2005 Analyst
Conference

Ó

A

Asset Businesses:
Integration Progress &
Future Opportunities

Hank Linginfelter – Mid-Atlantic Region

Suzanne Sitherwood – Southeastern Region

Dana Grams – Pivotal Energy Development

2005 Analyst
Conference

2

  VNG

ETG

2005

2006 Goal

New Meter Additions and Attrition – 2006 Forecast

Mid-Atlantic Operation
Business Drivers

     Customers              Annual Margin/Customer   Annual O&M/Customer

   (as of 10/31/05)                         (2005 est.)                        (2005 est.)

ETG          265,609                  $  525                             $ 281

Eklton           5,795                   $  458                             $ 345

VNG         260,262                   $  450                             $ 195

Mid-Atlantic  531,666              $488/customer                  $  239           

2005 Analyst
Conference

3

Corporate Safety Incident Rate

Elizabethtown Gas

Union Grievances

Elizabethtown Gas

Service Orders Worked Per FTE

Elizabethtown Gas

Meters Read Monthly

Elizabethtown Gas

ETG Notable Successes In First Year

2005 Analyst
Conference

4

We Keep Working The
Regulatory Compact

•

PRP proposal for ETG filed

–

Would allow for recovery of cast iron replacement costs

•

PBR filed for VNG

–

Addresses VSCC staff’s assessment of VNG’s earnings and proposes
five year rate freeze; hearings set for January 2006; VNG will pursue
settlement of issues with interveners

–

Bad debt

•

VSCC has allowed deferral accounting treatment in past for
excessive bad debt, but not recovery outside a rate case

•

Elected/civic leaders more engaged than ever on the issue of fuel
costs, bad debt and low-income assistance

•

ETG and VNG have focused on off-season disconnections to get
customers current on bills entering the winter season

•

Mid-Atlantic budget for bad debt charge-offs based on approximately
0.31% of revenue at VNG and 1.22% of revenue at ETG

•

New Sequent contract at VNG approved through 3/31/09

2005 Analyst
Conference

5

Labor Negotiations In A
Global Economy

•

Negotiations are underway at ETG with contract expiration on
November 20 at midnight

•

To date, negotiations are productive.  ETG has a
comprehensive work stoppage plan and arrangements are in
place to maintain service to customers in the event of a
stoppage.

•

VNG negotiations should occur in the spring of 2006 with
contract expiration in May.  VNG also has a comprehensive
work stoppage plan.

•

General issues include wage rates, outdated work rules and
benefits.

2005 Analyst
Conference

6

2005

2006 Goal

New Meter Additions and Attrition – 2006 Forecast

42,210

-30,775

11,435

AGL

Southeastern Operation
Business Drivers

     Customers              Annual Margin/Customer   Annual O&M/Customer

   (as of 10/31/05)                         (2005 est.)                        (2005 est.)

AGL           1,538,407              $  308                             $ 129

CG                 60,870               $  529                             $ 197

FCG             102,776               $  454                             $ 239

Southeastern  1,702,053            $325/customer               $  138           

2005 Analyst
Conference

7

INJ

Average Service Leak Response (Minutes)

Appt Attainment vs. Orders Worked

Corporate Safety Incident Rate

FCG Total Service Orders By FTE/Day

Distribution Total Service Orders By FTE/Day

Florida City Gas Notable Successes

2005 Analyst
Conference

8

We Keep Working The
Regulatory Compact

•

Rate-case “stay-out” while seeking regulatory solutions

–

Five-year stay-out in GA with no immediate need to file for rate
relief in TN and FL

–

Seek pipeline replacement program in TN

–

Legislative interest in strategic infrastructure in GA

–

Maintain asset management for reliability and customer value

•

Remove bad-debt exposure

–

Straight fixed-variable (SFV) rate design and monthly pre-billing in
GA

–

PGA adjustment for bad debt and base rates weather normalized
in TN

–

Considering margin stabilization alternatives for TN and FCG

–

For FCG bad debt levels for charge offs on approximately 0.6% of
revenue 

•

Proactive actions with Commissions and Legislators who have the
energy affordability gap for consumers top of mind

2005 Analyst
Conference

9

New Economics for Franchises

•

Regulated margin growth is not just about adding every residential customer

–

Non-traditional revenue through DDDC recalculation, higher DDDC,
PRP, service charges

–

Quality of customers with multiple burner-tips

–

Focus on higher-margin commercial and industrial customers

–

Niche services or rate options for interruptible and transportation
customers

–

Smart deployment of capital

•

Create relevancy of product for customer retention

–

Modify rate design for commercial customers

–

Build strong trade allies

–

Targeting high-density markets

–

Target consumer promotions such as incentives

–

Efficient use of all mediums from NJ to FL

2005 Analyst
Conference

10

How We Seek Our Value

•

Analyze Market Fundamentals

•

Know the Customer

•

Engage a Diversified Group

•

Use Every Tool

2005 Analyst
Conference

11

LNG

NYMEX Curve and Increasing Volatility
Highlights Need for More Storage

High Regional Basis Differences
Create Peaking Opportunities

Demand Forecasts Coupled with Declining
Reserves Illustrate Viability of LNG

Market Fundamentals
Drive New Projects

2005 Analyst
Conference

12

Jefferson Island Storage & Hub

•

Strategically located
salt-cavern storage 10 miles
northeast of Henry Hub;
working gas capacity of 7.2
MMDth

•

Facility was accretive to
earnings from day one

•

Expanding inventory cycle
from 10- to 12-turn. 

•

Fully subscribed with diverse
portfolio of customers;
currently evaluating bids for
capacity expiring in Spring
2006 (1.4 MMDth)

•

Soliciting customer interest
for capacity in two additional
caverns

•

Navigated hurricanes
successfully

2005 Analyst
Conference

13

Third  Cavern

Compression

Header System

•

Adding incremental 8000
HP

•

Increasing injections to 360
MDth/day

•

Commissioning Nov 2005

•

Engineering begun on new
interconnects with
Trunkline, Southern
Natural and Bridgeline

•

Capacity at Sabine &
Columbia doubled

Sabine, Gulf South, NGPL

Trunkline (Future)

Southern Natural (Future)

Sea Robin

Tennessee

Columbia Gulf

TexasGas

Cross Tex (LIG)

Lake Peigneur

Delcambre

Henry Hub

Erath

Bridgeline (Future)

•

Drilling finished by August
2006

•

Adding 6.3 MMDth working
gas by year end 2007

•

Another 6.3 MMDth added
by 2009 (4^th cavern)

Expansion Activity

2005 Analyst
Conference

14

:

10.0 MMDth

:

  7.2 MMDth

:

2

:

240 MDth per Day

:

720 MDth per Day

:

8

:

18 miles dual 16”

:

$13.6 million

Existing

Configuration

:

27.9 MMDth

:

19.8 MMDth

:

4

:

   750 MDth per Day

:

1,500 MDth per Day

:

11

:

Additional 10 miles 24”

:

$10.3 million

Expanded

Configuration

Proposed JISH Expansion

Total Capacity

Working Gas

Number of Caverns

Max Injection Capability

Max Withdrawal Capability

Interconnects

Header System

Cost/MMDth

2005 Analyst
Conference

15

Proposed LNG Terminals

Existing Gas Storage Fields

Existing LNG Terminals

Landscape of Opportunities

Jefferson Island
Storage and Hub

Pivotal
Propane