Atlanta Gas Light Files First Rate Case in Five YearsMonthly increase of less than $3 necessary to address stubborn economy and fund “Customer First” program
May 3, 2010
ATLANTA -- May 3, 2010 -- Facing higher operating expenses and declining revenue in a stubborn economy, Atlanta Gas Light today filed an application with the Georgia Public Service Commission (PSC) requesting a monthly increase in base rates of $2.95 for residential customers. About Atlanta Gas Light
In its first rate case filing in more than five years, Atlanta Gas Light attributes the primary need for the increase to higher compliance and operating costs, including employee expenses and declining customer growth. If granted, it would be the first base rate increase for Atlanta Gas Light since 1993. Revenues from base rates are what the utility uses to provide its core services. Even with the proposed increase, company forecasts indicate revenues collected from customers in 2010-2011 would be lower than the company received in 2005.
For the first time in company history, Atlanta Gas Light has lost more customers than it has added for two consecutive years. In 2009 alone, Atlanta Gas Light experienced a net loss of over 8,000 customers from the system. The impact of a slower rate of new customer additions and higher customer attrition means the fixed costs of the utility are spread over fewer customers, which contributes to the upward pressure on rates.
“Over the past five years, we have taken aggressive steps to control costs and manage our utility expenses,” said Suzanne Sitherwood, president, Atlanta Gas Light. “This rate adjustment is necessary to maintain appropriate service levels, to invest in vital programs that will make us more efficient, and to improve our ability to meet our customer needs. We deferred this necessary step as long as we could.”
A portion of the increase would support Atlanta Gas Light’s ongoing five-year business plan presented in the application. Called “Customer First,” the plan includes customer service initiatives such as:
· Automated Meter Reading Technology, which will equip radio technology to hundreds of thousands of meters and is expected to improve efficiency and accuracy and provide real-time consumption data;
· Re-establishing the Customer Call Center in Atlanta, bringing approximately 74 jobs to Riverdale, Ga., to better handle customer care;
· Improved Technology Systems, intended to provide quicker response times for marketer and customer services and improved web features for customer scheduling and personal consumption statistics;
· Service Call Courtesies and Repair/Replace Vouchers, enabling utility technicians during service calls to perform minor repairs or leave behind repair or replacement vouchers for ENERGY STAR appliances. This program is expected to help avoid service interruption, improve safety and retain customers on the natural gas system, which keeps costs down for all ratepayers; and
· Increased Service Availability, intended to improve response time and shorten customer wait time for the company to complete orders.
Atlanta Gas Light has included a proposal expected to help hold down future operating expenses by adopting a policy to require the company to share 50 percent of the cost savings resulting from future acquisitions with Atlanta Gas Light customers through lower operating expenses. Two recent acquisitions in Virginia and New Jersey have produced more than $100 million in cost savings since 2005, benefiting residential and commercial Atlanta Gas Light customers.
“A formal policy requiring that Atlanta Gas Light customers receive fifty percent of the cost savings from future acquisitions is the right thing to do,” said Hank Linginfelter, executive vice president, AGL Resources. “We have reduced overall corporate service expenses shouldered by Atlanta Gas Light’s customers from 90 percent to 48 percent through our most recent transactions, and we are now able to provide shared corporate services at one of the lowest rates in the country among major gas utilities.”
The company’s rate proposal is expected to increase the average annual residential natural gas bill by about 3 percent. If granted, the new rates would be expected to generate about $54 million annually. The new revenue would support ongoing operations and reset the company’s return on equity ($18.5 million), fund new customer service initiatives ($13.4 million), collect a portion of savings from mergers benefitting Atlanta Gas Light customers ($14.5 million), and restructure depreciation expenses ($7.7 million). The changes would go into effect in November 2010 and would be reflected in Atlanta Gas Light’s base rate charge assessed to customers by their certificated gas marketer.
The PSC will hold public hearings on the company’s application beginning in August and will evaluate the case under its legal obligation to balance the need for the consumer to receive reliable services at reasonable rates with the need to provide the utility with the opportunity to earn a reasonable return on its investment.
Atlanta Gas Light, a wholly owned subsidiary of AGL Resources (NYSE: AGL), provides natural gas delivery service to more than 1.5 million customers in Georgia. In operation since 1856, the company is one of the oldest corporations in the state. For more information, visit www.atlantagaslight.com.About AGL Resources
AGL Resources (NYSE: AGL), an Atlanta-based energy services company, serves approximately 2.3 million customers in six states. The company also owns Houston-based Sequent Energy Management, an asset manager serving natural gas wholesale customers throughout North America. As an 85-percent owner in the SouthStar partnership, AGL Resources markets natural gas to consumers in Georgia under the Georgia Natural Gas brand. The company also owns and operates Jefferson Island Storage & Hub, a high-deliverability natural gas storage facility near the Henry Hub in Louisiana. For more information, visit www.aglresources.com. Forward-Looking Statements
Certain expectations and projections regarding our future performance referenced in this press release are forward-looking statements. Forward - looking statements involve matters that are not historical facts and because these statements involve anticipated events or conditions, forward-looking statements often include words such as "anticipate," "assume," "believe," "can," "could," "estimate," "expect," "forecast," "future," "goal," "indicate," "intend," "may," "outlook," "plan," "potential," "predict," "project," "seek," "should," "target," "would," or similar expressions. Forward-looking statements in this press release include, without limitation, the expected revenues to be collected from Atlanta Gas Light customers in 2010-2011; including the underlying components , such as forecasted declining revenues, higher operating expenses and the sharing of cost savings from future acquisitions, driving the proposed higher base rates \, and the projected operational, customer and other benefits from the results of the “Customer First” five-year business plan and related initiatives; and future operating expenses related to future acquisitions.
Our expectations are not guarantees and are based on currently available competitive, financial and economic data along with our operating plans. While we believe our expectations are reasonable in view of the currently available information, our expectations are subject to future events, risks and uncertainties, and there are several factors - many beyond our control - that could cause results to differ significantly from our expectations.
Such events, risks and uncertainties include, but are not limited to, changes in price, supply and demand for natural gas and related products; the impact of changes in state and federal legislation and regulation including changes related to climate change; actions taken by government agencies on rates and other matters; utility and energy industry consolidation; the impact on cost and timeliness of construction projects by government and other approvals, development project delays, adequacy of supply of diversified vendors, and unexpected change in project costs, including the cost of funds to finance these projects; direct or indirect effects on our business, financial condition or liquidity resulting from a change in our credit ratings or the credit ratings of our counterparties or competitors; interest rate fluctuations; financial market conditions, including recent disruptions in the capital markets and lending environment and the current economic downturn; the impact of natural disasters such as hurricanes on the supply and price of natural gas; acts of war or terrorism; and other factors which are described in detail in our filings with the Securities and Exchange Commission, which we incorporate by reference in this press release. Forward-looking statements are only as of the date they are made, and we do not undertake to update these statements to reflect subsequent changes.
Media Contact: Tami Gerke, AGL Resources