Atlanta Gas Light Company And Georgia Public Service Commission Reach Accord On Earnings Review
April 29, 2002
ATLANTA, GEORGIA - Atlanta Gas Light Company, a wholly owned subsidiary of AGL Resources Inc. (NYSE: ATG), today reached an accord with the Georgia Public Service Commission on its earnings review. The company and Commission have agreed to a three-year performance based rate plan. The order, effective May 1, will reduce AGLC customers' base rates by $10 million annually.
The net impact of this order to AGLC is a reduction to cash flow from operations, net of income taxes, of approximately $6.5 million on an annual basis. This reduction to operating revenue will be largely offset by a reduction in depreciation expense. The projected effect of the order on AGL Resources' 2002 earnings is a reduction of approximately $0.02 per share. Despite this projected impact, AGL Resources reaffirms its earnings estimate for the calendar year 2002 of $1.65 to $1.70 earnings per share.
The performance based rate plan will allow the company to continue to earn a return on equity of 11 percent, while establishing an earnings band of between 10 percent and 12 percent. Three-quarters of any earnings above 12 percent will be shared with the natural gas customers of Georgia, and the remaining one-quarter will be retained by AGLC.
"We are highly satisfied to enter into a performance based rate plan," said Kevin P. Madden, executive vice president of distribution and pipeline operations. "This decision brings Atlanta Gas Light in line with the rate structures of other companies in our peer group. Natural gas customers will benefit from a three-year period of base rate stability, and the company will realize potential benefits from the sharing mechanism. We worked closely with the Commissioners and their staff in developing this plan, and view this as an affirmation of the desire of all parties to maintain a collaborative approach to regulation for the future."
As part of the order, AGLC will be required to file a general rate case on May 1, 2005, at which time the Commission will determine whether the order will remain in effect, be modified or discontinued. AGLC cannot file for a general base rate increase before that time unless its return on common equity falls below 10 percent.
The order does not include any effects of the recently passed Georgia legislation entitled the "Natural Gas Consumers' Relief Act." The company believes that any additional costs incurred as a result of implementing the legislation will be recoverable.