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          <NonNumbericText>&lt;div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.5; MARGIN-RIGHT: 0pt" align="left"&gt;&lt;font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"&gt;12.&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;REGULATORY PROCEEDINGS&lt;/font&gt;&lt;/div&gt;&lt;div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.5"&gt;&lt;br /&gt;&lt;/div&gt;&lt;div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.5; MARGIN-RIGHT: 0pt" align="left"&gt;&lt;font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"&gt;&lt;font style="DISPLAY: inline; FONT-WEIGHT: bold"&gt;Rate proceeding.&amp;#160;&amp;#160;&lt;/font&gt;On March 25, 2009, the ICC issued an order approving an increase in base revenues of approximately $69 million, a rate of return on rate base of 7.58 percent and a rate of return on equity of 10.17 percent.&amp;#160;&amp;#160;The order also approved an energy efficiency rider.&amp;#160;&amp;#160;Nicor Gas placed the rates approved in the March 25, 2009 order into effect on April 3, 2009.&lt;/font&gt;&lt;/div&gt;&lt;div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.5"&gt;&lt;br /&gt;&lt;/div&gt;&lt;div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.5; MARGIN-RIGHT: -9pt" align="left"&gt;&lt;font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"&gt;On April 24, 2009, Nicor Gas filed a request for rehearing with the ICC concerning the capital structure contained in the ICC's rate order contending the company's return on rate base should be higher.&amp;#160;&amp;#160;On October 7, 2009, the ICC issued its decision on rehearing in which it increased the annual base revenues approved for Nicor Gas in the March 25, 2009 order by approximately $11 million, increasing the rate of return on rate base to 8.09 percent.&amp;#160;&amp;#160;Nicor Gas placed the rates approved in the rehearing decision into effect on a prospective basis on October 15, 2009.&amp;#160;&amp;#160;Therefore, the total annual base revenue increase authorized in the rate case originally filed by the company in April 2008 is approximately $80 million.&lt;/font&gt;&lt;/div&gt;&lt;div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.5"&gt;&lt;br /&gt;&lt;/div&gt;&lt;div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.5; MARGIN-RIGHT: 0pt" align="left"&gt;&lt;font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"&gt;&lt;font style="DISPLAY: inline; FONT-WEIGHT: bold"&gt;Bad debt rider.&lt;/font&gt;&amp;#160;&amp;#160;In September 2009, Nicor Gas filed for approval of a bad debt rider with the ICC under an Illinois state law which took effect in July 2009.&amp;#160;&amp;#160;On February 2, 2010, the ICC issued an order approving the company's proposed bad debt rider.&amp;#160;&amp;#160;This rider provides for recovery from customers of the amount over the benchmark for bad debt expense established in the company's rate cases.&amp;#160;&amp;#160;It also provides for refunds to customers if bad debt expense is below such benchmarks.&lt;/font&gt;&lt;/div&gt;&lt;div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.5"&gt;&lt;br /&gt;&lt;/div&gt;&lt;div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.5; MARGIN-RIGHT: 0pt" align="left"&gt;&lt;font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"&gt;As a result of the February 2010 order, Nicor Gas recorded in the first quarter of 2010 a net recovery related to 2008 and 2009 of $31.7 million; substantially all of this amount is expected to be collected in 2010.&amp;#160;&amp;#160;The benchmark, against which 2010 actual bad debt expense will be compared, is approximately $63 million.&lt;/font&gt;&lt;/div&gt;</NonNumbericText>
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