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Derivative and Weather Related Instruments
0210 - Disclosure - Derivative and Weather Related Instruments
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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 10 - us-gaap:DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>NOTE 10. DERIVATIVE AND WEATHER-RELATED INSTRUMENTS</b>
</div>
<div align="center" style="font-size: 10pt">
<div style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px"> 
</div>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b>DERIVATIVE INSTRUMENTS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     To the extent that the information below is being disclosed under certain requirements of ASC
Topic 815, no prior information is presented for the nine month period ended June 30, 2009. Under
this guidance, only information after January 1, 2009 is required to be disclosed. Therefore, only
comparative activity for the three months ended June 30, 2010 is being disclosed for the income
statement.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt">     <b><i>Regulated Utility Operations</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Washington Gas enters into contracts related to the sale and purchase of natural gas that
qualify as derivative instruments and are accounted for under ASC Topic 815. These derivative
instruments are recorded at fair value on our balance sheet and Washington Gas does not designate
any derivatives as hedges under ASC Topic 815. Washington Gas’s derivative contracts relate to: <i>(i)</i>
Washington Gas’s asset optimization program, <i>(ii) </i>managing price risk associated with the purchase
of gas to serve utility customers and <i>(iii) </i>managing interest rate risk.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Asset Optimization. </i></b>Washington Gas optimizes the value of its long-term natural gas
transportation and storage capacity resources during periods when these resources are not being
used to physically serve utility customers. Specifically, Washington Gas utilizes: <i>(i) </i>its
transportation capacity assets to benefit from favorable natural gas prices between different
geographic locations and <i>(ii) </i>its storage capacity assets to benefit from favorable natural gas
prices between different time periods. As part of this asset optimization program, Washington Gas
enters into physical and financial derivative transactions in the form of forwards, swaps and
option contracts to lock-in operating margins that Washington Gas will ultimately realize. The
derivatives used under this program are subject to mark-to-market accounting treatment.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Regulatory sharing mechanisms in all three jurisdictions allow the profit from these
transactions to be shared between Washington Gas’s shareholders and customers; therefore, any
changes in fair value are recorded through earnings, or as regulatory assets or liabilities to the
extent that gains and losses associated with these derivative instruments will be included in the
rates charged to customers when they are realized. Valuation changes for the portion of net profits
to be retained for shareholders may cause significant period-to-period volatility in earnings from
unrealized gains and losses. This volatility does not change the locked-in operating margins that
Washington Gas will ultimately realize from these transactions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     All physically and financially settled contracts under our asset optimization program are
reported on a net basis in the statements of income in “Utility cost of gas”. Total net margins
recorded to “Utility cost of gas” after sharing and management fees associated with all asset
optimization transactions for the three months ended June 30, 2010 and 2009 were gains of $1.1
million and $2.2 million, respectively, including unrealized gains of $1.3 million and $2.0
million, respectively. Total net margins for the nine months ended June 30, 2010 and 2009 were
gains of $22.9 million and $19.6 million, respectively, including unrealized gains of $13.5 million
and $10.4 million, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Managing Price Risk. </i></b>To serve utility customers, as authorized by its regulators, Washington
Gas enters into forward, option, and financial swap contracts and other contracts.
These instruments are accounted for as derivative instruments as a part of managing price risk
associated with acquiring natural gas supply for utility customers. Any gains and losses associated
with these derivatives are recorded as regulatory liabilities or assets, respectively, to reflect
the rate treatment for these economic hedging activities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Managing Interest-Rate Risk</i></b><i>. </i>Washington Gas utilizes derivative instruments that are designed
to minimize the risk of interest-rate volatility associated with planned issuances of debt
securities. Any gains and losses associated with these types of derivatives are recorded as
regulatory liabilities or assets, respectively, and amortized in accordance with regulatory
requirements, which is typically over the life of the newly issued debt.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<i>
</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <b><i>Non-Utility Operations</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our non-regulated retail energy-marketing subsidiary, WGEServices, also enters into certain
derivative contracts as part of managing the price risk associated with the sale and purchase of
natural gas and electricity to its retail customers. Derivative instruments are recorded at fair
value on our consolidated balance sheets. WGEServices does not designate these derivatives as
hedges under ASC Topic 815; therefore, changes in the fair value of these derivative instruments
are reflected in the earnings of our retail energy-marketing segment. These derivatives may cause
significant period-to-period volatility in earnings; however, this volatility will not change the
operating margins that WGEServices will ultimately realize from the sales to its customers.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt">     <b><i>Consolidated Operations</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Reflected in the tables below is information for WGL Holdings as well as Washington Gas. The
information for WGL Holdings includes derivative instruments for both Washington Gas and
WGEServices.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At June 30, 2010, the absolute notional amounts of our derivatives are as follows:
</div>
<div align="left">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="98%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="54%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="9"><b>Absolute Notional Amounts</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="9" style="border-bottom: 1px solid #000000"><b>of Open Positions on Derivative instruments</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><i>(In millions)</i></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Notional Amounts</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" colspan="8" style="border-bottom: 1px solid #000000"><b>June 30, 2010</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><b>Derivative transactions</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">WGL Holdings</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Washington Gas</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Natural Gas</b><i>(in therms)</i>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Asset Optimization
</div></td>
<td> </td>
<td> </td>
<td align="right">1,294.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,294.0</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Retail sales
</div></td>
<td> </td>
<td> </td>
<td align="right">6.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other risk-management activities
</div></td>
<td> </td>
<td> </td>
<td align="right">404.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">200.0</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Electricity </b><i>(in kWhs)</i>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Retail sales
</div></td>
<td> </td>
<td> </td>
<td align="right">1,685.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Other risk-management activities
</div></td>
<td> </td>
<td> </td>
<td align="right">16,141.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Interest Rate Swap </b><i>(notional amount in dollars)</i>
</div></td>
<td> </td>
<td align="left"> </td>
<td align="right">$75.0</td>
<td> </td>
<td> </td>
<td align="left"> </td>
<td align="right">$75.0</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="98%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="54%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="15%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" colspan="8" style="border-bottom: 1px solid #000000">September 30, 2009</td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left">Derivative transactions</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">WGL Holdings</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">Washington Gas</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Natural Gas<i>(in therms)</i>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Asset Optimization
</div></td>
<td> </td>
<td> </td>
<td align="right">1,445.9</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,445.9</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Retail sales
</div></td>
<td> </td>
<td> </td>
<td align="right">4.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Other risk-management activities
</div></td>
<td> </td>
<td> </td>
<td align="right">477.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">301.7</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Electricity <i>(in kWhs)</i>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Retail sales
</div></td>
<td> </td>
<td> </td>
<td align="right">2,057.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Other risk-management activities
</div></td>
<td> </td>
<td> </td>
<td align="right">6,006.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest Rate Swap <i>(notional amount in dollars)</i>
</div></td>
<td> </td>
<td align="left"> </td>
<td align="right">$24.0</td>
<td> </td>
<td> </td>
<td align="left"> </td>
<td align="right">$24.0</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<i>
</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt">     The following tables present the balance sheet classification for all derivative
instruments as of June 30, 2010.
</div>
<div align="left">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="98%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="17"><b>WGL Holdings, Inc.</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="17" style="border-bottom: 1px solid #000000"><b>Balance Sheet Classification of Derivative Instruments</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" colspan="17" style="border-bottom: 1px solid #000000"><b>As of June 30, 2010</b><sup style="font-size: 85%; vertical-align: text-top"> </sup></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" colspan="17" style="border-bottom: 1px solid #000000"><i>(In millions)</i><sup style="font-size: 85%; vertical-align: text-top"> </sup></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top"> </sup></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Derivative</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Derivative</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Netting of</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top"> </sup></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Assets</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Liabilities</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Collateral</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other current assets
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>36.6</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"><b>$</b></td>
<td align="right"><b>(18.2</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>-</b></td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>18.4</b></td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred charges and other assets - other<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>81.7</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(45.7</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right"><b>-</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>36.0</b></td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other current liabilities<sup style="font-size: 85%; vertical-align: text-top">(a)</sup>
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>5.0</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(39.1</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right"><b>0.2</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(33.9</b></td>
<td nowrap="nowrap"><b>)</b></td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred credits - other<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>2.3</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(27.4</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right"><b>2.9</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(22.2</b></td>
<td nowrap="nowrap"><b>)</b></td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total <sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>125.6</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"><b>$</b></td>
<td align="right"><b>(130.4</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>3.1</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"><b>$</b></td>
<td align="right"><b>(1.7</b></td>
<td nowrap="nowrap"><b>)</b></td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">As of September 30, 2009<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other current assets
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">23.6</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(7.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">15.8</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred charges and other assets - other<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">13.2</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5.4</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">7.8</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other current liabilities<sup style="font-size: 85%; vertical-align: text-top">(b)</sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">5.4</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(26.0</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">1.4</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(19.2</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred credits - other<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">24.4</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(48.0</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">3.7</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(19.9</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total <sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">66.6</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(87.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">5.1</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(15.5</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 9pt; margin-top: 3pt"><i>(a) includes interest rate swaps of ($5.1) million</i>
</div>
<div align="left" style="font-size: 9pt; margin-top: 3pt"><i>(b) includes interest rate swaps of ($0.7) million</i>
</div>
<div align="left">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="98%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="40%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="4%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="17"><b>Washington Gas Light Company</b></td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="17" style="border-bottom: 1px solid #000000"><b>Balance Sheet Classification of Derivative Instruments</b></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" colspan="17" style="border-bottom: 1px solid #000000"><b>As of June 30, 2010</b><sup style="font-size: 85%; vertical-align: text-top"> </sup></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" colspan="17" style="border-bottom: 1px solid #000000"><i>(In millions)</i><sup style="font-size: 85%; vertical-align: text-top"> </sup></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top"> </sup></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Derivative</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Derivative</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Netting of</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top"> </sup></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Assets</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Liabilities</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Collateral</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>Total</b></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other current assets<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>19.2</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"><b>$</b></td>
<td align="right"><b>(9.6</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>-</b></td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>9.6</b></td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred charges and other assets - other<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>69.5</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(45.7</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right"><b>-</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>23.8</b></td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other current liabilities<sup style="font-size: 85%; vertical-align: text-top">(a)</sup>
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>3.3</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(12.7</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right"><b>-</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(9.4</b></td>
<td nowrap="nowrap"><b>)</b></td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred credits - other<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>-</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(0.3</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right"><b>-</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(0.3</b></td>
<td nowrap="nowrap"><b>)</b></td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total <sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>92.0</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"><b>$</b></td>
<td align="right"><b>(68.3</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>23.7</b></td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">As of September 30, 2009<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other current assets<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">19.1</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(7.6</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">11.5</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred charges and other assets - other<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">8.0</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5.4</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2.6</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other current liabilities<sup style="font-size: 85%; vertical-align: text-top">(b)</sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">2.9</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(8.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5.6</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred credits - other<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td> </td>
<td align="right">23.9</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(27.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3.6</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Total <sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">53.9</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(49.0</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">4.9</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 3px double #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 9pt; margin-top: 3pt"><i>(a) includes interest rate swaps of ($5.1) million</i>
</div>
<div align="left" style="font-size: 9pt; margin-top: 3pt"><i>(b) includes interest rate swaps of ($0.7) million</i>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<i>
</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      The following tables present all gains and losses associated with derivative instruments
for the three months ended June 30, 2010 and 2009.
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
<td width="2%"> </td>
<td width="1%"> </td>
<td width="6%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="17" style="border-bottom: 1px solid #000000"><font style="font-size:10pt"><b>Gains and (Losses) on Derivative Instruments</b></font></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>WGL Holdings, Inc.</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Washington Gas Light Company</b></td>
<td> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
<td style="border-bottom: 1px solid #000000"> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In millions)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2">2009</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right" colspan="2"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="right" colspan="2">2009</td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Recorded to income
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Operating
revenues - non-utility
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"><b>$</b></td>
<td align="right"><b>(14.1</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(5.2</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>-</b></td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Utility cost of gas
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>0.5</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1.4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right"><b>0.5</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1.4</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Non-utility cost of energy-related sales
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>29.6</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(9.7</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right"><b>-</b></td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Recorded to regulatory assets/liabilities
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Gas costs
</div></td>
<td> </td>
<td> </td>
<td align="right"><b>0.8</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5.0</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right"><b>0.8</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(5.0</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Other
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(6.2</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right"><b>(6.2</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px"><b>Total</b>
</div></td>
<td> </td>
<td align="left"><b>$</b></td>
<td align="right"><b>10.6</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(18.5</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"><b>$</b></td>
<td align="right"><b>(4.9</b></td>
<td nowrap="nowrap"><b>)</b></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(3.6</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="17" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      The following table presents all gains and losses associated with derivative instruments for the
nine months ended June 30, 2010.
</div>
<div align="center">
<table style="font-size: 9pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="2%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="9" style="border-bottom: 1px solid #000000"><font style="font-size:10pt"><b>Gains and (Losses) on Derivative Instruments</b></font></td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left" colspan="9" style="border-bottom: 1px solid #000000"> </td>
</tr>
<tr style="font-size: 9pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In millions)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">WGL Holdings, Inc.</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Washington Gas Light Company</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Recorded to income
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Operating revenues - non-utility
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">4.1</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Utility cost of gas
</div></td>
<td> </td>
<td> </td>
<td align="right">19.6</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">19.6</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Non-utility cost of energy-related sales
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(19.8</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">-</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Recorded to regulatory assets/liabilities
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Gas costs
</div></td>
<td> </td>
<td> </td>
<td align="right">8.7</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8.7</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Other
</div></td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(6.0</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="right"> </td>
<td align="right">(6.0</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px"><b>Total</b>
</div></td>
<td> </td>
<td align="right"><b>$</b></td>
<td align="right"><b>6.6</b></td>
<td> </td>
<td> </td>
<td align="right"><b>$</b></td>
<td align="right"><b>22.3</b></td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      Certain of Washington Gas’s derivative instruments contain contract provisions that would
require collateral to be posted if the credit rating of Washington Gas’s debt falls below certain
levels. Similarly, certain of WGEServices derivative instruments contain contract provisions that
require collateral to be posted if the credit rating of WGL Holdings falls below certain levels or
if counterparties exposure to WGEServices exceeds a certain level. Due to counterparty exposure
levels, at June 30, 2010 and September 30, 2009, WGEServices’ had posted $3.1 million and $5.1
million of collateral related to its derivative liabilities that contained credit-related
contingent features. Washington Gas was not required to post any collateral at June 30, 2010. The
following tables show the aggregate fair value of all derivative instruments with credit-related
contingent features that are in a liability position, as well as the maximum amount of collateral
that would be required to be posted related to the net fair value of our derivative instruments if
the most intrusive credit-risk-related contingent features underlying these agreements were
triggered on June 30, 2010 and September 30, 2009, respectively.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<i>
</i>
</div>
<div align="center" style="font-size: 10pt; margin-top: 6pt"><b>Potential Collateral Requirements for Derivative Liabilities<br />
with Credit-risk-Contingent Features</b><br />
<div style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px"> 
</div>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom" style="font-size: 0pt">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="left"><i>(In millions)</i></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">WGL Holdings</td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3">Washington Gas</td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">June 30, 2010
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Derivative liabilities with credit-risk-contingent features
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">91.2</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">47.8</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Maximum potential collateral requirements
</div></td>
<td> </td>
<td> </td>
<td align="right">46.1</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5.4</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">September 30, 2009
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 1px solid #000000"> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Derivative liabilities with credit-risk-contingent features
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">67.5</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">38.9</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Maximum potential collateral requirements
</div></td>
<td> </td>
<td> </td>
<td align="right">29.0</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3.1</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td colspan="9" align="left" style="border-top: 2px solid #000000"> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt">      Neither Washington Gas nor WGEServices enters into derivative contracts for speculative
purposes.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">      <b><i>Concentration of Credit Risk</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      Both Washington Gas and WGEServices are exposed to credit risk associated with agreements with
wholesale counterparties that are accounted for as derivative instruments. We have credit policies
in place that are designed to mitigate credit risk associated with wholesale counterparties through
a requirement for credit enhancements including, but not limited to, letters of credit, parent
guarantees and cash collateral when deemed necessary. For certain counterparties or their
guarantors that meet this policy’s credit worthiness criteria, both Washington Gas and WGEServices
grant unsecured credit which is continuously monitored. Additionally, our agreements with wholesale
counterparties contain netting provisions which allow the receivable and payable exposure to/from
each counterparty to be offset. At June 30, 2010, three counterparties represented over 10% of
Washington Gas’s credit exposure to wholesale derivative counterparties, for a total credit risk of
$28.8 million. WGEServices had two counterparties representing over 10% of its credit exposure to
wholesale counterparties for a credit risk of $0.1 million at June 30, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      <b>WEATHER-RELATED INSTRUMENTS</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      <b><i>Regulated Utility Operations</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      On September 21, 2009, Washington Gas executed a heating degree day (HDD) derivative contract
to manage its financial exposure to variations from normal weather in the District of Columbia
during fiscal year 2010. Under this contract, Washington Gas purchased protection against net
revenue shortfalls due to warmer-than-normal weather and sold to the counterparty the right to
receive the benefit when weather is colder than normal. This derivative contract resulted in a
payment to Washington Gas of $2.1 million on the date of execution.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      Our weather protection instruments are accounted for under ASC Topic 815. For weather
derivative contracts executed by a premium payment, benefits or losses are recognized to the extent
actual HDDs are less than or greater than the contracted HDDs. The cost of our weather-related
instruments is amortized based on the pattern of normal HDDs over the coverage period. For weather
derivative contracts for which we receive a net option premium, we record the receipt as a
liability and mark the contract to fair value each period. The expenses or benefits that are
derived from our weather-related instruments are not considered in establishing the retail rates of
Washington Gas.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      During the three months ended June 30, 2010 and 2009, Washington Gas recorded a total pre-tax
gain of $0.2 million and a pre-tax loss of $0.2 million, respectively, including premium costs and
any fair value adjustments related to its weather derivatives. During the nine months ended June
30, 2010 and 2009, Washington Gas recorded a total pre-tax gain of $1.3 million and a pre-tax loss
of $3.3 million, respectively, including premium costs and any fair value adjustments related to
its weather derivatives. Benefits and expenses associated with Washington Gas’s weather-related
instruments are recorded to “Operation and maintenance” expense.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      <b><i>Non-Utility Operations</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">      WGEServices utilizes weather-related derivatives for managing the financial effects of weather
risks. These derivatives cover a portion of WGEServices’ estimated revenue or energy-related cost
exposure to variations in heating or
cooling degree days.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: Helvetica,Arial,sans-serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
<i>
</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">These contracts may provide for payment to or from WGEServices of a
fixed-dollar amount for every degree day over or under specific levels during the calculation
period, depending upon the type of contract executed. For the three months ended June 30, 2010,
WGEServices recorded pretax expenses of $1.2 million. For the nine months ended June 30, 2010,
WGEServices recorded pre-tax expenses of $2.3 million. For the three months ended June 30, 2009,
WGEServices recorded a pretax gain of $0.2 million. For the nine months ended June 30, 2009,
WGEServices recorded pre-tax expenses of $1.0 million, related to these derivatives.
</div>
</div>
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This element can be used to disclose the entity's entire derivative instruments and hedging activities disclosure as a single block of text. Describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising there from, and the amounts of and methodologies and assumptions used in determining the amounts of such items.
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 45
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44
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