The
increase in other income of $26.8 million is primarily due to the following:
. An increase of $16.0 million related to SouthStar primarily as a
result of weather in the Georgia service area being approximately 27%
colder and an increase in the number of customers served compared to
the same period last year;
. A gain of $10.9 million related to the sale of Utilipro;
. An increase of $1.7 million related to the Propane joint venture that
is now accounted for under the equity method of accounting as compared
to the consolidation method of accounting;
. These increases were offset by an expense of $1.4 million as a result
of a write down of assets held for sale.

Interest Expense and Preferred Stock Dividends
- ----------------------------------------------
Interest expense and preferred stock dividends increased to $73.4 million for
the nine months ended June 30, 2001 from $42.5 million for the same period last
year. The increase of $30.9 million was primarily a result of increased amounts
of debt outstanding during the period related to the issuance of the Senior
Notes, Trust Preferred Securities, and the commercial paper program that was
used primarily to finance the acquisition of VNG.

Income Taxes
- ------------
Income tax expense increased to $47.8 million for the nine months ended June 30,
2001 from $30.7 million for the same period last year. The increase in income
taxes of $17.1 million was due primarily to an increase in income before income
taxes of $47.5 million compared to the same period last year. The effective tax
rate (income tax expense expressed as a percentage of pre-tax income) for the
nine months ended June 30, 2001 was 36.2% as compared to 36.4% for the same
period last year.

Net Income
- ----------
For the nine-month period ended June 30, 2001, net income was $84.1 million or
$1.55 per basic share and $1.54 per diluted share. For the nine-month period
ended June 30, 2000, net income was $53.7 million or $.97 per basic and diluted
common share. The increase in net income of $30.4 million was a result of the
contribution of VNG, the gain on sale of Utilipro, the contribution of Sequent,
and customer growth that was offset by an increase in interest expense and
goodwill amortization related to the acquisition of VNG.

Core Earnings
- -------------
For the nine-month period ended June 30, 2001, core earnings (net income
excluding one-time items), excluding the gain on sale of Utilipro, were $77.0
million or $1.42 per basic share and $1.41 per diluted share. For the nine-month
period ended June 30, 2000, core earnings were $53.7 million or $.97 per basic
and diluted share. During the nine-month period ended June 30, 2000 there were
no one-time items recorded. The increase in core earnings of $23.3 million was a
result of the contribution of VNG, the contribution of Sequent, and customer
growth that was offset by an increase in interest expense and goodwill
amortization related to the acquisition of VNG.

Page 22 of 33

Financial Condition

Seasonality of Business
- -----------------------
AGLC has Straight Fixed Variable ("SFV") rates for its gas delivery service,
which eliminates the seasonality of both revenues and expenses. However, the
operations of VNG and Chattanooga, as well as AGL Resources' investments in
SouthStar and Propane are seasonal, and those businesses will likely experience
greater profitability in the winter months than in the summer months.

Financing
- ---------
In October 2000, AGL Resources established a $900 million commercial paper
program through AGL Capital Corporation. AGL Resources' commercial paper
consists of short-term unsecured promissory notes with maturities ranging from
overnight to 270 days. AGL Resources' commercial paper program is fully
supported by bank back-up credit lines. On October 6, 2000, AGL Resources issued
$660 million in commercial paper, the proceeds of which were used to finance the
VNG acquisition and to refinance existing short-term debt. In May 2001, the
Revolving Commitment limit was reduced to $450 million.

Short-term debt decreased $107.3 million to $259.0 million as of June 30, 2001
from $366.3 million as of March 31, 2001. As of June 30, 2001, $191.0 million
remained available for borrowing under the commercial paper program. AGL
Resources' working capital needs are met through the issuance of short-term
debt.

On February 23, 2001, AGL Resources issued $300 million of Senior Notes through
AGL Capital Corporation. These senior notes mature in January 2011, have an
interest rate of 7.125% and are fully and unconditionally guaranteed by AGL
Resources. The proceeds from the issuance were used to refinance a portion of
the existing short-term debt under the commercial paper program.

The weighted average interest rate on short-term debt outstanding was 5.5% and
6.3% for the three-month and nine-month periods ended June 30, 2001,
respectively. Management believes available credit will be sufficient to meet
working capital needs both on a short-term and long-term basis. However, capital
needs depend on many factors, and AGL Resources may seek additional financing
through debt or equity offerings in the private or public markets at any time.

Page 23 of 33

Financial Condition (continued)

Operating cash flow increased to $98.8 million for the nine-months ended June
30, 2001 as compared to $94.2 million for the same period last year. The
increase of $4.6 million was primarily due to increased net income of $30.4
million from the utility and non-utility businesses, decreased gas costs credits
of $36.6 million which was reflected in a joint stipulation with the GPSC last
year, and other operating activities. This was mostly offset by increases in
inventories of $98.7 million from higher costs of gas injections.

Cash flow provided by financing activities increased to $514.3 million for the
nine-months ended June 30, 2001 as compared to cash used of $7.0 million for the
same period last year. The increase of $521.3 million was primarily due to
$300.0 million in Senior Notes issued on February 23, 2001, and $145.4 million
(net of $4.6 million in expenses) in Trust Preferred Securities issued on May
14, 2001, and other financing activities.

Cash flow used in investing activities increased to $610.6 million for the
nine-months ended June 30, 2001 as compared to $120.1 million for the same
period last year. The increase of $490.5 million was primarily due to the
acquisition of VNG for $539.7 million, and other investing activities.

Capital Expenditures
- --------------------
Capital expenditures for construction of distribution facilities
purchase of equipment, and other general improvements were $105.4
million for the nine-month period ended June 30, 2001 as compared to
$119.3 million for the nine-month period ended June 30, 2000. The
decrease of $13.9 million is primarily attributable to utility plant
expenditures that were offset by capital expenditures incurred by VNG
of $11.8 million.

Excluding VNG, capital expenditures decreased 22% over the same period
last year. Typically, funding for capital expenditures is provided
through a combination of internal and external sources.

Management believes available credit will be sufficient to meet working
capital needs both on a short- and long-term basis. However, capital
needs depend on many factors and AGL Resources may seek additional
financing through debt or equity offerings in the private or public
markets at any time.

Common Stock
- ------------
During the nine-month period ended June 30, 2001, AGL Resources issued
744,646 shares of common stock out of treasury under ResourcesDirect, a
direct stock purchase and dividend reinvestment plan; the Retirement
Savings Plus Plan; the Long-Term Stock Incentive Plan; the Long-Term
Incentive Plan; and the Non-Employee Directors Equity Compensation
Plan.

The average number of shares outstanding for the nine-month period
ended June 30, 2001 as compared to June 30, 2000 decreased to 54.3
million from 55.5 million, respectively.

Ratios
- ------
As of June 30, 2001, AGL Resources' capitalization ratios consisted of:

. 12.7% short-term debt;
. 2.2% current portion of long-term debt;
. 41.3% long-term debt (excluding current portion);
. 10.7% preferred securities; and
. 33.1% common equity.

Page 24 of 33

Financial Condition (continued)

Concentration of Credit Risk
- ----------------------------
AGLC has concentration of credit risk related to the provision of
services to certificated marketers. At September 30, 1998 (prior to
deregulation), AGLC billed approximately 1.4 million end-use customers
in Georgia for its services. In contrast, at June 30, 2001, AGLC billed
8 certificated and active marketers in Georgia for services, which, in
turn, billed end-use customers.

Several factors are designed to mitigate the risks to AGL Resources of
the increased concentration of credit that has resulted from
deregulation. First, in order to obtain a certificate from the GPSC, a
certificated marketer must demonstrate to the GPSC, among other things,
that it possesses satisfactory financial and technical capability to
render the certificated service. Second, AGLC has instituted certain
practices and imposed certain requirements designed to reduce credit
risk. These include:

. Pursuant to AGLC's tariff, each certificated marketer is required to
maintain security for its obligations to AGLC in an amount equal to at
least two times the marketer's estimated maximum monthly bill in the
form of a cash deposit, letter of credit, surety bond or guaranty from
a creditworthy guarantor; and
. Intrastate delivery service is billed in advance rather than in
arrears.

For the three-month and nine-month periods ended June 30, 2001, the
three largest certificated marketers based on customer count, one of
which was SouthStar, accounted for approximately 61% and 41% of AGL
Resources' operating revenues, respectively. From October 1, 2000
through June 30, 2001, only gas receivables attributable to Chattanooga
and Virginia were due from end-use customers.

AGLC also faces potential credit risk in connection with assignments to
certificated marketers of interstate pipeline transportation and
storage capacity. Although AGLC has assigned this capacity to the
certificated marketers, in the event that the certificated marketers
fail to pay the interstate pipelines for the capacity, the interstate
pipelines would in all likelihood seek repayment from AGLC. This risk
is mitigated somewhat by the fact that the interstate pipelines require
the certificated marketers to maintain security for their obligations
to the interstate pipelines arising out of the assigned capacity.

On October 26, 1999, Peachtree Natural Gas, LLC ("Peachtree"), the then
fifth largest certificated marketer in Georgia based on customer count,
filed for protection under Chapter 11 of the United States Bankruptcy
Code. As of the date of Peachtree's bankruptcy filing, Peachtree owed
AGLC approximately $14 million for pre-petition delivery service and
other services and charges. This amount represented approximately 29%
of AGL Resources' total gas receivables at June 30, 2001. AGLC holds
$11 million of surety bonds as security for Peachtree's obligations.
The amount owed to AGLC does not include amounts owed by Peachtree to
interstate pipelines for assigned capacity. Based upon proofs of claim
filed by interstate pipelines in Peachtree's bankruptcy proceeding, as
of the date of Peachtree's filing, Peachtree owed interstate pipelines
approximately $2.5 million for assigned capacity. In December 1999,
Shell Energy Services Company, L.L.C. began serving the firm customers
formerly served by Peachtree. AGLC has been paid in full for all
post-petition delivery and other services provided by AGLC to
Peachtree. Peachtree has filed a declaratory judgment action against
AGLC to determine who has right, title and interest in and to
approximately $6.2 million, constituting the proceeds of the sale of
certain natural gas inventory. In management's opinion, this marketer
bankruptcy will not have a material adverse effect on AGL Resources'
financial condition or results of operations.

Page 25 of 33

State Regulatory Activity

Rate Structure. As required by the GPSC, in July 1998 AGLC began
billing marketers for each residential customer's distribution costs in
equal monthly installments. As required by the GPSC, effective February
1, 2001, AGLC implemented a seasonal rate design for the calculation of
each residential customer's annual SFV capacity charge, which is billed
to certificated marketers and reflects the historic volumetric usage
pattern for the entire residential class. Generally, this change should
result in residential customers being billed by the certificated
marketers for a higher capacity charge in the winter months and a lower
charge in the summer months. This requirement has an operating cash
flow impact, but does not change AGLC's revenue recognition. As a
result, AGLC continues to recognize its residential SFV capacity
revenues for financial reporting purposes in equal monthly
installments. Any difference between the billings under the new
seasonal rate design and the SFV revenue recognized is deferred and
will be reconciled on an annual basis. As of June 30, 2001, AGLC had
deferred customer collections of approximately $8.9 million (included
as a current liability in the Condensed Consolidated Balance Sheets and
excluded from the Condensed Statements of Consolidated Income) related
to the difference between the billings under the new seasonal rate
design and the SFV revenue recognized.

Transition to Competition Costs. On October 19, 1999, the GPSC approved
an order allowing AGLC to defer certain transition to competition costs
for fiscal 2000 that AGLC considered to be "stranded" as a result of
deregulation. In accordance with the GPSC order, AGLC deferred
approximately $10 million in stranded costs for fiscal 2000. These
stranded costs are recorded as a regulatory asset on AGLC's balance
sheet and are being amortized over a five-year period beginning October
1, 1999. Of the total transition to competition costs, AGLC amortized
$0.5 and $1.5 million during the three-month and nine-month periods
ended June 30, 2001, respectively, leaving a net balance of $3.9
million at June 30, 2001.

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Page 26 of 33

Federal Regulatory Activity

FERC Order 637: Transition Costs Settlement Agreements. The Federal Energy
Regulatory Commission ("FERC") issued Order No. 637 on February 9, 2000, which
revises the FERC's rules governing the operations of the utility's interstate
pipeline suppliers. Among other things, the FERC:

. On an experimental basis through September 30, 2002, permitted
holders of firm pipeline capacity to release the capacity to other
customers at a price greater than the pipeline's maximum rate for
the same capacity;
. Authorized pipelines to propose different rates for services
rendered during periods of peak usage, and to propose rates that
would differ based on the length of a customer's contract; and
. Declined, for the present time, to permit pipelines and their
customers to establish individually negotiated terms and
conditions of service that depart from generally applicable
pipeline tariff rules.

On May 19, 2000, the FERC issued order No. 637-A, granting and denying
rehearing in part of order No. 637, and making clarifying adjustments
to its final rule. Among other things, the FERC clarified that all
capacity release transactions of more than one month must be subject to
posting and bidding as long as waiver of the maximum rate ceiling is in
effect, thereby eliminating the exemption from posting and bidding that
previously applied to certain transactions, including rollovers of
monthly pre-arranged capacity release transactions set at the maximum
tariff rate. On July 26, 2000, the FERC issued Order No. 637-B, denying
rehearing and granting clarification of Order No. 637-A, as well as
other aspects of its final rule. Among other things, the FERC denied
the requests for hearing of its ruling in Order No. 637-A requiring
that all capacity release transactions of more than one month must be
subject to posting and bidding as long as waiver of the maximum rate
ceiling is in effect. Petitions for review of these orders are pending
in federal court. The interstate pipeline suppliers of AGLC,
Chattanooga and VNG have made filings at the FERC in order to comply
with the new rule and AGL Resources is participating in the various
Order No. 637 compliance proceedings at FERC involving these suppliers.
On May 31, 2001, the Commission approved the Stipulation and Agreement
filed by Dominion Transmission Inc. ("DTI") to resolve all issues
related to DTI's compliance with Order No. 637. The settlement was
either supported or not opposed by most of the active parties to the
case. AGLC and VNG were listed among the non-opposing parties to this
settlement. On July 2, 2001, Southern Natural Gas Company filed a
Stipulation and Agreement to resolve all Order No. 637 compliance
issues on its system. AGLC and Chattanooga are listed as non-opposing
parties to this settlement.

The FERC has required the utility, as well as other interstate pipeline
customers, to pay transition costs associated with the separation of
the pipeline suppliers' transportation and gas supply services. Based
on its pipeline suppliers' filings with the FERC, the utility has
determined that the total portion of its transition costs from all of
its pipeline suppliers was $108.1 million. As of September 30, 2000,
all of those costs had been incurred and were being recovered from the
utility's customers under rates charged for the distribution of gas.

AGLC is involved in four Transcontinental Gas Pipe Line Corporation
rate cases, which concern rates in effect since September 1, 1995, as
well as proposed changes to take effect prospectively. These rate
proceedings are at various stages of litigation before the FERC, and
none of these proceedings are final. At the present time, AGLC cannot
predict the effect of these proceedings on rates or operations.

Page 27 of 33

AGLC Pipeline Safety

On January 8, 1998, the GPSC issued procedures and set a schedule for
hearings about alleged pipeline safety violations. On July 21, 1998,
the GPSC approved a settlement between AGLC and the staff of the GPSC
that details a 10-year pipeline replacement program for approximately
2,300 miles of cast iron and bare steel pipe. Over that 10-year period,
AGLC will recover from end-use customers, through billings to
certificated marketers, the costs related to the program net of any
cost savings from the program.

The capital expenditures and operations and maintenance costs incurred
from the pipeline safety program are capitalized and depreciated over
the life of the assets. All recoveries are recorded as revenue. In the
near term, the primary financial impact to AGLC from the pipeline
safety program is reduced cash flow from operating and investing
activities, as the timing related to cost recovery does not match the
timing of when costs are incurred.

During the nine months ended June 30, 2001, approximately 206 miles of
pipe were replaced and AGLC's capital expenditure and operation and
maintenance costs related to the program were approximately $34.6
million and $5.4 million, respectively. For the same period last year
187 miles of pipe were replaced, and capital expenditure and operation
and maintenance costs were $35.8 million and $6.6 million,
respectively. This equates to 10% more pipe replacement over last year
with 6% less in capital expenditure and operation and maintenance
costs. All such amounts will be recovered through a combination of SFV
rates and a pipeline safety revenue rider. On October 1, 1999, AGLC
began recovering costs of the program through the pipeline safety
revenue rider. The amount recovered during the nine months ended June
30, 2001 was approximately $2.8 million, compared to $1.5 million for
the same period last year.

Since the inception of the pipeline replacement program in October
1998, AGLC has completed replacing approximately 701 miles or 30.5% of
the 2,300 mile requirement. In addition, AGLC has incurred
approximately $127.0 million in capital expenditure and $25.3 million
in operation and maintenance costs, of which $4.8 million has been
recovered from SFV rates and the pipeline safety revenue rider. In
addition to the program being ahead of schedule at June 30, 2001, the
program is operating under its established budget as a result of
efficiencies in engineering, bidding, construction and project
management.

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Page 28 of 33

Environmental Matters

Before natural gas was widely available in the Southeast, AGLC
manufactured gas from coal and other fuels. Those manufacturing
operations were known as manufactured gas plants ("MGP"), which AGLC
ceased operating in the 1950s. Because of recent environmental
concerns, AGLC is required to investigate possible environmental
contamination at those plants and, if necessary, clean up any
contamination.

AGLC has been associated with nine MGP sites in Georgia and three in
Florida. Based on investigations to date, AGLC believes that some
cleanup is likely at most of the sites. In Georgia, the state
Environmental Protection Division ("EPD") supervises the investigation
and cleanup of MGP sites. In Florida, the U.S. Environmental Protection
Agency has that responsibility.

By March 31, 2001, AGLC had obtained approval from EPD of Corrective
Action Plans for the nine Georgia MGP sites. In addition, AGL Resources
recently entered into a Consent Order for cleanup of the MGP site in
St. Augustine, Florida, and received a Record of Decision for one
portion of the MGP site in Sanford, Florida. As these cleanup options
and plans continue to develop and the cleanup contracts are entered
into, AGLC should be able to provide a more specific estimate of the
likely costs of its MGP program. Although the range of costs for each
site has been refined as a result of greater certainty in the cleanup
alternatives, at this time there still remains considerable variability
in available cost estimates. By estimating, where possible, AGLC's
share of investigation and cleanup costs at these sites, AGLC believes
that the remaining cost of future actions at its MGP sites will be
within a range of $144.8 to $186.6 million. AGLC cannot at this time
identify any single number within this range as a better estimate of
its likely future costs, because its actual future investigation and
cleanup costs may still be affected by a number of contingencies that
cannot be quantified at this time. Consequently, as of June 30, 2001,
AGLC has recorded the lower end of the range, or $144.8 million, as a
liability and a corresponding regulatory asset.

AGLC has two ways of recovering investigation and cleanup costs. First,
the GPSC has approved an environmental response cost recovery rider.
This rider allows the recovery of costs of investigation, testing,
cleanup, and litigation. Because of that rider, AGLC has recorded a
regulatory asset for actual and projected future costs related to
investigation and cleanup, to be recovered from the rate payers in
future years. During the three-month and nine-month periods ended June
30, 2001, AGLC recovered $3.4 million and $10.1 million, respectively,
through its environmental response cost recovery rider. The regulatory
asset increased by $12.0 million as a result of additional expenses
incurred.

The second way AGLC can recover costs is by exercising the legal rights
AGLC believes it has to recover a share of its costs from other
potentially responsible parties, typically former owners or operators
of the MGP sites. AGLC has been actively pursuing those recoveries.
There were no material recoveries during the three-month and nine-month
periods ended June 30, 2001.

Page 29 of 33

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Market Risk
- -----------
AGL Resources is exposed to market risks associated with interest rates
and commodity prices. At the direction of the Board of Directors,
management has established comprehensive risk management policies to
monitor and manage these market risks. AGL Resources' Risk Management
Committee is responsible for the overall approval of risk management
policies and the delegation of approval and authorization levels. The
Risk Management Committee is comprised of senior executives who monitor
market risk positions, corporate exposures, credit exposures and
overall results of AGL Resources' risk management activities.

Interest Rate Risk
- ------------------
Interest rate fluctuations expose AGL Resources' variable-rate debt to
changes in interest expense and cash flows. AGL Resources'
variable-rate debt consisted of commercial paper, which amounted to
$259.0 million as of June 30, 2001. Based on outstanding borrowings at
quarter-end, a 10% change in market interest rates at June 30, 2001
would result in a change in annual pre-tax expense or cash flows of
$1.1 million. As of June 30, 2001, $45.0 million of long-term fixed
debt obligations mature in the following 12 months. Any new debt
obtained to refinance this obligation would be exposed to changes in
interest rates. A hypothetical 10% change in interest rates on this
debt would not have a material effect on earnings.

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Page 30 of 33

PART II -- OTHER INFORMATION

"Part II -- Other Information" is intended to supplement information
contained in the Annual Report on Form 10-K for the fiscal year ended
September 30, 2000, and should be read in conjunction therewith.

ITEM 1. LEGAL PROCEEDINGS

AGL Resources is a party, as both plaintiff and defendant, to a number
of suits, claims and counterclaims on an ongoing basis. (See State
Regulatory Activity, Federal Regulatory Activity, and Environmental
Matters contained in Item 2 of Part I under the caption "Management's
Discussion and Analysis of Results of Operations and Financial
Condition.") Management believes that the outcome of all litigation in
which AGL Resources is involved will not have a material adverse effect
on the consolidated financial statements of AGL Resources.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER

None.

ITEM 5. OTHER INFORMATION

Information related to State Regulatory Activity, Federal Regulatory
Activity, and Environmental Matters is contained in Item 2 of Part I
under the caption "Management's Discussion and Analysis of Results of
Operations and Financial Condition."

Page 31 of 33

PART II -- OTHER INFORMATION (continued)

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10.1 Employment agreement dated June 19, 2001 by and between Richard J.
Duszynski and AGSC.

10.2 Officer Incentive Plan.

10.3 Annual Team Performance Incentive Plan for fiscal year 2001.

10.4 Sequent Incentive Compensation Program.

10.5 Offer of employment dated April 16, 2001 by and between Susan A.
McLaughlin and AGL Resources.

10.6 Separation agreement dated April 30, 2001 by and between Donald P.
Weinstein and AGL Resources.

(b) Reports on Form 8-K.

On April 27, 2001, AGL Resources Inc. filed a Current Report on
Form 8-K dated April 26, 2001, relating to an announcement
regarding officer appointments at AGL Resources Inc., AGLC and
Sequent, pursuant to Item 5 (Other Events) and Item 7(c)
(Exhibits) of Form 8-K.

On May 8, 2001, AGL Resources Inc. filed a Current Report on Form
8-K dated May 7, 2001, relating to materials used by management
for a presentation at the American Gas Association conference held
on May 8, 2001, pursuant to Item 7(c) (Exhibits) and Item 9
(Regulation FD Disclosure) of Form 8-K.

On May 23, 2001, AGL Resources Inc. filed a Current Report on Form
8-K dated May 14, 2001, related to the sale of Trust Preferred
Securities by AGL Capital Trust II, pursuant to Item 5 (Other
Events) and Item 7(c) (Exhibits) of Form 8-K.

Page 32 of 33

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

AGL Resources Inc.
-----------------------------------------------
(Registrant)

Date: August 7, 2001 /s/ Richard T. O'Brien
-----------------------------------------------
Richard T. O'Brien
Senior Vice President & Chief Financial Officer
(Principal Accounting and Financial Officer)

Page 33 of 33