Virginia Natural Gas Requests First Increase of its Approved Base Rates Since 1996; Company Proposes Three Year Phased-in Approach

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Feb 08, 2011, 04:23 ET

NORFOLK, Va., Feb. 8, 2011 /PRNewswire/ -- Virginia Natural Gas (VNG), a subsidiary of AGL Resources, has filed a request for a net rate increase of $25.1 million with the Virginia State Corporation Commission (VSCC). Today's application seeks recovery of the company's investment in the successful construction of the Hampton Roads Crossing Pipeline, which went into service in 2010, as well as operational cost increases. Virginia Natural Gas customers have not seen a rate increase in their approved base rates since 1996.

In recognition of current economic conditions, VNG is proposing an alternative that will phase in the total rate increase over a three-year period. If approved, the residential impact would be $3.11 per month for the first year, with an incremental increase over the next two years of less than $1.50 per month.

Under a traditional approach, customers would see an increase of $6.27 a month effective August 1, 2011.

"It is never easy to raise rates, especially in challenging economic times, but investments in the reliability and safety of critical energy infrastructure is still required," said Jodi Gidley, president, VNG. "Our customers have already seen tremendous value from the Hampton Roads Crossing Pipeline that was completed last year, and we are now seeking to recover our incurred costs. In addition to increased reliability, this pipeline has enabled us to reduce gas purchase costs which are passed through to customers. It has provided the backbone necessary to allow continued economic growth in the region in a safe and reliable manner."

The Hampton Roads Crossing natural gas pipeline joins two previously unconnected northern and southern pipeline systems by crossing the Hampton Roads harbor. This connection provides for an increase in reliability of natural gas supplies for residential and industrial customers and area military facilities.

Natural gas prices currently remain low due to current levels of excess supply relative to market demand for natural gas, in part due to abundant sources of shale natural gas reserves and the lack of demand by commercial and industrial enterprises. Discoveries of shale gas across the U.S. and new extraction methods have brought commodity prices down significantly. Accordingly, we expect these current conditions to reduce the impact of any rate increases to our customers.

"Natural gas prices are predicted to remain stable, and even with the proposed increase in base rates, the typical customer is expected to pay less for natural gas than they paid three years ago," said Gidley.

Another way Virginia Natural Gas customers can lower their natural gas bills is by participating in energySMART customer conservation programs. Today Virginia Natural Gas customers have the option of saving up to 15 percent per month under the VNG-sponsored energySMART. These programs are designed to help consumers save money by reducing their energy usage.

For more information on energySMART, visit www.virginianaturalgas.com.

About Virginia Natural Gas

Virginia Natural Gas, a wholly owned subsidiary of AGL Resources (NYSE: AGL), provides retail natural gas sales and distribution services to 275,000 customers in southeast Virginia. For more information, visit www.virginianaturalgas.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 two high-deliverability natural gas storage facilities: Jefferson Island Storage & Hub near the Henry Hub in Louisiana and Golden Triangle Storage in Texas. For more information, visit www.aglresources.com.

Forward-Looking Statements

Certain expectations and projections regarding our future performance referenced in this presentation, in other reports or statements we file with the SEC or otherwise release to the public, and on our website, are forward-looking statements. Senior officers and other employees may also make verbal statements to analysts, investors, regulators, the media and others that are forward-looking. Forward-looking statements involve matters that are not historical facts, such as statements regarding our future operations, prospects, strategies, financial condition, economic performance (including growth and earnings), industry conditions and demand for our products and services. 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 contained in this press release include, without limitation, the quotes from Jodi Gibley and the information regarding rate increases, market demand, and future costs, supplies and operations. 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; concentration of credit risk; 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, unexpected change in project costs, including the cost of funds to finance these projects; the impact of acquisitions and divestitures; 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; general economic conditions; uncertainties about environmental issues and the related impact of such issues; the impact of changes in weather, including climate change, on the temperature-sensitive portions of our business; 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 provided in detail in our filings with the Securities and Exchange Commission. 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.

SOURCE Virginia Natural Gas