-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HnJK/fOya/t7X94hImuFzZbRy1Myp/p2ooC84+6fFVt4NYi6tr0iNhoMdiQ4eGy7 rfgvWe632h0SG+W+uhlWwg== 0000008154-95-000035.txt : 19951226 0000008154-95-000035.hdr.sgml : 19951226 ACCESSION NUMBER: 0000008154-95-000035 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951222 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLANTA GAS LIGHT CO CENTRAL INDEX KEY: 0000008154 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 580145925 STATE OF INCORPORATION: GA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09905 FILM NUMBER: 95603886 BUSINESS ADDRESS: STREET 1: 303 PEACHTREE ST NE STREET 2: ONE PEACHTREE CENTER CITY: ATLANTA STATE: GA ZIP: 30308 BUSINESS PHONE: 4045844000 MAIL ADDRESS: STREET 1: PO BOX 4569 CITY: ATLANTA STATE: GA ZIP: 30302 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 1995 Commission File Number 1-9905 ATLANTA GAS LIGHT COMPANY (Exact name of registrant as specified in its charter) Georgia 58-0145925 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 303 Peachtree Street, N.E., Atlanta, Georgia 30308 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 404-584-4000 Securities registered pursuant to Section 12(b) of the Act: Common Stock, $5 Par Value New York Stock Exchange Depositary Preferred Shares New York Stock Exchange (Title of Class) (Name of exchange on which registered) Securities registered pursuant to Section 12(g) of the Act: Cumulative Preferred Stock, $100 Par Value (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing price of such stock as of November 30, 1995: $1,052,321,837. The number of shares of Common Stock outstanding as of November 30, 1995 was 55,023,364 shares (as adjusted for a 2-for-1 stock split paid in the form of a 100% stock dividend on December 1, 1995). DOCUMENTS INCORPORATED BY REFERENCE: Portions of the 1995 Annual Report for the fiscal year ended September 30, 1995 are incorporated herein by reference in Part II and portions of the Proxy Statement for the 1996 Annual Meeting of Shareholders are incorporated herein by reference in Part III. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] TABLE OF CONTENTS Page PART I Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . 13 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 13 Item 4. Submission of Matters to a Vote of Security Holders . . . . 16 Item 4.(A)Executive Officers of the Registrant . . . . . . . . . . . 17 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . 18 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . 18 Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition . . . . . . . . . . . . . . . . . . . 18 Item 8. Financial Statements and Supplementary Data . . . . . . . . 18 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. . . . . . . . . . . . . . . . . . . 19 PART III Item 10. Directors and Executive Officers of the Registrant. . . . . 19 Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . 19 Item 12. Security Ownership of Certain Beneficial Owners and Management.19 Item 13. Certain Relationships and Related Transactions. . . . . . . 19 PART IV Item 14.Exhibits, Financial Statement Schedules and Reports on on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . 20 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Part I Item 1. Business GENERAL Atlanta Gas Light Company (AGL) was incorporated on February 16, 1856 by a special act of the Georgia General Assembly. Unless noted specifically or otherwise required by the context, reference to the "Company" includes AGL and its wholly owned subsidiaries, AGL Energy Services, Inc., AGL Investments, Inc., Chattanooga Gas Company (Chattanooga), Georgia Gas Company, Georgia Gas Service Company, Georgia Energy Company and Trustees Investments, Inc. The Company is predominantly engaged in the distribution of natural gas to customers in central, northwest, northeast and southeast Georgia and the Chattanooga, Tennessee area. The Company's major service area is the ten county metropolitan Atlanta area. Metropolitan Atlanta has an estimated population of 2.9 million, constituting approximately 41% of the total population of Georgia. Approximately 66% of the Company's natural gas customers are located in the Atlanta metropolitan area. These customers consume 45% of the natural gas sold and transported and provide approximately 63% of the gas revenues of the Company. The Company's other principal service areas in Georgia are the Athens, Augusta, Brunswick, Macon, Rome, Savannah and Valdosta areas. During the fiscal year ended September 30, 1995, the Company supplied natural gas service to an average of approximately 1.3 million customers in Georgia including 531 centrally metered customers serving 52,555 apartment units. The Company provides natural gas service in 229 cities and surrounding areas in Georgia. In addition to the Company's service areas in Georgia, natural gas service was supplied by Chattanooga to an average of approximately 49,000 customers in Chattanooga and Cleveland, Tennessee, and surrounding portions of Hamilton County and Bradley County, Tennessee during the fiscal year ended September 30, 1995. All of the Company's natural gas service area is certificated by the Georgia Public Service Commission (Georgia Commission) and the Tennessee Public Service Commission (Tennessee Commission). The areas served by the Company in Georgia outside the metropolitan areas described in the preceding paragraph were for many years primarily agricultural, with timber, poultry, cattle, cotton, tobacco, peanuts and soy beans among the principal products. However, both industry and agriculture are currently important to the economies of these areas. In addition to the industries that use local natural resources such as pulpwood, clay, marble, talc and kaolin, the Company serves a number of nationally known organizations that operate installations in Georgia. These operations increase substantially the diversification of industry in the Company's service area. During fiscal 1995, the Company added approximately 37,000 customers, based on 12-month average calculations, representing an increase over the prior year of approximately 2.8%. Substantially all of this growth was in the residential and small commercial service categories. The ten largest customers of the Company accounted for 3.1% and 1.8% of total operating revenues and operating margin, respectively, for the fiscal year ended September 30, 1995. For the same period, volumes of gas sold and transported to the ten largest customers accounted for 12.6% of total volumes of gas sold and transported. Consolidated operating revenues during the fiscal year ended September 30, 1995 were $1.1 billion, of which approximately 57% was derived from residential customers, 23% from commercial customers, 16% from industrial customers, 2% from transportation customers and 2% other. In addition to its predominant business of natural gas distribution, the Company, through wholly owned subsidiaries, serves approximately 17,000 customers in Georgia and Alabama with liquefied petroleum gas and also has interests in gas production activities, real estate holdings and natural gas vehicle conversions. The aggregate net income contributed by diversified operations in fiscal 1995 was $0.9 million. On August 31, 1995, the Company signed an agreement with Sonat Inc. (Sonat) to form a joint venture to acquire the business of Sonat Marketing Company, a wholly owned subsidiary of Sonat. The joint venture, Sonat Marketing Company L.P. (Sonat Marketing), offers natural gas sales, transportation, risk management and storage services to natural gas users in key natural gas producing and consuming areas of the United States. The Company invested $32.6 million for a 35% ownership interest in Sonat Marketing. The Company's 35% investment is being accounted for under the equity method. The Company has certain rights for a period of five years to sell its interest to Sonat at a predetermined fixed price, as defined, or for fair market value at any time. Through September 30, 1995, the Company's historic maximum daily sendout was 1.943 billion cubic feet which occurred on January 18, 1994. The mean temperature in the metropolitan Atlanta area that day was 23 degrees F. The Company's business is highly seasonal in nature and heavily dependent on weather because of the substantial use of gas for heating purposes. However, the Company has implemented weather normalization adjustment riders. The weather normalization adjustment riders, which were approved by the Georgia and Tennessee Commissions, offset the impact that either unusually cold or unusually warm weather has upon the Company's operating margin, earnings and cash flow and are designed to stabilize the Company's operating margin and earnings at the levels which would occur with normal weather. For the effects of seasonal variations on the Company's quarterly earnings, see Note 15 in Notes to Consolidated Financial Statements in the Company's 1995 Annual Report to Shareholders. On September 30, 1995, the Company had 2,941 employees. Approximately 750 of AGL's employees are covered by provisions of collective bargaining agreements with the General Teamsters Local Union No. 528. The master agreement with the Teamsters provides for a general wage increase of 3% effective September 18, 1995. This agreement expires September 15, 1996. The Company also has a collective bargaining agreement covering approximately 60 employees in Savannah, Georgia. A three-year agreement with the International Union of Operating Engineers, Local Union No. 474, was ratified on November 9, 1994. The contract stipulates that wages will be negotiated in 1995 and 1996. Wages subsequent to November 9, 1995 are still being negotiated. The Company also has approximately 60 employees at its Chattanooga and Cleveland, Tennessee facilities covered by an agreement with the Utility Workers Union of America, Local Union No. 461. A new three-year agreement with the Utility Workers became effective on November 28, 1994, and specifies that wages will be negotiated in 1995 and 1996. Wages subsequent to November 28, 1995 are still being negotiated. The Company holds franchises, permits, certificates and rights which management believes are sufficient for the operation of its properties without any substantial restrictions and adequate for the operation of its gas distribution business. Corporate Restructuring In November 1994, the Company announced a corporate restructuring plan and began its implementation during fiscal 1995. As a result of the restructuring, the Company has combined offices and established centralized customer service centers. During 1995, the Company reduced the average number of employees by approximately 500 through voluntary retirement and severance programs and attrition. The Company recorded $43.1 million, after income taxes, in restructuring-related expenses during 1995. As a result of the restructuring, the Company expects considerable reductions in future annual operating expenses, which should enable the Company to be more competitive. Subsequent Event On November 27, 1995, the Company filed with the Securities and Exchange Commission (SEC) and the Georgia Commission to form a holding company, AGL Resources Inc. (the Holding Company). The Holding Company would become the parent corporation of Atlanta Gas Light Company and its subsidiaries. In addition to the SEC and Georgia Commission approvals, the Company will seek shareholder approval of the reorganization at the 1996 annual shareholders meeting. If approved, holders of Atlanta Gas Light Company common stock will become holders of the Holding Company common stock, and the present stock certificates representing Atlanta Gas Light Company common stock will represent the Holding Company common stock on a share-for-share basis. The Holding Company common stock is expected to be approved for listing on the New York Stock Exchange. If requisite approvals are obtained, it is anticipated that the reorganization into holding company structure will be completed during the second fiscal quarter of 1996. The purpose of the formation of the holding company is to separate the Company's regulated business from its unregulated business, which will allow the Company to adapt to the increasingly deregulated energy marketplace and take advantage of potential business opportunities. The remainder of this page was intentionally left blank.
Gas Sales and Statistics FOR THE YEARS ENDED SEPTEMBER 30 1995 1994 1993 1992 1991 Operating Revenues (Millions of Dollars) Sales of Gas Residential $ 610.6 $ 700.7 $ 658.2 $ 575.7 $ 550.2 Commercial 243.2 285.8 268.1 231.5 226.0 Industrial 169.4 172.1 154.2 140.9 144.1 Transportation Revenues 23.9 22.6 33.8 36.6 37.8 Miscellaneous Revenues 15.9 18.7 16.0 9.9 5.7 Total $ 1,063.0 $ 1,199.9 $ 1,130.3 $ 994.6 $ 963.8 Therms Sold (Millions) Residential 916.8 1,003.1 1,001.4 915.4 819.5 Commercial 454.0 478.9 478.5 433.9 402.8 Industrial 526.0 424.8 388.7 445.0 455.1 Therms Transported 722.8 697.4 795.6 901.8 862.6 Total 2,619.6 2,604.2 2,664.2 2,696.1 2,540.0 Number of Customers (Average in Thousands) Residential 1,250.4 1,215.2 1,182.7 1,152.2 1,124.0 Commercial 100.0 98.0 95.7 93.7 92.0 Industrial 2.6 2.5 2.5 2.5 2.5 Total 1,353.0 1,315.7 1,280.9 1,248.4 1,218.5 Sales, Average Residential Customer Gas Sold (Therms) 733 825 847 794 729 Revenue (Dollars) $ 488.32 $ 576.61 $ 556.52 $ 499.65 $ 489.50 Revenue Per Therm (Cents) 66.6 69.9 65.7 62.9 67.1 Degree Days - Atlanta Area 30-Year Normal 2,991 2,991 3,021 3,021 3,021 Actual 2,121 2,565 2,852 2,552 2,273 Percentage of Actual to 30-Year Normal 70.9 85.8 94.4 84.5 75.2 Gas Account (Millions of Therms) Natural Gas Purchased 1,406.9 1,453.6 1,629.9 1,555.4 1,563.0 Natural Gas Withdrawn from Storage 520.7 500.3 276.4 263.3 148.2 Gas Transported 722.8 697.4 795.6 901.8 862.6 Total Send-Out 2,650.4 2,651.3 2,701.9 2,720.5 2,573.8 Less Unaccounted For 20.4 37.2 29.0 16.2 24.4 Company Use 10.4 9.9 8.7 8.2 9.4 Sold to Customers and Transported 2,619.6 2,604.2 2,664.2 2,696.1 2,540.0 Cost of Gas (Millions of Dollars) Natural Gas Purchased $ 389.4 $ 550.1 $ 595.7 $ 487.9 $ 502.5 Natural Gas Withdrawn from Storage 182.4 186.7 105.3 102.6 77.4 Total $ 571.8 $ 736.8 $ 701.0 $ 590.5 $ 579.9 Gas Plant - End of Year (Millions of Dollars) Gross Plant $ 1,919.9 $ 1,833.2 $ 1,740.6 $ 1,634.8 $ 1,517.0 Net Plant $ 1,336.6 $ 1,279.6 $ 1,217.9 $ 1,157.4 $ 1,081.4 Gross Plant Investment per Customer (Thousands of Dollars) $ 1.4 $ 1.4 $ 1.4 $ 1.3 $ 1.2 Capital Expenditures (Millions of Dollars) $ 121.7 $ 122.5 $ 122.2 $ 132.9 $ 141.9 Gas Mains - Miles of 3" Equivalent 28,520 27,972 27,390 26,936 26,623 Employees - Average 3,249 3,764 3,764 3,794 3,820 Average Btu Content of Gas 1,027 1,032 1,027 1,024 1,025
GAS SUPPLY SERVICES, PRICING AND COMPETITION General The Company is served directly by four interstate pipelines: Southern Natural Gas Company (Southern), South Georgia Natural Gas Company (South Georgia), Transcontinental Gas Pipe Line Corporation (Transco) and East Tennessee Natural Gas Company (East Tennessee) in combination with its upstream pipeline, Tennessee Gas Pipeline Company (Tennessee), the parent company and primary source of gas for East Tennessee. The implementation of Federal Energy Regulatory Commission (FERC) Order 636 mandated the unbundling of interstate pipeline sales service and established certain open access transportation regulations. The unbundling of pipeline sales service requires local distribution companies (LDCs), such as AGL and Chattanooga, to contract directly and separately for wellhead gas supply, underground storage and firm transportation services. Unbundling also shifts the responsibility and risk of securing a reliable and cost-effective gas services portfolio from the pipelines to LDCs such as AGL and Chattanooga (See Part I, Item 1, "Federal Regulatory Matters - Order 636.") As a result of Order 636, gas purchasing decisions made by LDCs may be subject to greater review by state regulatory commissions. Prior to the implementation of Order 636, the cost of bundled pipeline sales service was reviewed and approved by the FERC. Because of diminished review by the FERC, LDCs face greater accountability and risks from their purchasing practices for gas supply, transportation and storage services. During the 1994 session of the Georgia General Assembly, legislation was passed that provides for annual review and approval by the Georgia Commission of AGL's gas services portfolio on a prospective basis. The legislation requires the filing of a gas supply plan with the Georgia Commission on or before August 1 of each year for the subsequent fiscal year. Purchases made pursuant to an approved plan are recovered under the purchased gas provisions of AGL's rate schedules. On August 1, 1995, AGL filed its gas supply plan consisting of an array of gas supply, transportation and storage options designed to provide reliable service to firm customers at the best cost for fiscal year 1996. On September 14, 1995, the Georgia Commission approved AGL's gas supply plan for fiscal year 1996 (See Part I, Item 1, "State Regulatory Matters - Gas Supply Filing.") Firm Pipeline Transportation and Underground Storage The table on the following page shows the amount of firm transportation and describes the types and amounts of underground storage that both AGL and Chattanooga have elected or been assigned under Order 636. The table also shows services that were not affected by the implementation of Order 636. Production Area Supplemental Maximum Underground Underground Firm Storage Storage Trans- Maximum Maximum portation Withdrawal Withdrawal Expiration Mcf/Day Mcf/Day(1) Mcf/Day(2) Date Atlanta Gas Light Company Southern Firm Transportation 1,000 June 30, 2007 Firm Transportation 650,129 February 28, 1998 Firm Transportation 110,905 April 30, 2007 CSS 406,222 February 28, 1998 ANR-50 113,000 March 31, 2003 ANR-100 55,500 March 31, 2003 Transco Firm Transportation 107,600 March 31, 2010 Firm Transportation 15,000 July 1, 2005 Firm Transportation 6,222 March 17, 2008 Firm Transportation 4,500 October 31, 2009 WSS 70,588 March 31, 2010 Eminence Storage 12,011 March 31, 1997(3) Eminence Storage 20,298 March 31, 2001(3) GSS 124,935 March 31, 1992(3) LSS 17,430 March 31, 1994(3) SS-1 20,211 March 31, 2009 LGA 41,522 October 31, 1991(3) Tennessee/East Tennessee Firm Transportation 62,000 November 1, 2000(3) FSS 20,000 November 1, 2000 FSM 8,533 November 1, 2000 FSP 1,837 November 1, 2000 CNG 3,421 March 31, 2001 Southern/South Georgia Firm Transportation 11,877 April 30, 2007 ANR-100 708 March 31, 2004 CSS 6,764 February 28, 1998 Total 969,233 549,674 373,306 Chattanooga Gas Company Southern Firm Transportation 4,756 June 30, 2007 Firm Transportation 13,944 February 28, 1998 Firm Transportation 3,300 April 30, 2007 CSS 14,051 February 28, 1998 Tennessee/East Tennessee Firm Transportation 45,000 November 1, 2000(3) FSS 12,300 November 1, 2000 FSM 6,193 November 1, 2000 FSP 1,333 November 1, 2000 CNG 2,483 March 31, 2001 Total 67,000 36,360 (1)Production area storage requires a complementary amount of the firm transportation capacity identified in the first column to move storage gas withdrawals to the Company's service area. (2)Supplemental underground storage includes delivery to the Company's service area and does not require any of the firm transportation capacity identified in the first column. (3)The Company is operating under Natural Gas Act (NGA) certificate authority. Wellhead Supply AGL and Chattanooga have entered into firm wellhead supply contracts of approximately 398,000 Mcf/day and approximately 26,000 Mcf/day, respectively, to supply their firm transportation and underground storage requirements. The Company anticipates entering into additional firm wellhead supply contracts by the end of December 1995 of up to approximately 104,000 Mcf/day for AGL and approximately 7,800 Mcf/day for Chattanooga. The Company also purchases spot market gas as needed during the year. Liquefied Natural Gas To meet the demand for natural gas on the coldest days of the winter months, the Company must also maintain sufficient supplemental quantities of liquefied natural gas (LNG) in its supply portfolio. The Company's three strategically located Georgia-based LNG plants -- north and south of Atlanta and near Macon -- provide a combined maximum daily supplement of approximately 665,000 Mcf and a combined usable storage capacity of 72 million gallons, equivalent to approximately 5,952,000 Mcf. Chattanooga's LNG plant provides a maximum daily supplement of approximately 90,000 Mcf and has a usable storage capacity of 13 million gallons, equivalent to approximately 1,076,000 Mcf. Competition The Company competes to supply natural gas to interruptible customers who are capable of switching to alternative fuels, including fuel oil, coal, propane, electricity and, in some cases, combustible wood by-products. The Company also competes to supply gas to interruptible customers who might seek to bypass the Company's distribution system. On February 17, 1995, the Georgia Commission approved a settlement that permits the Company to negotiate contracts with customers who have the option of bypassing the Company's facilities (Bypass Customers) and receiving natural gas from other suppliers. The bypass avoidance contracts (Negotiated Contracts) can be renewable, provided that the initial term does not exceed five years, unless a longer term specifically is authorized by the Georgia Commission. The rate provided by the Negotiated Contract may be lower than AGL's filed rate, but not less than AGL's marginal cost of service to the potential Bypass Customer. Service pursuant to a Negotiated Contract may commence without Georgia Commission action, once a copy of the contract is filed with the Georgia Commission. Negotiated Contracts may be rejected by the Georgia Commission within 90 days of filing; absent such action, however, the Negotiated Contracts remain effective. None of the Negotiated Contracts filed with the Georgia Commission have been rejected. The settlement also provides for a bypass loss recovery mechanism to operate until the earlier of September 30, 1998, or the effective date of new rates for AGL resulting from a general rate case. Under the recovery mechanism, AGL is allowed to recover from other customers 75% of the difference between (a) the non-gas cost revenue that was received from the potential Bypass Customer during the most recent twelve month period and (b) the non-gas cost revenue that is calculated to be received from the lower Negotiated Contract rate applied to the same volumetric level. With respect to the remaining 25% of the difference, AGL is allowed to retain a 44% share of capacity release revenues in excess of $5 million until AGL is made whole for discounts from Negotiated Contracts. To the extent that there are additional capacity release revenues, AGL is allowed to retain 15% of such amounts. In addition to Negotiated Contracts, which are designed to serve existing and potential Bypass Customers, the Company's Interruptible Transportation and Sales Maintenance (ITSM) Rider continues to permit discounts for short-term transactions to compete with alternative fuels. Revenue shortfalls, if any, from interruptible customers as measured by the test-year interruptible revenues determined by the Georgia Commission in the Company's 1993 rate case will continue to be recovered under the ITSM Rider. The settlement approved by the Georgia Commission also provides that AGL may file contracts (Special Contracts) for Georgia Commission approval if the service cannot be provided through the ITSM Rider, existing rate schedules or the Negotiated Contract procedures. An example of an application for a Special Contract would be to provide for a long-term service contract to compete with alternative fuels where physical bypass was not the relevant competition. Since the Georgia Commission's order approving the settlement, AGL has filed, and is providing service pursuant to, 40 Negotiated Contracts. Additionally, the Georgia Commission has approved Special Contracts with four additional customers. On November 21, 1995, the Georgia Commission issued a Natural Gas Notice of Inquiry (NOI) which sets forth a procedure and schedule for soliciting comments from Georgia LDCs and other interested parties concerning how to work together to move the local distribution of natural gas toward a more competitive future. Among other opinions expressed within the NOI, the Georgia Commission recommended pursuing a legislative solution to establish regulatory rules that will allow for an efficient and customer-responsive retail natural gas sector. The schedule calls for comments from interested parties in December 1995 and January 1996. FEDERAL REGULATORY MATTERS Order 636 In 1992, FERC issued Order 636 which, among other things, mandated the unbundling of interstate pipeline sales service and established certain open access transportation regulations that became effective beginning in the 1993-1994 heating season. In Order 636, FERC acknowledged that, without special recovery mechanisms, certain costs that previously were recovered in the pipelines' rate for bundled sales services no longer could be recovered by the pipelines in a restructured environment. Those costs, referred to as transition costs, include such things as unrecovered gas costs, gas supply realignment costs and various stranded costs resulting from unbundling. Accordingly, Order 636 included a recovery mechanism that allows the pipeline companies to pass through to their customers any prudently incurred transition costs attributable to compliance with Order 636. The Company, based on filings with FERC by its pipeline suppliers, estimates that its portion of such costs from all of its pipeline suppliers would be approximately $97.7 million. Such filings currently are pending before FERC for final approval, and the transition costs are being collected subject to refund. Approximately $71 million of such costs have been incurred by the Company as of November 30, 1995, and are being recovered from its customers under the purchased gas provisions of the Company's rate schedules. Transition costs have not affected the total cost of gas to the Company's customers significantly because (1) the Company purchases its wellhead gas supplies based upon market prices that are below the cost of gas previously embedded in the bundled pipeline sales service rates and (2) many elements of transition costs previously were embedded in the rates for the pipelines' bundled sales service. See Part I, Item 1, "State Regulatory Matters - Gas Supply Filing" in this Form 10-K for further discussion of recovery of gas costs. Details concerning the status of the Order 636 restructuring proceedings involving the pipelines that serve the Company directly are set forth below. SOUTHERN Restructuring Proceeding. The Company has filed several petitions for review with the United States Court of Appeals for the District of Columbia Circuit concerning various aspects of Southern's restructuring. These aspects include favorable treatment of small customers, rate mitigation, mitigation of gas supply realignment (GSR) costs, and tying of firm storage service to firm transportation service. The Company's petitions for review currently are pending with the court, but will be withdrawn if the settlement between Southern and its customers, discussed below, is approved by the FERC. GSR Cost Recovery Proceeding. Southern has made several quarterly GSR recovery filings, has filed on a monthly basis to revise its GSR billing determinants, and has made quarterly filings to recover other transition costs. The Company has entered into a settlement agreement with Southern and other customers to resolve virtually all pending Southern proceedings before the FERC and the courts. The FERC approved the settlement on September 29, 1995, but the order approving the settlement is subject to rehearing before the agency. The settlement would, if approved by the FERC, resolve Southern's pending general rate proceedings, which relate to Southern's rates charged from January 1, 1991, through the present. The settlement also provides for rate reductions and refund offsets against GSR costs. It would also resolve Southern's Order 636 transition cost proceedings and provide for revisions to Southern's tariff. Assuming the settlement is approved, the Company's share of Southern's transition costs is estimated to be $84.5 million. As of November 30, 1995, $65.8 million of such costs have been incurred by the Company. TENNESSEE Restructuring Proceeding. The Company has filed several petitions for review with the United States Court of Appeals for the District of Columbia Circuit concerning various aspects of Tennessee's restructuring. These aspects include favorable treatment for small customers, rate mitigation and others. The Company also has filed a petition for review of FERC orders concerning Tennessee's service obligation to the Company. The Company's petitions for review currently are pending with the court. GSR Cost Recovery Proceeding. Tennessee has made several quarterly GSR recovery filings. The Company's estimated liability as a result of Tennessee's prior GSR recovery filings is approximately $8.4 million, subject to possible reduction based upon the hearing FERC established to investigate Tennessee's costs. The Company is actively participating in Tennessee's GSR cost recovery proceeding. As of November 30, 1995, $4.6 million of such costs have been incurred by the Company. Columbia Gas Transmission Corporation. The Company has filed a petition for review of a FERC order approving a settlement between Tennessee and Columbia Gas Transmission Corporation (Columbia). The settlement resolves issues relating to Columbia's upstream capacity on Tennessee's system, as well as certain other matters between the two pipelines. The Company has sought review of the order on the ground that the FERC has failed to ensure that Tennessee's customers will be made whole with respect to Tennessee's agreement to permit Columbia to abandon certain contracts for capacity on Tennessee's system. FERC Rate Proceedings The Company also is participating in various rate proceedings before the FERC involving applications for rate changes filed by its pipeline suppliers, Southern, Transco, Tennessee and South Georgia. To the extent that these cases have not been settled, as described below, the rates filed in these proceedings have been accepted, and made effective subject to refund and the outcome of the FERC proceedings. SOUTHERN The Company is participating in two Southern rate proceedings which affect two prior rate periods, from January 1, 1991 through August 31, 1992, and from September 1, 1992 through April 30, 1993. In each case, the FERC has approved partial settlement offers. The former settlement reserved certain issues for briefing before the FERC, but procedures have not yet been established for such briefing. The latter settlement reserved one contested issue for hearing and decision. This issue concerns Southern's recovery of costs associated with its construction of facilities to attach certain offshore gas supplies. An Administrative Law Judge (ALJ) has ruled that an earlier settlement bars recovery of the costs in question. This ruling currently is pending review by the FERC. Southern's current rate case involves Southern's rates from May 1, 1993 forward, and also involves undue discrimination claims raised by the Company against Southern. These claims arise out of a settlement between Southern and Arcadian Corporation (Arcadian) related to the bypass of the Company's system and certain discounted transportation arrangements entered into between Southern and Arcadian as a part of the settlement. See Part I, Item 3, "Legal Proceedings." As noted previously, the Company has entered into a settlement agreement with Southern that will, if approved by the FERC, resolve virtually all issues between the Company and Southern for Southern's outstanding rate proceedings, including the undue discrimination issue raised by the Company in Southern's current rate case. SOUTH GEORGIA On February 9, 1995, an ALJ issued an initial decision in South Georgia's rate case that South Georgia's interruptible transportation (IT) rate should be based on a load factor of 100% on a prospective basis. AGL supported the 100% load factor IT rate at the hearing in this proceeding. South Georgia and an intervenor have filed exceptions to the initial decision with the FERC, and AGL has responded to the exceptions and supported the initial decision. The FERC has not yet acted on the exceptions. TENNESSEE On July 24, 1995, a FERC ALJ issued an initial decision addressing rates to be charged by Tennessee on a prospective basis. Among other matters, the ALJ approved Tennessee's proposal to decrease the load factor used to calculate its IT rates from 125% to 100%. The Company supported a further reduction to 50%, but argued that 100% would be the highest reasonable load factor. The ALJ also rejected challenges by the Company and others to Tennessee's "straight-fixed-variable-to-the-wellhead" rate design for firm transportation rates. Various parties, including the Company, have filed exceptions to the initial decision, which therefore is not yet final. In addition, on December 30, 1994, Tennessee filed a new general rate case seeking an increase of approximately $117.9 million annually, and reflecting numerous modifications to its tariff. The impact of that rate increase on the Company is approximately $2.6 million annually. The FERC has accepted Tennessee's filing and has set it for hearing. The FERC has also accepted Tennessee's motion filing to implement slightly lower rates than originally sought by Tennessee, effective July 1, 1995, subject to refund and the outcome of the hearing. The Company is actively participating in the hearing procedures. TRANSCO On July 19, 1995, a FERC ALJ rejected Transco's proposal to adopt a "firm-to-the-wellhead" rate structure for firm transportation rates which would, if approved, shift approximately $60 million in production area fixed costs into firm transportation rates. In addition, the ALJ determined that Transco's existing production area rate design is unjust and unreasonable, and adopted a production area rate design proposal offered by another intervenor in the proceeding. AGL opposed Transco's "firm-to-the-wellhead" proposal, but supported Transco's existing production area rate design. Various parties, including AGL, have filed exceptions to the initial decision, which therefore is not yet final. In addition, on March 1, 1995, Transco filed a new general rate case seeking approximately $132 million in additional revenues annually, and to reflect numerous modifications to its tariff. The impact of that rate increase on the Company is approximately $2.2 million annually. The FERC has accepted Transco's filing, and Transco has implemented its rate increase, effective September 1, 1995, subject to refund and the outcome of a hearing. AGL is actively participating in the hearing procedures. ANR PIPELINE ANR Pipeline (ANR) provides transportation services to Southern under a case-specific certificate issued by the FERC in 1980. Southern entered into this transportation arrangement with ANR in order to provide Southern's customers, including AGL, access to storage facilities owned and operated by ANR Storage Company. According to Southern, approximately 96% of Southern's service entitlement on ANR is used to serve AGL. AGL is participating in ANR's general rate proceeding, and has protested the proposed rates for ANR's service to Southern. The FERC has established hearing procedures with respect to ANR's application, and AGL is actively participating in the hearing, supporting a reduced transportation rate for ANR's services to Southern. Arcadian The FERC has issued an order approving the settlement between Southern and Arcadian; see Part I, Item 3, "Legal Proceedings." The settlement resolves both Arcadian's FERC complaint against Southern and Arcadian's antitrust lawsuit against Southern and AGL. The settlement provides for Southern to provide firm transportation service to Arcadian at a discounted rate for an initial term of five years. In addition, the settlement establishes tariff language addressing the conditions under which Southern will address future requests for direct transportation service. AGL has sought rehearing of the FERC's order approving the settlement, and has petitioned for review in the United States Court of Appeals for the Eleventh Circuit. AGL's appeals are currently being held in abeyance pending action by the FERC on AGL's rehearing request. The settlement between Southern and AGL will, if approved, resolve the undue discrimination issue raised by AGL in Southern's current rate case. The Company cannot predict the outcome of these federal proceedings nor can it determine the effect, if any, such proceedings may have on the Company. STATE REGULATORY MATTERS Atlanta Gas Light Company 1993 Rate Case On March 31, 1993, AGL made a rate filing with the Georgia Commission seeking an increase in revenues of $62.5 million annually, based upon a test year ending September 30, 1994. During the course of the rate proceedings, AGL modified its requested increase to $47 million to reflect changes in conditions expected during the test year. On September 29, 1993, the Georgia Commission approved an annual increase in revenues of approximately $11.2 million, effective October 1, 1993. In its decision, the Georgia Commission approved a restructuring of AGL's interruptible service rates. The Georgia Commission, however, did not approve the redesigned firm service rates proposed by AGL. On October 12, 1993, AGL filed a petition with the Georgia Commission for rehearing, reconsideration and oral argument with respect to the redesigned firm service rates. Oral argument was heard on December 2, 1993. On September 25, 1995, the Georgia Commission issued an order revising firm service rates, on a revenue neutral basis, to more accurately reflect the cost to serve those customers. Economic Development Policy On September 19, 1993, the Georgia Commission initiated an investigation of Economic Development Incentive Policies of the utilities under its jurisdiction. On November 3, 1994, the Georgia Commission issued a final order establishing guidelines for utility economic development incentives which are designed to provide incentives to industrial customers to locate or expand facilities in Georgia. On December 19, 1994, AGL filed its proposed economic development incentive program in compliance with the Georgia Commission's order. As filed, the AGL Economic Development Policy is designed to promote economic development within the context of its approved Integrated Resource Plan (IRP) by providing cost-effective job creation incentive payments and investment incentive payments to industrial customers where such payments provide positive benefits both to AGL and its new and existing industrial customers. On October 3, 1995 the Georgia Commission approved AGL's filed program with one modification. As a result, on November 29, 1995, AGL withdrew the Economic Development Incentive Program it filed with the Georgia Commission on December 19, 1994 and filed a revised Economic Development Incentive Program that provides investment incentive payments under AGL's approved IRP. Gas Supply Filing Federal restructuring resulting from the implementation of Order 636 caused LDCs to face greater accountability and risks related to their purchasing practices for gas supply, transportation and storage services. As a result, during the 1994 session of the Georgia General Assembly, legislation was passed that provides for annual review and approval by the Georgia Commission of AGL's gas services portfolio on a prospective basis. The legislation requires AGL to file a gas supply plan with the Georgia Commission on or before August 1 of each year for the subsequent fiscal year. Purchases made pursuant to an approved plan may be recovered under the purchased gas provisions of AGL's rate schedules. On August 1, 1995, AGL filed its gas supply plan consisting of an array of gas supply, transportation and storage options designed to provide reliable service to firm customers at the best cost for fiscal year 1996. On September 14, 1995, the Georgia Commission approved AGL's gas supply plan for fiscal year 1996. In addition to approving the array of services AGL proposed, the Georgia Commission also approved the recovery of Order 636 transition costs that currently are being collected by AGL's pipeline suppliers. Other Commission Proceedings On July 21, 1995, AGL filed with the Georgia Commission a request to approve a refund of $38.5 million of the revenues collected through the Purchased Gas Adjustment (PGA) Rider since October 1994. On August 23, 1995, the Georgia Commission approved a $38.5 million refund of deferred purchased gas costs, plus interest. The refund resulted from the overrecovery of gas costs by AGL through the PGA Rider. The refund was credited to customers' bills in September 1995. On November 21, 1995, the Georgia Commission issued a Natural Gas Notice of Inquiry (NOI) which sets forth a procedure and schedule for soliciting comments from Georgia LDCs and other interested parties concerning how to work together to move the local distribution of natural gas toward a more competitive future. Among other opinions expressed within the NOI, the Georgia Commission recommended pursuing a legislative solution to establish regulatory rules that will allow for an efficient and customer-responsive retail natural gas sector. The schedule calls for comments from interested parties in December 1995 and January 1996. For additional information concerning the effects of competition on AGL's provision of gas service, see Part I, Item 1, "Business - Competition." The staff of the Georgia Commission has undertaken a financial and management process audit related to AGL's former manufactured gas plant sites. The result of such audit is not expected to have a significant effect on the Company's consolidated financial statements. See Part I, Item 3, "Legal Proceedings - Environmental Matters." Chattanooga Gas Company On May 1, 1995, Chattanooga filed a rate proceeding with the Tennessee Commission seeking an increase in revenues of $5.2 million annually. On September 27, 1995, a settlement agreement was reached that provides for an annual increase in revenues of approximately $2.5 million, effective November 1, 1995. The Company cannot predict the outcome of pending state regulatory matters nor can it determine the ultimate effect, if any, such proceedings may have on the Company. Item 2. Properties The Company's properties consist primarily of distribution systems and related facilities and local offices serving 229 cities and surrounding areas in the State of Georgia and 2 cities and surrounding areas in the State of Tennessee. As of September 30, 1995, AGL had 25,043 miles of mains and 5,952,000 Mcf of LNG storage capacity in three LNG plants to supplement the gas supply in very cold weather or emergencies. Chattanooga had 1,308 miles of mains and 1,076,000 Mcf of LNG storage capacity in its one LNG plant. At September 30, 1995, the Company's gross utility plant amounted to approximately $1.9 billion. Item 3. Legal Proceedings The nature of the Company's business ordinarily results in periodic regulatory proceedings before various state and federal authorities as well as litigation incidental to the business. For information regarding regulatory proceedings, see the preceding sections in Part I, Item 1, "Business - Federal Regulatory Matters" and "Business - State Regulatory Matters." Arcadian Arcadian Corporation v. Southern Natural Gas Company and Atlanta Gas Light Company, U. S. District Court for the Southern District of Georgia, Augusta Division, Case No. CV192-006. On January 10, 1992, Arcadian, an industrial customer of AGL, filed a complaint against Southern and AGL alleging violation of the federal antitrust laws and seeking treble damages in excess of $45 million. In the complaint, Arcadian alleged that Southern and AGL conspired to restrain trade by agreeing not to compete in the provision of direct transportation service to end users in the areas served by the Company. The Company denied the allegations of the complaint. On November 30, 1993, a proposed settlement between Southern and Arcadian was filed with FERC that would resolve both Arcadian's FERC complaint against Southern and Arcadian's antitrust lawsuit against Southern and AGL. The settlement provided for firm and interruptible transportation service from Southern to Arcadian at discounted rates for an initial term of five years. In addition, the settlement establishes tariff conditions for addressing future requests for direct transportation service. In connection with the proposed settlement, the antitrust lawsuit has been stayed and administratively closed. On May 12, 1994, FERC approved the settlement over AGL's objections. AGL has sought rehearing of the FERC's order approving the settlement, and has petitioned for review in the United States Court of Appeals for the Eleventh Circuit. AGL's appeals are currently being held in abeyance pending action by the FERC on AGL's rehearing request. Environmental Matters Prior to the general availability of natural gas in the 1800s and early 1900s, manufactured gas was a chief source of gas for lighting and heat nationwide. The process involved heating certain combustibles such as coal, oil and pine knots in a low oxygen atmosphere. Gas was manufactured by this process at over 1,500 different sites throughout the country. The residue from this process, including lampblack and coal tar, was typically stored on site or sold for commercial use. Such plants were operated in Georgia until the early 1950s. In June 1990, the Company was contacted by attorneys for Florida Public Utilities Company (FPUC) in connection with a former manufactured gas plant (MGP) site in Sanford, Florida. Thereafter, FPUC received a "Warning Notice" from the Florida Department of Environmental Regulation (FDER) demanding that FPUC enter into a consent order to investigate the Sanford site. Preliminary investigation results indicate some environmental impacts at this site. In addition, limited investigations of the surrounding area indicate potential environmental impacts off-site. On January 31, 1992, FPUC filed suit against the Company, two other corporations and the City of Sanford, under the federal Comprehensive Environmental Response, Compensation and Liability Act, and an equivalent state statute, alleging the Company is a former "owner," to obtain contribution from the Company and others for all costs incurred and for a declaratory judgment that all defendants are jointly and severally liable for future response costs. On May 15, 1992, the Court administratively terminated the case for one year while the parties, pursuant to an agreement, attempted to determine the nature and extent of impacts at the Sanford MGP site. By letter dated September 11, 1992, FPUC responded to the "Warning Notice" issued by FDER and proposed to conduct a joint investigation of the site under FDER supervision, without the entry of any formal order. By letter dated September 23, 1992, FDER rejected this proposal. Pursuant to an agreement among the parties to fund the conduct of further studies, an administrative termination of the case was reinstituted. On February 3, 1994, the parties submitted a Contamination Assessment Report (CAR) to the Florida Department of Environmental Protection (FDEP), previously known as FDER. The CAR confirmed the existence of environmental impacts at the site and off-site. On April 10, 1994, FDEP completed its review of the CAR and submitted a preliminary scoring of the site to Region IV of the U. S. Environmental Protection Agency (EPA). FDEP concluded that further study is necessary in some areas because the site did not exceed the listing threshold under one set of assumptions but did exceed that threshold under different assumptions. On February 17, 1995, FPUC dismissed its lawsuit without prejudice. The EPA has requested that FPUC conduct an Expanded Site Investigation (ESI) of the Sanford site and the nearby area. FPUC declined and it is expected that EPA will conduct the ESI. In addition to the Sanford site noted above, there are two other sites in Florida presently being investigated by environmental authorities in connection with which the Company may be contacted as a potentially responsible party. No claim has been made by any party regarding these sites. AGL has identified nine sites in Georgia where it currently owns all or part of an MGP site. These sites are located in Athens, Augusta, Brunswick, Griffin, Macon, Rome, Savannah, Valdosta and Waycross. In addition, AGL has identified three other sites in Georgia which AGL does not now own, but which may have been associated with the operation of MGPs by AGL or its predecessors. These sites are located in Atlanta (2) and Macon. A Preliminary Assessment (PA) has been conducted at each of these sites and a subsequent Site Investigation (SI) was conducted at ten of the twelve sites (all but the two Atlanta sites). Results from these investigations reveal environmental impacts at and near nine sites (all but the two Atlanta sites and the second Macon site). AGL has entered into consent orders with the Georgia Environmental Protection Division (EPD) with respect to four sites (Augusta, Griffin, Savannah and Valdosta) pursuant to which AGL is obligated to investigate and clean-up, if necessary, these sites. The Company has submitted to EPD the PA/SIs for each site. The Company, in response to a request by EPD, also has submitted the SI for the Athens site. For the four sites subject to EPD orders, the orders require the Company, if necessary, to conduct additional investigations sufficient to develop a Corrective Action Plan (CAP), which will provide a proposal for cleanup of groundwater, surface water and soil at and near each consent order site. This CAP will then be submitted to EPD for review and approval. Within 180 days of approval of the CAP by EPD, AGL must complete installation of all remedial structures called for in the CAP. The Company developed a proposed CAP for the Griffin site, and submitted the CAP to EPD for review. Additional assessment activities are now being conducted, and the Company expects to submit a revised CAP for Griffin in January 1996. Assessment activities are being conducted at Augusta and Savannah. In addition, further studies are underway at the Athens site. AGL expects these activities in Augusta, Savannah and Athens to be completed in early 1996. On March 22, 1994, AGL submitted to the EPD, under regulations issued by EPD under the Georgia Hazardous Site Response Act (HSRA), formal notifications pertaining to MGP site conditions at seven of the eight then owned MGP sites: Athens, Augusta, Brunswick, Macon, Savannah, Valdosta and Waycross. On November 4, 1994, the Company submitted a notification for the acquired portion of the Griffin site. EPD has completed its initial review of these submissions, has eliminated one site (Macon) from further consideration at this time, and has listed the seven remaining sites (Athens, Augusta, Brunswick, Griffin, Savannah, Valdosta and Waycross) on Georgia's "Hazardous Site Inventory" (HSI). EPD has also listed the Rome MGP site with which AGL has been associated and which is the subject of pending litigation. Under the HSRA regulations, the sites subject to consent orders (Augusta, Griffin, Savannah and Valdosta) are presumed to require corrective action. EPD will determine whether corrective action is required at any or all of the remaining four sites (Athens, Brunswick, Rome and Waycross). EPD had requested Compliance Status Reports (CSRs) for Athens, Brunswick and Rome. The Company has estimated the investigation and remediation expenses likely to be associated with the former MGP sites. First, for some sites, the Company has determined that its liability, if any, for future investigation and cleanup expenses is likely to arise from claims by potentially responsible parties, or equivalent proceedings by the government, for contribution and/or cost recovery. Under such circumstances, although the Company may be jointly and severally liable for all investigation and cleanup expenses, the probable amount of the Company's ultimate liability is likely to be limited to the Company's equitable share of such expenses under the circumstances. Accordingly, the Company has adjusted the range of future investigation and cleanup expenses for these sites by estimating, where possible, the range of reasonably possible values for the Company's share of such expenses, given the current methods of equitable apportionment and the Company's knowledge of relevant facts, including the solvency of potential contributors and likely disputes over appropriate shares. In all other cases where such values were not reasonably estimable, the Company has simply continued to use a range of expenses without adjustment for the Company's equitable share. Second, the issuance of regulations under HSRA and the listing of MGP sites on the HSI has altered the basis upon which the Company has projected future investigation and remediation costs associated with the former MGP sites in Georgia. Under a thorough analysis of these and other current potentially applicable requirements, the Company has estimated that, under the most favorable circumstances reasonably possible, the future cost of investigating and remediating the former MGP sites could be as low as $28.6 million. Alternatively, the Company has estimated that, under the least favorable circumstances reasonably possible, the future cost of investigating and remediating the former MGP sites could be as high as $109 million. The Company cannot estimate at this time the amount of any other future expenses or liabilities, or the impact on these estimates of future environmental regulatory changes, that may be associated with or related to the MGP sites, including expenses or liabilities relating to any litigation. At the present time, no amount within the range can be identified as a better estimate than any other estimate. Therefore, a liability for the low end of this range and a corresponding regulatory asset have been recorded in the financial statements. The Georgia Commission has approved the recovery by AGL of Environmental Response Costs, as defined below, effective October 1, 1992, pursuant to AGL's Environmental Response Cost Recovery Rider (ERCRR). For purposes of the ERCRR, Environmental Response Costs include investigation, testing, remediation and litigation costs and expenses or other liabilities relating to or arising from MGP sites. AGL is permitted to recover from its ratepayers Environmental Response Costs that it may incur in succeeding 12-month periods ending each June 30, net of working capital benefits resulting from deferred income taxes, amortized over a 60-month recovery period beginning each October 1. The carrying costs to AGL of Environmental Response Costs during the period of amortization are subject to recovery from any amounts received from insurance carriers and from former owners or operators of MGP sites. Any amounts received from such sources are shared equally by AGL and its customers. AGL records its portion as income to offset unrecovered carrying costs. AGL has recorded income to date of $0.8 million as a result of amounts received from such sources. In connection with the ERCRR, the staff of the Georgia Commission has undertaken a financial and management process audit related to the MGP sites, cleanup activities at the sites and Environmental Response Costs which have been incurred for purposes of the ERCRR. The result of such audit is not expected to have a significant effect on the Company's consolidated financial statements. The Company notified its insurance carriers and filed a declaratory judgment action against 23 insurance companies in the United States District Court for the Northern District of Georgia, seeking a determination that various policies held by the Company provide coverage for Environmental Response Costs. Nine of the 23 carriers named in the action have settled with the Company. On October 8, 1993, the Court granted summary judgment to the remaining carriers on the basis that the Company provided untimely notice. The Court entered a final judgment in favor of the defendants. On October 20, 1995, the Eleventh Circuit Court of Appeals reversed the grant of summary judgment and remanded the case to the trial court, with instructions to dismiss the case on the grounds that there was no case or controversy when filed. The Company has not determined the nature or extent of actions it will take as a result of this decision. On November 14, 1995, one of the insurance companies named in the declaratory judgment action initiated a new action against the Company in the United States District Court for the Northern District of Georgia seeking a declaratory judgment that it is not obligated to provide insurance coverage for third party damage resulting from the operation of the former MGP sites. The Company has not been served with the summons and the Company and the insurance carrier have entered into an agreement not to pursue the action for a period of time. With regard to other legal proceedings related to the former MGP sites, the Company is or expects to be a party to claims or counterclaims on an ongoing basis. Among such matters, the Company intends to continue to pursue insurance coverage and contribution from potentially responsible parties. Management currently believes that the outcome of MGP-related litigation in which the Company is involved will not have a material adverse effect on the financial condition and results of operations of the Company. As a result of the ERCRR, the Company expects that it will be able to recover all of its Environmental Response Costs. See Note 10 in Notes to Consolidated Financial Statements in the Company's 1995 Annual Report to Shareholders. Other Legal Proceedings With regard to other legal proceedings, the Company is a party, as both plaintiff and defendant, to a number of other suits, claims and counterclaims on an ongoing basis. Management believes that the outcome of all litigation in which it is involved will not have a material adverse effect on the consolidated financial statements of the Company. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. Item 4.(A) Executive Officers of the Registrant Set forth below, in accordance with General Instruction G(3) of Form 10-K and Instruction 3 of Item 401(b) of Regulation S-K, is certain information regarding the executive officers of AGL. Unless otherwise indicated, the information set forth is as of September 30, 1995. Other Offices Held Present Held During Name and Position Age Office Since Past Five Years David R. Jones 58 February 1988 President and Chief Executive Officer and Director Charles W. Bass 48 November 1994 (1)Senior Vice Executive Vice President - President - Market Service Governmental and and Development Regulatory Affairs Thomas H. Benson 50 November 1994 (1)Senior Vice Executive Vice President - President - Customer Operations Operations and Engineering Robert L. Goocher 45 November 1994 (1)Senior Vice Executive Vice President - President, Chief Business Support Financial Officer and Secretary (2)Vice President - Finance (3)Vice President - Augusta Division Charlie J. Lail 56 November 1994 (1)Senior Vice Senior Vice President - President - Operations Improvement Divisions (2)Vice President - Divisions (3)Vice President - Northeast Georgia Division Richard H. Woodward, Jr. 48 November 1994 (1)Senior Vice Senior Vice President - President - Business Development Corporate Services Michael D. Hutchins 44 November 1994 (1)Vice President - Vice President - Operations Engineering and Engineering Clayton H. Preble 48 November 1994 (1)Vice President - Vice President - Marketing and Corporate Planning Sales (2)Director - Corporate Planning (3)Division Manager - Northeast Georgia (4)Manager - Gwinnett J. Michael Riley 44 November 1994 (1)Vice President and Vice President - Finance and Controller Accounting (2)Controller There are no family relationships among the executive officers. All officers generally are elected annually by the Board of Directors at the first meeting following the Annual Meeting of Shareholders in February. Part II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters Information relating to the market for holders of and dividends on the Company's common stock is set forth under the caption "Shareholder Information" on page 46 of the Company's 1995 Annual Report. Such information is incorporated herein by reference. Portions of the 1995 Annual Report are filed as Exhibit 13 to this report. Item 6. Selected Financial Data Selected financial data for the Company for each year of the five-year period ended September 30, 1995 is set forth under the caption "Selected Financial Data" on pages 42 and 43 of the Company's 1995 Annual Report referred to in Item 5 above. Such five-year selected financial data is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition A discussion of the Company's results of operations and financial condition is set forth under the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 22 through 27 of the Company's 1995 Annual Report referred to in Item 5 above. Such discussion is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data The following financial statements of the Company, which are set forth on pages 28 through 41 of the Company's 1995 Annual Report referred to in Item 5 above, are incorporated herein by reference: Statements of Consolidated Income for the years ended September 30, 1995, 1994 and 1993. Statements of Consolidated Cash Flows for the years ended September 30, 1995, 1994 and 1993. Consolidated Balance Sheets as of September 30, 1995 and 1994. Statements of Consolidated Common Stock Equity for the years ended September 30, 1995, 1994 and 1993. Notes to Consolidated Financial Statements. Independent Auditors' Report. The supplementary financial information required by Item 302 of Regulation S-K is set forth in Note 15 in Notes to Consolidated Financial Statements in the Company's 1995 Annual Report to Shareholders. The following supplemental data is submitted herewith: Independent Auditors' Report on Financial Statement Schedule. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None Part III Item 10. Directors and Executive Officers of the Registrant Information relating to nominees for director of the Company is set forth under the caption "Election of Directors-Information Concerning Nominees" in the Proxy Statement for the 1996 Annual Meeting of Shareholders. Such information is incorporated herein by reference. The definitive Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the Company's fiscal year end. Information relating to the executive officers of the Company, pursuant to Instruction 3 of Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K, is set forth at Part I, Item 4(A) of this report under the caption "Executive Officers of the Registrant." Item 11. Executive Compensation Information relating to executive compensation is set forth under the caption "Executive Compensation" in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management Information relating to ownership of common stock of the Company by certain persons is set forth under the caption "Security Ownership of Management" in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions Information relating to existing or proposed relationships or transactions between the Company and any affiliate of the Company is set forth under the caption "Compensation Committee Interlocks and Insider Participation" in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference. Part IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Documents Filed as Part of This Report: 1. Financial Statements Included under Item 8 are the following financial statements: Statements of Consolidated Income for the Years Ended September 30, 1995, 1994 and 1993. Statements of Consolidated Cash Flows for the Years Ended September 30, 1995, 1994 and 1993. Consolidated Balance Sheets as of September 30, 1995 and 1994. Statements of Consolidated Common Stock Equity for the Years Ended September 30, 1995, 1994 and 1993. Notes to Consolidated Financial Statements. Independent Auditors' Report. 2. Supplemental Consolidated Financial Schedules for Each of the Three Years in the Period Ended September 30, 1995: Independent Auditors' Report. II. - Valuation and Qualifying Account--Allowance for Uncollectible Accounts. Schedules other than those referred to above are omitted and are not applicable or not required, or the required information is shown in the financial statements or notes thereto. 3. Exhibits Where an exhibit is filed by incorporation by reference to a previously filed registration statement or report, such registration statement or report is identified in parentheses. 3(a) - Charter of the Company, as amended through February 20, 1990 (Exhibit 3(a), Registration No. 33-52752). 3(b) - Articles of Amendment to the Articles of Incorporation (Charter) of the Company filed on October 9, 1992, with the Secretary of State of the State of Georgia (Exhibit 3(b), Form 10-K for the fiscal year ended September 30, 1992). 3(c) - Articles of Correction to the Charter of the Company filed on October 16, 1992, with the Secretary of State of the State of Georgia (Exhibit 3(c), Form 10-K for the fiscal year ended September 30, 1992). 3(d) - Articles of Amendment to the Articles of Incorporation (Charter) of the Company filed on February 22, 1993, with the Secretary of State of the State of Georgia (Exhibit 3, Form 10-Q for the quarter ended March 31, 1993). 3(e) - By-Laws of the Company, as amended through November 17, 1995. 4(a) - Indenture, dated as of December 1, 1989, between Atlanta Gas Light Company and Bankers Trust Company, as Trustee (Exhibit 4(a), Registration No. 33-32274). 4(b) - First Supplemental Indenture, dated as of March 16, 1992, between Atlanta Gas Light Company and NationsBank of Georgia, National Association, as Successor Trustee, (Exhibit 4(a), Registration No. 33-46419). 10(a) - Executive Compensation Plans and Arrangements; Atlanta Gas Light Company Long-Term Stock Incentive Plan of 1990, (Exhibit 10(ii), Form 10-K for the fiscal year ended September 30, 1991). Atlanta Gas Light Company Nonqualified Savings Plan. 10(b) - Service Agreement under Rate Schedule GSS dated April 13, 1972, between the Company and Transcontinental Gas Pipe Line Corporation (Exhibit 5(c), Registration No. 2-48297). 10(c) - Service Agreement under Rate Schedule LG-A, effective August 16, 1974, between the Company and Transcontinental Gas Pipe Line Corporation (Exhibit 5(d), Registration No. 2-58971). 10(d) - Storage Transportation Agreement, dated June 1, 1979, between the Company and Southern Natural Gas Company, (Exhibit 5(n), Registration No. 2-65487). 10(e) - Letter of Intent dated September 18, 1987, between the Company and Jupiter Industries, Inc. relating to the purchase by the Company of the assets of the Chattanooga Gas Company Division of Jupiter Industries, Inc. (Exhibit 10(p), Form 10-K for the fiscal year ended September 30, 1987). 10(f) - Agreement for the Purchase of Assets dated April 5, 1988, between the Company and Jupiter Industries, Inc., (Exhibit 10(q), Form 10-K for the fiscal year ended September 30, 1988). 10(g) - 100 Day Storage Service Agreement, dated June 1, 1979, between the Company and South Georgia Natural Gas Company, (Exhibit 10(r), Form 10-K for the fiscal year ended September 30, 1989). 10(h) - Service Agreement under Rate Schedule LSS, dated October 31, 1984, between the Company and Transcontinental Gas Pipe Line Corporation, (Exhibit 10(s), Form 10-K for the fiscal year ended September 30, 1989). 10(i) - Letter from Transcontinental Gas Pipe Line Corporation, dated April 19, 1988, relating to commencement of storage service under Rate Schedule SS-1, (Exhibit 10(v), Form 10-K for the fiscal year ended September 30, 1989). 10(j) - Storage Transportation Agreement, dated June 1, 1979, between the Company and South Georgia Natural Gas Company, (Exhibit 10(v), Form 10-K for the fiscal year ended September 30, 1990). 10(k) - Firm Seasonal Transportation Agreement, dated June 29, 1990, between the Company and Transcontinental Gas Pipe Line Corporation, (Exhibit 10(bb), Form 10-K for the fiscal year ended September 30, 1990). 10(l) - Service Agreement under Rate Schedule WSS, dated June 1, 1990, between the Company and Transcontinental Gas Pipe Line Corporation, (Exhibit 10(cc), Form 10-K for the fiscal year ended September 30, 1990). 10(m) - Limited-Term Transportation Agreement Contract # A970 dated April 1, 1988, between the Company and CNG Transmission Corporation, (Exhibit 10(bb), Form 10-K for the fiscal year ended September 30, 1991). 10(n) - Service Agreement System Contract #.2271 under Rate Schedule FT, dated August 1, 1991, between the Company and Transcontinental Gas Pipe Line Corporation, (Exhibit 10(dd), Form 10-K for the fiscal year ended September 30, 1991). 10(o) - Service Agreement System Contract #.4984 dated August 1, 1991, between the Company and Transcontinental Gas Pipe Line Corporation, (Exhibit 10(ee), Form 10-K for the fiscal year ended September 30, 1991). 10(p) - Service Agreement Contract #830810 under Rate Schedule FT, dated March 1, 1992, between the Company and South Georgia Natural Gas Company (Exhibit 10(aa), Form 10-K for the fiscal year ended September 30, 1992). 10(q) - Firm Gas Transportation Contract #3699 under Rate Schedule FT, dated February 1, 1992, between the Company and Transcontinental Gas Pipe Line Corporation (Exhibit 10(dd), Form 10-K for the fiscal year ended September 30, 1992). 10(r) - Firm Gas Transportation Agreement under Rate Schedule FT-1, dated July 1, 1992, between the Company and East Tennessee Natural Gas Company (Exhibit 10(ff), Form 10-K for the fiscal year ended September 30, 1992). 10(s) - Service Agreement Applicable to the Storage of Natural Gas under Rate Schedule GSS, dated October 25, 1993, between the Company and CNG Transmission Corporation (Exhibit 10(y), Form 10-K for the fiscal year ended September 30, 1993). 10(t) - Service Agreement Applicable to the Storage of Natural Gas under Rate Schedule GSS, dated September, 1993, between Chattanooga Gas Company and CNG Transmission Corporation (Exhibit 10(z), Form 10-K for the fiscal year ended September 30, 1993). 10(u) - Gas Storage Contract #2031 under Rate Schedule FS, dated September 1, 1993, between the Company and Tennessee Gas Pipeline Company (Exhibit 10(aa), Form 10-K for the fiscal year ended September 30, 1993). 10(v) - Firm Seasonal Transportation Agreement, dated February 1, 1992, between the Company and Transcontinental Gas Pipe Line Corporation amending Exhibit 10(bb), Form 10-K for the fiscal year ended September 30, 1990 (Exhibit 10(cc), Form 10-K for the fiscal year ended September 30, 1993). 10(w) - Service Agreement under Rate Schedule SS-1, dated April 1, 1988, between the Company and Transcontinental Gas Pipe Line Corporation (Exhibit 10(z), Form 10-K for the fiscal year ended September 30, 1994). 10(x) - Firm Gas Transportation Agreement #5049 under Rate Schedule FT-A, dated November 1, 1993, between the Company and Tennessee Gas Pipeline Company (Exhibit 10(aa), Form 10-K for the fiscal year ended September 30, 1994). 10(y) - Firm Gas Transportation Agreement #5051 under Rate Schedule FT-A, dated November 1, 1993, between Chattanooga Gas Company and Tennessee Gas Pipeline Company (Exhibit 10(bb), Form 10-K for the fiscal year ended September 30, 1994). 10(z) - Gas Storage Contract #3998 under Rate Schedule FS, dated November 1, 1993, between the Company and Tennessee Gas Pipeline Company (Exhibit 10(cc), Form 10-K for the fiscal year ended September 30, 1994). 10(aa) - Gas Storage Contract #3999 under Rate Schedule FS, dated November 1, 1993, between Chattanooga Gas Company and Tennessee Gas Pipeline Company (Exhibit 10(dd), Form 10-K for the fiscal year ended September 30, 1994). 10(bb) - Gas Storage Contract #3923 under Rate Schedule FS, dated November 1, 1993, between the Company and Tennessee Gas Pipeline Company (Exhibit 10(ee), Form 10-K for the fiscal year ended September 30, 1994). 10(cc) - Gas Storage Contract #3947 under Rate Schedule FS, dated November 1, 1993, between Chattanooga Gas Company and Tennessee Gas Pipeline Company (Exhibit 10(ff), Form 10-K for the fiscal year ended September 30, 1994). 10(dd) - Gas Storage Contract #2027 under Rate Schedule FS, dated September 1, 1993, between Chattanooga Gas Company and Tennessee Gas Pipeline Company (Exhibit 10(gg), Form 10-K for the fiscal year ended September 30, 1994). 10(ee) - Service Agreement #902470 under Rate Schedule FT, dated September 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(hh), Form 10-K for the fiscal year ended September 30, 1994). 10(ff) - Service Agreement #904460 under Rate Schedule FT, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(ii), Form 10-K for the fiscal year ended September 30, 1994). 10(gg) - Service Agreement #904480 under Rate Schedule FT, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(jj), Form 10-K for the fiscal year ended September 30, 1994). 10(hh) - Service Agreement #904461 under Rate Schedule FT-NN, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(kk), Form 10-K for the fiscal year ended September 30, 1994). 10(ii) - Service Agreement #904481 under Rate Schedule FT-NN, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(ll), Form 10-K for the fiscal year ended September 30, 1994). 10(jj) - Service Agreement #S20140 under Rate Schedule CSS, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(mm), Form 10-K for the fiscal year ended September 30, 1994). 10(kk) - Service Agreement #S20150 under Rate Schedule CSS, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(nn), Form 10-K for the fiscal year ended September 30, 1994). 10(ll) - Service Agreement #904470 under Rate Schedule FT, dated November 1, 1994, between Chattanooga Gas Company and Southern Natural Gas Company (Exhibit 10(oo), Form 10-K for the fiscal year ended September 30, 1994). 10(mm) - Service Agreement #904471 under Rate Schedule FT-NN, dated November 1, 1994, between Chattanooga Gas Company and Southern Natural Gas Company (Exhibit 10(pp), Form 10-K for the fiscal year ended September 30, 1994). 10(nn) - Service Agreement #S20130 under Rate Schedule CSS, dated November 1, 1994, between Chattanooga Gas Company and Southern Natural Gas Company (Exhibit 10(qq), Form 10-K for the fiscal year ended September 30, 1994). 10(oo) - Firm Storage (FS) Agreement, dated November 1, 1994, between the Company and ANR Storage Company (Exhibit 10(a), Form 10-Q for the quarter ended March 31, 1995). 10(pp) - Firm Storage (FS) Agreement, dated November 1, 1994, between the Company and ANR Storage Company (Exhibit 10(b), Form 10-Q for the quarter ended March 31, 1995). 10(qq) - Firm Transportation Agreement, dated March 1, 1995, between the Company and Southern Natural Gas Company amending Exhibits 10(jj), 10(ll) and 10(mm), Form 10-K for the fiscal year ended September 30, 1994 (Exhibit 10(c), Form 10-Q for the quarter ended March 31, 1995). 10(rr) - Firm Transportation Agreement, dated March 1, 1995, between the Company and Southern Natural Gas Company amending Exhibits 10(hh), 10(ii), 10(kk) and 10(nn), Form 10-K for the fiscal year ended September 30, 1994 (Exhibit 10(d), Form 10-Q for the quarter ended March 31, 1995). 10(ss) - Firm Transportation Agreement, dated March 1, 1995, between Chattanooga Gas Company and Southern Natural Gas Company amending Exhibits 10(oo), 10(pp) and 10(qq), Form 10-K for the fiscal year ended September 30, 1994 (Exhibit 10(a), Form 10-Q for the quarter ended June 30, 1995). 10(tt) - Firm Transportation Agreement, dated June 1, 1995, between the Company and Southern Natural Gas Company amending Exhibit 10(ii), Form 10-K for the fiscal year ended September 30, 1994. 10(uu) - Firm Storage Agreement, effective December 1, 1994, between Chattanooga Gas Company and Tennessee Gas Pipeline Company amending Exhibit 10(ff), Form 10-K for the fiscal year ended September 30, 1994. 10(vv) - Firm Storage Agreement, effective July 1, 1995, between Chattanooga Gas Company and Tennessee Gas Pipeline Company amending Exhibit 10(ff), Form 10-K for the fiscal year ended September 30, 1994. 10(ww) - Firm Storage Agreement, effective July 1, 1995, between Chattanooga Gas Company and Tennessee Gas Pipeline Company amending Exhibit 10(dd), Form 10-K for the fiscal year ended September 30, 1994. 10(xx) - Firm Transportation Agreement, dated September 26, 1994, between the Company and South Georgia Natural Gas Company amending Exhibit 10(s), Form 10-K for the fiscal year ended September 30, 1994. 10(yy) - Firm Storage Agreement, effective July 1, 1995, between the Company and Tennessee Gas Pipeline Company amending Exhibit 10(ee), Form 10-K for the fiscal year ended September 30, 1994. 10(zz) - Firm Storage Agreement, effective July 1, 1995, between the Company and Tennessee Gas Pipeline Company amending Exhibit 10(cc), Form 10-K for the fiscal year ended September 30, 1994. 13 - Portions of the 1995 Annual Report to Shareholders incorporated herein by reference. 21 - Subsidiaries of the Registrant. 23 - Independent Auditors' Consent. 24 - Powers of Attorney. 27 - Financial Data Schedule. (b) Reports on Form 8-K No Form 8-K was filed during the last quarter of the year ended September 30, 1995. The remainder of this page was intentionally left blank. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ATLANTA GAS LIGHT COMPANY (Registrant) By/s/ David R. Jones December 22, 1995 David R. Jones Date President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ David R. Jones David R. Jones President and Chief December 22, 1995 Executive Officer (Principal Executive Officer) and Director /s/ Robert L. Goocher Executive Vice President - December 22, 1995 Robert L. Goocher Business Support and Chief Financial Officer (Principal Financial Officer) /s/ J. Michael Riley Vice President - December 22, 1995 J. Michael Riley Finance and Accounting (Principal Accounting Officer) *Frank Barron, Jr. Director December 22, 1995 Frank Barron, Jr. *W. Waldo Bradley Director December 22, 1995 W. Waldo Bradley Signature Title Date *Otis A. Brumby, Jr. Otis A. Brumby, Jr. Director December 22, 1995 *L. L. Gellerstedt, Jr. L. L. Gellerstedt, Jr. Director December 22, 1995 Kenneth D. Lewis Director *Albert G. Norman, Jr. Albert G. Norman, Jr. Director December 22, 1995 *D. Raymond Riddle D. Raymond Riddle Director December 22, 1995 *Betty L. Siegel Betty L. Siegel Director December 22, 1995 *Ben J. Tarbutton, Jr. Ben J. Tarbutton, Jr. Director December 22, 1995 *Charles McKenzie Taylor Charles McKenzie Taylor Director December 22, 1995 *Felker W. Ward, Jr. Felker W. Ward, Jr. Director December 22, 1995 *By: /s/ Robert L. Goocher Robert L. Goocher (Attorney-in-Fact) INDEPENDENT AUDITORS' REPORT To the Shareholders and Board of Directors of Atlanta Gas Light Company: We have audited the consolidated balance sheets of Atlanta Gas Light Company and subsidiaries as of September 30, 1995 and 1994, and the related statements of consolidated income, common stock equity, and cash flows for each of the three years in the period ended September 30, 1995, and have issued our report thereon dated November 27, 1995; such financial statements and report are included in your 1995 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the financial statement schedule of Atlanta Gas Light Company and subsidiaries, listed in Item 14. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Deloitte & Touche LLP DELOITTE & TOUCHE LLP Atlanta, Georgia November 27, 1995 SCHEDULE II ATLANTA GAS LIGHT COMPANY AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNT ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993 (IN THOUSANDS) 1995 1994 1993 Balance, beginning of year . . . . . . $ 2,755 $ 1,854 $ 3,327 Additions: Provisions charged to income . . . . 5,282 7,506 6,370 Recovery of accounts previously written off as uncollectible . . . . . . . . . 6,622 7,129 4,415 -------- -------- -------- Total . . . . . . . . . . . . . . 14,659 16,489 14,112 Deduction: Accounts written off as uncollectible . . . . . . . . . 10,267 13,734 12,258 -------- -------- -------- Balance, end of year . . . . . . . . . $ 4,392 $ 2,755 $ 1,854 ======== ======== ======== INDEX TO EXHIBITS Exhibit Number Description 3(a) - Charter of the Company, as amended through February 20, 1990 (Exhibit 3(a), Registration No. 33-52752). 3(b) - Articles of Amendment to the Articles of Incorporation (Charter) of the Company filed on October 9, 1992, with the Secretary of State of the State of Georgia (Exhibit 3(b), Form 10-K for the fiscal year ended September 30, 1992). 3(c) - Articles of Correction to the Charter of the Company filed on October 16, 1992, with the Secretary of State of the State of Georgia (Exhibit 3(c), Form 10-K for the fiscal year ended September 30, 1992). 3(d) - Articles of Amendment to the Articles of Incorporation (Charter) of the Company filed on February 22, 1993, with the Secretary of State of the State of Georgia (Exhibit 3, Form 10-Q for the quarter ended March 31, 1993). 3(e) - By-Laws of the Company, as amended through November 17, 1995. 4(a) - Indenture, dated as of December 1, 1989, between Atlanta Gas Light Company and Bankers Trust Company, as Trustee (Exhibit 4(a), Registration No. 33-32274). 4(b) - First Supplemental Indenture, dated as of March 16, 1992, between Atlanta Gas Light Company and NationsBank of Georgia, National Association, as Successor Trustee, (Exhibit 4(a), Registration No. 33-46419). Exhibit Number Description 10(a) - Executive Compensation Plans and Arrangements; Atlanta Gas Light Company Long-Term Stock Incentive Plan of 1990, (Exhibit 10(ii), Form 10-K for the fiscal year ended September 30, 1991). Atlanta Gas Light Company Nonqualified Savings Plan. 10(b) - Service Agreement under Rate Schedule GSS dated April 13, 1972, between the Company and Transcontinental Gas Pipe Line Corporation (Exhibit 5(c), Registration No. 2-48297). 10(c) - Service Agreement under Rate Schedule LG-A, effective August 16, 1974, between the Company and Transcontinental Gas Pipe Line Corporation (Exhibit 5(d), Registration No. 2-58971). 10(d) - Storage Transportation Agreement, dated June 1, 1979, between the Company and Southern Natural Gas Company, (Exhibit 5(n), Registration No. 2-65487). 10(e) - Letter of Intent dated September 18, 1987, between the Company and Jupiter Industries, Inc. relating to the purchase by the Company of the assets of the Chattanooga Gas Company Division of Jupiter Industries, Inc. (Exhibit 10(p), Form 10-K for the fiscal year ended September 30, 1987). 10(f) - Agreement for the Purchase of Assets dated April 5, 1988, between the Company and Jupiter Industries, Inc., (Exhibit 10(q), Form 10-K for the fiscal year ended September 30, 1988). 10(g) - 100 Day Storage Service Agreement, dated June 1, 1979, between the Company and South Georgia Natural Gas Company, (Exhibit 10(r), Form 10-K for the fiscal year ended September 30, 1989). 10(h) - Service Agreement under Rate Schedule LSS, dated October 31, 1984, between the Company and Transcontinental Gas Pipe Line Corporation, (Exhibit 10(s), Form 10-K for the fiscal year ended September 30, 1989). Exhibit Number Description 10(i) - Letter from Transcontinental Gas Pipe Line Corporation, dated April 19, 1988, relating to commencement of storage service under Rate Schedule SS-1, (Exhibit 10(v), Form 10-K for the fiscal year ended September 30, 1989). 10(j) -Storage Transportation Agreement, dated June 1, 1979, between the Company and South Georgia Natural Gas Company, (Exhibit 10(v), Form 10-K for the fiscal year ended September 30, 1990). 10(k) - Firm Seasonal Transportation Agreement, dated June 29, 1990, between the Company and Transcontinental Gas Pipe Line Corporation, (Exhibit 10(bb), Form 10-K for the fiscal year ended September 30, 1990). 10(l) - Service Agreement under Rate Schedule WSS, dated June 1, 1990, between the Company and Transcontinental Gas Pipe Line Corporation, (Exhibit 10(cc), Form 10-K for the fiscal year ended September 30, 1990). 10(m) - Limited-Term Transportation Agreement Contract # A970 dated April 1, 1988, between the Company and CNG Transmission Corporation, (Exhibit 10(bb), Form 10-K for the fiscal year ended September 30, 1991). 10(n) - Service Agreement System Contract #.2271 under Rate Schedule FT, dated August 1, 1991, between the Company and Transcontinental Gas Pipe Line Corporation, (Exhibit 10(dd), Form 10-K for the fiscal year ended September 30, 1991). 10(o) - Service Agreement System Contract #.4984 dated August 1, 1991, between the Company and Transcontinental Gas Pipe Line Corporation, (Exhibit 10(ee), Form 10-K for the fiscal year ended September 30, 1991). 10(p) - Service Agreement Contract #830810 under Rate Schedule FT, dated March 1, 1992, between the Company and South Georgia Natural Gas Company (Exhibit 10(aa), Form 10-K for the fiscal year ended September 30, 1992). Exhibit Number Description 10(q) - Firm Gas Transportation Contract #3699 under Rate Schedule FT, dated February 1, 1992, between the Company and Transcontinental Gas Pipe Line Corporation (Exhibit 10(dd), Form 10-K for the fiscal year ended September 30, 1992). 10(r) - Firm Gas Transportation Agreement under Rate Schedule FT-1, dated July 1, 1992, between the Company and East Tennessee Natural Gas Company (Exhibit 10(ff), Form 10-K for the fiscal year ended September 30, 1992). 10(s) - Service Agreement Applicable to the Storage of Natural Gas under Rate Schedule GSS, dated October 25, 1993, between the Company and CNG Transmission Corporation (Exhibit 10(y), Form 10-K for the fiscal year ended September 30, 1993). 10(t) - Service Agreement Applicable to the Storage of Natural Gas under Rate Schedule GSS, dated September, 1993, between Chattanooga Gas Company and CNG Transmission Corporation (Exhibit 10(z), Form 10-K for the fiscal year ended September 30, 1993). 10(u) - Gas Storage Contract #2031 under Rate Schedule FS, dated September 1, 1993, between the Company and Tennessee Gas Pipeline Company (Exhibit 10(aa), Form 10-K for the fiscal year ended September 30, 1993). 10(v) - Firm Seasonal Transportation Agreement, dated February 1, 1992, between the Company and Transcontinental Gas Pipe Line Corporation amending Exhibit 10(bb), Form 10-K for the fiscal year ended September 30, 1990 (Exhibit 10(cc), Form 10-K for the fiscal year ended September 30, 1993). 10(w) - Service Agreement under Rate Schedule SS-1, dated April 1, 1988, between the Company and Transcontinental Gas Pipe Line Corporation (Exhibit 10(z), Form 10-K for the fiscal year ended September 30, 1994). Exhibit Number Description 10(x) - Firm Gas Transportation Agreement #5049 under Rate Schedule FT-A, dated November 1, 1993, between the Company and Tennessee Gas Pipeline Company (Exhibit 10(aa), Form 10-K for the fiscal year ended September 30, 1994). 10(y) - Firm Gas Transportation Agreement #5051 under Rate Schedule FT-A, dated November 1, 1993, between Chattanooga Gas Company and Tennessee Gas Pipeline Company (Exhibit 10(bb), Form 10-K for the fiscal year ended September 30, 1994). 10(z) - Gas Storage Contract #3998 under Rate Schedule FS, dated November 1, 1993, between the Company and Tennessee Gas Pipeline Company (Exhibit 10(cc), Form 10-K for the fiscal year ended September 30, 1994). 10(aa) - Gas Storage Contract #3999 under Rate Schedule FS, dated November 1, 1993, between Chattanooga Gas Company and Tennessee Gas Pipeline Company (Exhibit 10(dd), Form 10-K for the fiscal year ended September 30, 1994). 10(bb) - Gas Storage Contract #3923 under Rate Schedule FS, dated November 1, 1993, between the Company and Tennessee Gas Pipeline Company (Exhibit 10(ee), Form 10-K for the fiscal year ended September 30, 1994). 10(cc) - Gas Storage Contract #3947 under Rate Schedule FS, dated November 1, 1993, between Chattanooga Gas Company and Tennessee Gas Pipeline Company (Exhibit 10(ff), Form 10-K for the fiscal year ended September 30, 1994). 10(dd) - Gas Storage Contract #2027 under Rate Schedule FS, dated September 1, 1993, between Chattanooga Gas Company and Tennessee Gas Pipeline Company (Exhibit 10(gg), Form 10-K for the fiscal year ended September 30, 1994). 10(ee) - Service Agreement #902470 under Rate Schedule FT, dated September 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(hh), Form 10-K for the fiscal year ended September 30, 1994). Exhibit Number Description 10(ff) - Service Agreement #904460 under Rate Schedule FT, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(ii), Form 10-K for the fiscal year ended September 30, 1994). 10(gg) - Service Agreement #904480 under Rate Schedule FT, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(jj), Form 10-K for the fiscal year ended September 30, 1994). 10(hh) - Service Agreement #904461 under Rate Schedule FT-NN, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(kk), Form 10-K for the fiscal year ended September 30, 1994). 10(ii) - Service Agreement #904481 under Rate Schedule FT-NN, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(ll), Form 10-K for the fiscal year ended September 30, 1994). 10(jj) - Service Agreement #S20140 under Rate Schedule CSS, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(mm), Form 10-K for the fiscal year ended September 30, 1994). 10(kk) - Service Agreement #S20150 under Rate Schedule CSS, dated November 1, 1994, between the Company and Southern Natural Gas Company (Exhibit 10(nn), Form 10-K for the fiscal year ended September 30, 1994). 10(ll) - Service Agreement #904470 under Rate Schedule FT, dated November 1, 1994, between Chattanooga Gas Company and Southern Natural Gas Company (Exhibit 10(oo), Form 10-K for the fiscal year ended September 30, 1994). 10(mm) - Service Agreement #904471 under Rate Schedule FT-NN, dated November 1, 1994, between Chattanooga Gas Company and Southern Natural Gas Company (Exhibit 10(pp), Form 10-K for the fiscal year ended September 30, 1994). Exhibit Number Description 10(nn) - Service Agreement #S20130 under Rate Schedule CSS, dated November 1, 1994, between Chattanooga Gas Company and Southern Natural Gas Company (Exhibit 10(qq), Form 10-K for the fiscal year ended September 30, 1994). 10(oo) - Firm Storage (FS) Agreement, dated November 1, 1994, between the Company and ANR Storage Company (Exhibit 10(a), Form 10-Q for the quarter ended March 31, 1995). 10(pp) - Firm Storage (FS) Agreement, dated November 1, 1994, between the Company and ANR Storage Company (Exhibit 10(b), Form 10-Q for the quarter ended March 31, 1995). 10(qq) - Firm Transportation Agreement, dated March 1, 1995, between the Company and Southern Natural Gas Company amending Exhibits 10(jj), 10(ll) and 10(mm), Form 10-K for the fiscal year ended September 30, 1994 (Exhibit 10(c), Form 10-Q for the quarter ended March 31, 1995). 10(rr) - Firm Transportation Agreement, dated March 1, 1995, between the Company and Southern Natural Gas Company amending Exhibits 10(hh), 10(ii), 10(kk) and 10(nn), Form 10-K for the fiscal year ended September 30, 1994 (Exhibit 10(d), Form 10-Q for the quarter ended March 31, 1995). 10(ss) - Firm Transportation Agreement, dated March 1, 1995, between Chattanooga Gas Company and Southern Natural Gas Company amending Exhibits 10(oo), 10(pp) and 10(qq), Form 10-K for the fiscal year ended September 30, 1994 (Exhibit 10(a), Form 10-Q for the quarter ended June 30, 1995). 10(tt) - Firm Transportation Agreement, dated June 1, 1995, between the Company and Southern Natural Gas Company amending Exhibit 10(ii), Form 10-K for the fiscal year ended September 30, 1994. 10(uu) - Firm Storage Agreement, effective December 1, 1994, between Chattanooga Gas Company and Tennessee Gas Pipeline Company amending Exhibit 10(ff), Form 10-K for the fiscal year ended September 30, 1994. Exhibit Number Description 10(vv) - Firm Storage Agreement, effective July 1, 1995, between Chattanooga Gas Company and Tennessee Gas Pipeline Company amending Exhibit 10(ff), Form 10-K for the fiscal year ended September 30, 1994. 10(ww) - Firm Storage Agreement, effective July 1, 1995, between Chattanooga Gas Company and Tennessee Gas Pipeline Company amending Exhibit 10(dd), Form 10-K for the fiscal year ended September 30, 1994. 10(xx) - Firm Transportation Agreement, dated September 26, 1994, between the Company and South Georgia Natural Gas Company amending Exhibit 10(s), Form 10-K for the fiscal year ended September 30, 1994. 10(yy) - Firm Storage Agreement, effective July 1, 1995, between the Company and Tennessee Gas Pipeline Company amending Exhibit 10(ee), Form 10-K for the fiscal year ended September 30, 1994. 10(zz) - Firm Storage Agreement, effective July 1, 1995, between the Company and Tennessee Gas Pipeline Company amending Exhibit 10(cc), Form 10-K for the fiscal year ended September 30, 1994. 13 - Portions of the 1995 Annual Report to Shareholders incorporated herein by reference. 21 - Subsidiaries of the Registrant. 23 - Independent Auditors' Consent. 24 - Powers of Attorney. 27 - Financial Data Schedule. EX-3 2 Exhibit 3e ATLANTA GAS LIGHT COMPANY BY-LAWS AS AMENDED NOVEMBER 17, 1995 BY-LAWS ATLANTA GAS LIGHT COMPANY ARTICLE I. SHAREHOLDERS SECTION 1. ANNUAL MEETING. The annual meeting of the Shareholders for the election of Directors and for the transaction of general business shall be held at the office of the Corporation in Atlanta, Georgia, except in cases in which the calls therefor designate some other place within the State of Georgia, on such date and at such time as may be fixed by resolution of the Board of Directors. Such annual meeting shall be general meetings, that is to say, open for the transaction of any business within the powers of the Corporation without special notice of such business, except in cases in which special notice is required by statute, by the Charter or by these By-Laws. SECTION 2. SPECIAL MEETINGS. At any time in the interval between annual meetings, special meetings of the Shareholders may be called by the Chairman of the Board of Directors, the President, the Board of Directors or the Executive Committee by vote at a meeting, by a majority of the Directors in writing without a meeting, or by the holders of not less than 50% of the shares of Common Stock then outstanding and entitled to vote. Special meetings of the Shareholders shall be held at the office of the Corporation in Atlanta, Georgia, except in cases in which the calls therefor designate some other place within the State of Georgia. Notice of a special meeting must include a description of the purpose or purposes for which the meeting is called. SECTION 3. NOTICE OF MEETING. Written or printed notice of every meeting of the Shareholders shall be given to each Shareholder entitled to vote at such meeting, not less than ten (10) nor more than sixty (60) days before such meeting, by leaving the same with him or at his residence or usual place of business or by mailing it, postage prepaid, to him at his address as it appears upon the records of the Corporation on the record date for such meeting as provided in Section 3 of Article V of these By-Laws. In the event of the transfer of stock after the giving of such notice and prior to the holding of the meeting, it shall not be necessary to give notice of the meeting to the transferee. Notice of every special meeting shall state the place, day and hour of such meeting and the general nature of the business proposed to be transacted thereat. Failure to give notice of any annual meeting or any irregularity in such notice shall not affect the validity of such annual meeting or of any proceeding at such meeting (other than proceedings of which special notice is required by law, by the Charter or by the By-Laws). It shall not be requisite to the validity of any meeting of Shareholders that notice thereof, whether prescribed by law, by the Charter or by these By-Laws, shall have been given to any Shareholder who attends in person or by proxy, or to any Shareholder who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. No notice other than by verbal announcement need be given of any adjourned meetings of Shareholders. SECTION 4. QUORUM. At all meetings of Shareholders, a majority of the outstanding shares of capital stock entitled to vote, represented by Shareholders in person or by proxy, shall constitute a quorum for the transaction of business; but in the absence of a quorum the Shareholders present in person or by proxy at the time and place fixed by Section 1 of this Article I for an annual meeting, or designated in the notice of a special meeting, or at the time and place of any adjournment thereof, by majority vote may adjourn the meeting from time to time without notice other than by verbal announcement at the meeting, until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting. SECTION 5. VOTING AND PROXIES. Any Shareholder having the right to vote at any meeting shall be entitled to one vote for each share of stock held by him. Any Shareholder entitled to vote at any meeting may vote either in person or by proxy. Every proxy shall be in writing, subscribed by a Shareholder or his duly authorized attorney, and dated, but need not be sealed, witnessed or acknowledged. SECTION 6. LIST OF SHAREHOLDERS. A complete list of the Shareholders entitled to vote at the annual meeting of the Shareholders or at any special meeting of Shareholders, arranged in alphabetical order, with the mailing address of each according to the records of the Corporation and the number of voting shares held by each, shall be prepared by the Secretary or any Assistant Secretary and produced at any meeting of Shareholders upon the request of any Shareholder. SECTION 7. NOTICE OF ACTION. At any meeting of the Shareholders, only such business, including nomination of candidates for election to the Board of Directors, shall be conducted as shall have been brought before the meeting (i) by or at the direction of the Board of Directors or (ii) by any Shareholder of the Corporation who complies with the notice procedures set forth in this Section 7; provided, in each case, that such business proposed to be conducted is, under the law, an appropriate subject for shareholder action. For such business to be properly brought before a meeting by a Shareholder, the Shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, in the case of an annual meeting of Shareholders, a Shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, in accordance with Securities and Exchange Commission Rule 14a-8(a)(3)(i), not less than 120 calendar days prior to the date of the Corporation's proxy statement released to Shareholders in connection with the previous year's annual meeting of Shareholders, except if no annual meeting of Shareholders was held in the previous year or if the date of the annual meeting of Shareholders has been changed by more than 30 calendar days from the date contemplated at the time of the previous year's proxy statement, the notice shall be received at the principal offices of the Corporation not less than the later of (a) the date which is 150 calendar days prior to the date of the contemplated annual meeting and (b) the date which is 10 calendar days after the date of the first public announcement or other notification to Shareholders of the contemplated annual meeting. In the case of special meetings of Shareholders, a Shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, in accordance with Securities and Exchange Commission Rule 14a-8(a)(3)(i), not less than 120 calendar days prior to the date of the special meeting. A Shareholder's notice to the Secretary shall set forth as to each matter such Shareholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting the business at the meeting; (ii) the name and address, as they appear on the Corporation's books, of the Shareholder proposing such business; (iii) the class and number of shares that are beneficially owned by such Shareholder; (iv) the dates upon which the Shareholder acquired such shares; (v) documentary support for any claim of beneficial ownership; (vi) any material interest of such Shareholder in such business; (vii) a statement in support of the matter and any other information required by said Rule 14a-8; and (viii) as to each person whom the Shareholder proposes to nominate for election or reelection as director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, and Rule 14a-11 thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected). The chairman of a Shareholders meeting may, if the facts warrant, determine and declare to the meeting that such business or nomination was not properly brought before the meeting in accordance with the provisions of this Section 7, and, if he should so determine, he shall so declare to the meeting, and any such business so determined to be not properly brought before the meeting shall not be transacted, or in the case of persons so nominated, not be eligible for election. ARTICLE II. BOARD OF DIRECTORS SECTION 1. ELECTION AND POWERS. A. The business and property of the Corporation shall be conducted and managed by a Board of Directors, which shall consist of such number of Directors as shall be fixed from time to time exclusively pursuant to a resolution adopted by the Board of Directors. The members of the Board of Directors shall be elected by the Shareholders at their annual meeting, or at any meeting held in lieu thereof. Each Director shall hold office until the Annual Meeting of Shareholders held next after his election and until his successor shall have been duly chosen and qualified or until he shall have resigned or shall have been removed in the manner provided in Section 6 of this Article II. B. To be eligible to be a Director of the Company, a person must own at least 100 shares of the Common Stock of the Company. C. If any Director ceases to hold the position in his principal employment profession, trade, or calling that he or she held at the beginning of the current term for which he or she was elected a Director, such person shall not be eligible for re-election to the Board of Directors at the expiration of such current term unless the Board of Directors decides that such person should be eligible for re-election. D. Any Director who (i) was not a Director on September 30, 1965 and (ii) either (aa) attains his seventieth (70th) birthday or (bb) retires from or discontinues his employment with the Corporation, whichever first occurs, shall thereafter, upon completion of the term for which he was elected a Director, cease to be an active Director; provided, however, anyone who, upon his retirement is Chairman of the Board or President of the Company may, notwithstanding the above provisions of this Section, continue to serve as an active Director until he attains his seventieth (70th) birthday, and thereafter until completion of the term for which he was elected a Director. E. Upon appointment by the Board of Directors, a Director who ceases to be an active Director because of age or retirement, or any other person who shall be so elected by the Board of Directors, shall become an Honorary Director for such term or terms as the Board of Directors may determine, but subject to removal from the position of Honorary Director at any time at the pleasure of the Board. Except for the regular November meeting of the Board of Directors, Honorary Directors will not be expected to attend meetings of the Board of Directors unless specially invited. The expenses of Honorary Directors in attending such November meeting or any other meeting of the Board of Directors to which they are specially invited will be reimbursed by the Company but they will not receive fees for attending such meetings. Honorary Directors may participate in an advisory capacity in all discussions and deliberations of the Board of Directors, but shall have no vote, at the meetings which they attend in accordance with the foregoing provisions. An Honorary Director shall not be included in any calculation of the number of active Directors authorized and serving under this Section 1. SECTION 2. MEETINGS. Regular meetings of the Board of Directors shall be held at such places within or without the State of Georgia and at such times as the Board of Directors by vote may from time to time determine and if so determined, no notice thereof need be given. Special meetings of the Board of Directors may be held at any time or place, either within or without the State of Georgia, whenever called by the Chairman of the Board of Directors, the President, the Board of Directors or the Executive Committee by vote at a meeting, or by a majority of the Directors in writing without a meeting, notice thereof being given to each Director at least two days before the meeting by delivering the same to him personally or by sending the same to him by telegraph or by leaving the same at his residence or usual place of business or, in the alternative, upon three days notice by mailing same to him at his last known mailing address according to the records of the Corporation. It shall not be requisite to the validity of any meetings of the Board of Directors that notice thereof shall have been given to any Director who attends, or to any Director who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. No notice of adjourned meetings of the Board of Directors need be given. All regular and special meetings of the Board of Directors shall be general meetings open for the transaction of any business within the powers of the Corporation without special notice of such business, except in cases in which special notice is required by law, by the Charter, by these By-Laws or by the call of such meeting. SECTION 3. QUORUM. At all meetings of the Board of Directors, a majority of the total number of the Directors shall constitute a quorum for the transaction of business, except in cases where it is by law, by the Charter or by the By-Laws otherwise provided, a majority of such quorum shall decide any questions that may come before the meeting. In the absence of a quorum, the Directors present by majority vote may adjourn the meeting from time to time without notice other than by verbal announcement at the meeting until a quorum shall attend. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. SECTION 4. VACANCIES. The Board of Directors at any time may create vacancies in the Board of Directors by increasing the number of Directors from the number elected by the Shareholders to any number not more than fifteen (15). Vacancies occurring in the Board of Directors, through death, resignation, increase in the number of Directors or any cause other than removal by the Shareholders, may be filled by the vote of a majority of the remaining Directors. SECTION 5. COMPENSATION. The Directors may be compensated for their services on an annual basis and/or they may receive a fixed sum for attendance at each regular or special meeting and every adjournment thereof; such compensation or fixed sum to be fixed from time to time by resolution of the Board of Directors. The Directors shall be reimbursed for all reasonable traveling expenses incurred in attending meetings. Nothing in this Section shall preclude a Director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 6. REMOVAL. At any meeting of the Shareholders called for the purpose, any Director may, by vote of the Shareholders entitled to cast a majority in number of all the votes, be removed from office, with or without cause, and another be appointed in the place of the person so removed, to serve for the remainder of his term. SECTION 7. INDEMNIFICATION OF DIRECTORS AND OFFICERS; INSURANCE. A. This Corporation shall indemnify any Director made a party to a proceeding because he is or was a Director or who, while a Director, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against reasonable expenses and liability, as defined in Official Code of Georgia Annotated Section 14-2-850, as it may from time to time be amended, incurred by such Director in any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal, and shall advance expenses upon receipt from such Director of the written affirmation and repayment promise required by Section 14-2-856 of the Official Code of Georgia Annotated or successor provisions; provided, however, that the Corporation shall not indemnify any Director for any liability or expenses incurred by such Director (i) for any appropriation, in violation of his duties, of any business opportunity of the Corporation; (ii) for any acts or omissions which involve intentional misconduct or a knowing violation of law; (iii) for the types of liability set forth in Section 14-2-832 of the Official Code of Georgia Annotated or successor provisions; or (iv) for any transaction from which the Director derives an improper personal benefit. B. This Corporation shall indemnify any Officer made a party to a proceeding because he is or was an Officer or who, while an Officer, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against reasonable expenses and liability, as defined in Official Code of Georgia Annotated Section 14-2-850, as it may from time to time be amended, incurred by such Officer in any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, and whether formal or informal, and shall advance expenses to the same extent, and subject to the same conditions, as are provided in Subsection A of this Section with respect to Directors. C. The indemnification under Subsection A of this Section (unless ordered by a court) shall be effective only when a determination of eligibility under Subsection A is made: (i) By the Board of Directors by majority vote of a quorum consisting of Directors not at the time parties to the proceeding; (ii) If a quorum cannot be obtained under subparagraph (i) of this subsection, by majority vote of a committee duly designated by the Board of Directors (in which designation Directors who are parties may participate), consisting solely of two or more Directors not at the time parties to the proceeding; (iii) By special legal counsel: (a) Selected by the Board of Directors or its committee in the manner prescribed in subparagraph (i) or (ii) of this subsection; or (b) If a quorum of the Board of Directors cannot be obtained under subparagraph (i) of this subsection and a committee cannot be designated under subparagraph (ii) of this subsection, selected by majority vote of the full Board of Directors (in which selection Directors who are parties may participate); or (iv) By the shareholders, but shares owned by or voted under the control of Directors who are at the time parties to the proceeding may not be voted on the determination. D. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding on receipt of a written affirmation of the person seeking such advance of his good faith belief that he has met the standard of conduct set forth in Section 14-2-856(b) of the Official Code of Georgia Annotated or successor provisions, and receipt of an undertaking by or on behalf of such person to repay any advances if it is ultimately determined that such person is not entitled to indemnification. E. The Corporation and its officers shall have the power to purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the Corporation or who, while a director, officer, employee, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise against liability asserted against or incurred by him in that capacity or arising from his status as a director, officer, employee, or agent, whether or not the Corporation would have the power to indemnify him against the same liability under the provisions of this section. F. If the Corporation indemnifies or advances expenses to a Director, otherwise than by action by the shareholders or by an insurance carrier pursuant to insurance maintained by the Corporation, the Corporation shall report the indemnification or advance in writing to the shareholders with or before the notice of the next annual shareholders' meeting. G. The rights to indemnification provided by this section shall apply to all proceedings described in Subsections A and B of this Section 7 with respect to actions or omissions of a Director or Officer that occur while this Section 7 is in effect, regardless of whether any provision of this Section 7 has been amended or repealed subsequent to such actions or omissions. All rights to indemnification under this Section shall be deemed to be a contract between the Corporation and each Director and Officer who serves or served in such capacity and shall not be diminished by any written agreement providing any such person with rights of indemnification, but shall be in addition to such rights. H. For purposes of this Section, references to the "Corporation" shall include, in addition to this Corporation, any merging or consolidating corporation (including any merging or consolidating corporation of a merging or consolidating corporation) absorbed in a merger or consolidation with this Corporation, so that any person who is or was a Director or Officer of such merging or consolidating corporation, or who is or was serving at the request of such merging or consolidating corporation as a Director or Officer of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Section with respect to this Corporation as he would if he had served this Corporation in the same capacity, provided that no indemnification under Subsections A and B of this Section permitted by this Subsection I shall be mandatory under this Subsection or any By-Law of this Corporation without the approval of such indemnification by the Board of Directors or the Shareholders of this Corporation in the manner provided in paragraphs (i) and (iii) of Subsection D of this Section. I. The indemnification and advancement of expenses provided by or granted pursuant to this Section shall continue as to a person who has ceased to be a Director or Officer and shall inure to the benefit of the heirs, executors and administrators of such a person. J. The indemnification and advancement of expenses provided by or granted pursuant to this Section is intended and shall be interpreted to provide indemnification and advancement of expenses to the full extent permitted by the Official Code of Georgia Annotated but shall not be deemed exclusive of any other rights, in respect of indemnification or otherwise, to which any Director or Officer may be entitled under any By-Law, agreement, vote of Shareholders or disinterested Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. ARTICLE III. COMMITTEES SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may designate an Executive Committee of three or more Directors which designation shall include the Chairman of the Board of Directors and the President. Each Director of the Corporation who is not designated as a member of the Executive Committee is hereby designated as an alternate member of the Executive Committee, who may act in the place and stead of any absent member or members at any meeting of such Executive Committee in the event (a) a quorum of the Executive Committee is not present, and (b) the Chairman of the Board or, in his absence, the President, appoints such alternate member to act for that Meeting as a member the Executive Committee; and such alternate member shall serve only at the Meeting for which such appointment is made, but shall have at that Meeting all the powers of a regular member of the Executive Committee. During the intervals between the meetings of the Board of Directors, the Executive Committee shall have and may exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation conferred by these By- Laws or otherwise, to the extent authorized by the resolution providing for such Executive Committee or by subsequent resolution adopted by a majority of the whole Board of Directors, in all cases in which specific directions shall not have been given by the Board of Directors. The Executive Committee shall keep full and fair accounts of its transactions. All action by the Executive Committee shall be reported to the Board of Directors at its meeting next succeeding such action, and shall be subject to revision and alteration by the Board of Directors; provided that no rights of third persons shall be affected by any such revision or alteration. Vacancies in the Executive Committee shall be filled by the Board of Directors. SECTION 2. MEETINGS OF EXECUTIVE COMMITTEE. Regular meetings of the Executive Committee shall be held at such places within or without the State of Georgia and at such times as the Executive Committee by vote may from time to time determine and if so determined no notice thereof need be given. Special meetings of the Executive Committee may be held at any time or place, either within or without the State of Georgia, whenever called by the Chairman of the Board of Directors, the President, the Board of Directors or the Executive Committee by vote at a meeting, or by two members of the Committee in writing without a meeting, notice thereof being given to each member of the Committee at least one day before the meeting, by delivering the same to him personally or by sending the same to him by telephone or telegraph or, in the alternative, upon two days notice by mailing same to him at his last known mailing address according to the records of the Corporation. It shall not be requisite to the validity of any meeting of the Executive Committee that notice thereof shall have been given to any member of the Committee who attends or to any member of the Committee who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. All regular and special meetings of the Executive Committee shall be general meetings open for the transaction of any business within its powers without special notice of such business, except in cases in which special notice is required by law, by the Charter, by these By-Laws or by the call of such meeting. SECTION 3. QUORUM OF EXECUTIVE COMMITTEE. At all meetings of the Executive Committee a majority of the total number of its members shall constitute a quorum for the transaction of business. Except in cases in which it is by law, by the Charter, by these By-Laws or by resolution of the Board of Directors otherwise provided, a majority of such quorum shall decide any questions that may come before the meeting. In the absence of a quorum, the members of the Committee present by majority vote may adjourn the meeting from time to time, without notice other than by verbal announcement at the meeting, until a quorum shall attend. SECTION 4. COMPENSATION OF EXECUTIVE COMMITTEE. Members of the Executive Committee may be compensated for their services on an annual basis and/or they may receive a fixed sum for attendance at each meeting of the Executive Committee and every adjournment thereof; such compensation or fixed sum to be fixed from time to time by resolution of the Board of Directors. The members of the Executive Committee shall be reimbursed for all reasonable traveling expenses incurred in attending meetings. Nothing in this Section shall preclude a member of the Executive Committee from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 4A. HONORARY MEMBERS OF EXECUTIVE COMMITTEE. Upon appointment by the Board of Directors, a Director who ceases to be an active Director because of age or retirement, and who at that time has been a member of the Executive Committee for twelve or more years, shall become an Honorary Member of the Executive Committee for such term or terms as the Board of Directors may determine, but subject to removal from the position of Honorary Member of the Executive Committee at any time at the pleasure of the Board. Honorary Members of the Executive Committee shall receive the customary fees for attending regular meetings, and may participate in an advisory capacity in all discussions and deliberations of the Executive Committee, but shall have no vote. An Honorary Member of the Executive Committee shall not be included in any calculation of the number of active members of the Executive Committee authorized and serving under this ARTICLE III. SECTION 5. AUDIT COMMITTEE. A. The Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may designate an Audit Committee of four (4) or more outside Directors. The members of said Audit Committee shall serve at the pleasure of the Board of Directors or until their successor shall be duly designated. Each outside Director of the Corporation who is not designated as a member of the Audit Committee is hereby designated as an alternate member of the Audit Committee, who may act in the place and stead of any absent member or members at any such meeting of such Audit Committee in the event (a) a quorum of the Audit Committee is not present, and (b) the Chairman of the Board or, in his absence, the President, appoints such alternate member to act for that meeting as a member of the Audit Committee; and such alternate member shall serve only at the meeting for which such appointment is made but shall have at that meeting all the powers of a regular member of the Audit Committee. The Audit Committee shall consider the choice of the independent public accountants for the Corporation, shall review the planned scope of the audit and the results of their audits of the financial statements of the Corporation, their reports thereon and their recommendations with respect to accounting, internal controls and other matters, shall convey information to and from the Board and its independent public accountants and auditors, shall review the scope of the audits of the internal auditors and the results of their audits, and shall make their report to the Board of Directors or the Executive Committee, or to both. The Audit Committee shall keep full and fair accounts of its transactions. All action by the Audit Committee shall be reported to the Board of Directors at its meeting next succeeding such action, and shall be subject to revision and alteration by the Board of Directors; provided that no rights of third persons shall be affected by any such revision or alteration. Vacancies in the Audit Committee shall be filled by the Board of Directors. B. Regular meetings of the Audit Committee shall be held at such places within or without the State of Georgia and at such times as the Audit Committee by vote may from time to time determine and if so determined no notice thereof need be given. Special meetings of the Audit Committee may be held at any time or place, either within or without the State of Georgia, whenever called by the Chairman of the Board of Directors, the President, the Board of Directors or the Audit Committee by vote at a meeting, or by two members of the Committee in writing without a meeting, notice thereof being given to each member of the Committee at least one day before the meeting, by delivering the same to him personally or by sending the same to him by telephone or facsimile or, in the alternative, upon two days notice by mailing same to him at his last known mailing address according to the records of the Corporation. It shall not be requisite to the validity of any meeting of the Audit Committee that notice thereof shall have been given to any member of the Committee who attends or to any member of the Committee who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. All regular and special meetings of the Audit Committee shall be general meetings open for the transaction of any business within its powers without special notice of such business, except in cases in which special notice is required by law, by the Charter, by these By-Laws or by the call of such meeting. C. At all meetings of the Audit Committee a majority of the total number of its members shall constitute a quorum for the transaction of business. Except in cases in which it is by law, by the Charter, by these By-Laws or by resolution of the Board of Directors otherwise provided, a majority of such quorum shall decide any questions that may come before the meeting. In the absence of a quorum, the members of the Committee present by majority vote may adjourn the meeting from time to time, without notice other than by verbal announcement at the meeting, until a quorum shall attend. D. Members of the Audit Committee may be compensated for their services on an annual basis and/or they may receive a fixed sum for attendance at each meeting of the Audit Committee and every adjournment thereof; such compensation or fixed sum to be fixed from time to time by resolution of the Board of Directors. The members of the Audit Committee shall be reimbursed for all reasonable traveling expenses incurred in attending meetings. Nothing in this Section shall preclude a member of the Audit Committee from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 6. N0MINATING AND COMPENSATION COMMITTEE. A. The Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may designate a Nominating and Compensation Committee of four (4) or more Directors. The members of said Nominating and Compensation Committee shall serve at the pleasure of the Board of Directors or until their successors shall be duly designated. Each Director of the Corporation who is not designated as a member of the Nominating and Compensation Committee is hereby designated as an alternate member of the Nominating and Compensation Committee, who may act in the place and stead of any absent member or members at any such meeting of such Nominating and Compensation Committee in the event (a) a quorum of the Nominating and Compensation Committee is not present, and (b) the Chairman of the Board or, in his absence, the President, appoints such alternate member to act for that meeting as a member of the Nominating and Compensation Committee; and such alternate member shall serve only at the meeting for which such appointment is made but shall have at that meeting all the powers of a regular member of the Nominating and Compensation Committee. The Nominating and Compensation Committee shall review the performance of the senior officers of the Corporation and will recommend to the Board of Directors the appropriate compensation level for these and the other officers of the Corporation; they shall review and recommend to the Board of Directors any changes in the various benefit programs of the Corporation; and shall review the level of fees paid and the manner in which fees are paid to the members of the Corporation's Board of Directors and shall make recommendations for adjustments as appropriate. The Nominating and Compensation Committee shall also identify and recommend to the Board of Directors the nominees for election to the Board. The Nominating and Compensation Committee shall keep full and fair accounts of its transactions. All action by the Nominating and Compensation Committee shall be reported to the Board of Directors at its meeting next succeeding such action, and shall be subject to revision and alteration by the Board of Directors; provided that no rights of third persons shall be affected by any such revision or alteration. Vacancies in the Nominating and Compensation Committee shall be filled by the Board of Directors. B. Regular meetings of the Nominating and Compensation Committee shall be held at such places within or without the State of Georgia and at such times as the Nominating and Compensation Committee by vote may from time to time determine and if so determined no notice thereof need be given. Special meetings of the Nominating and Compensation Committee may be held at any time or place, either within or without the State of Georgia, whenever called by the Chairman of the Board of Directors, the President, the Board of Directors or the Nominating and Compensation Committee by vote at a meeting, or by two members of the Committee in writing without a meeting, notice thereof being given to each member of the Committee at least one day before the meeting, by delivering the same to him personally or by sending the same to him by telephone or telegraph or, in the alternative, upon two days notice by mailing same to him at his last known mailing address according to the records of the Corporation. It shall not be requisite to the validity of any meeting of the Nominating and Compensation Committee that notice thereof shall have been given to any member of the Committee who attends or to any member of the Committee who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. All regular and special meetings of the Nominating and Compensation Committee shall be general meetings open for the transaction of any business within its powers without special notice of such business, except in cases in which special notice is required by law, by the Charter, by these By-Laws or by the call of such meeting. C. At all meetings of the Nominating and Compensation Committee a majority of the total number of its members shall constitute a quorum for the transaction of business. Except in cases in which it is by law, by the Charter, by these By-Laws or by resolution of the Board of Directors otherwise provided, a majority of such quorum shall decide any questions that may come before the meeting. In the absence of a quorum, the members of the Committee present by majority vote may adjourn the meeting from time to time, without notice other than by verbal announcement at the meeting, until a quorum shall attend. D. Members of the Nominating and Compensation Committee may be compensated for their services on an annual basis and/or they may receive a fixed sum for attendance at each meeting of the Nominating and Compensation Committee and every adjournment thereof; such compensation or fixed sum to be fixed from time to time by resolution of the Board of Directors. The members of the Nominating and Compensation Committee shall be reimbursed for all reasonable traveling expenses incurred in attending meetings. Nothing in this Section shall preclude a member of the Nominating and Compensation Committee from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 7. LONG RANGE PLANNING COMMITTEE. A. The Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may designate a Long Range Planning Committee of four (4) or more Directors. The members of said Long Range Planning Committee shall serve at the pleasure of the Board of Directors or until their successor shall be duly designated. Each Director of the Corporation who is not designated as a member of the Long Range Planning Committee is hereby designated as an alternate member of the Long Range Planning Committee, who may act in the place and stead of any absent member or members at any such meeting of such Long Range Planning Committee in the event (a) a quorum of the Long Range Planning Committee is not present, and (b) the Chairman of the Board or, in his absence, the President, appoints such alternate member to act for that meeting as a member of the Long Range Planning Committee; and such alternate member shall serve only at the meeting for which such appointment is made but shall have at that meeting all the powers of a regular member of the Long Range Planning Committee. The Long Range Planning Committee shall review plans for the growth and financial stability of the Corporation. In carrying out these duties, said Committee shall make periodic reviews of the annual budget of the Corporation, all financing plans, the Corporation's Employee Pension Plan (including investments of its funds) and investments in non-utility operations. The results of said reviews shall be reported to the Board of Directors. The Long Range Planning Committee shall keep full and fair accounts of its transactions. All action by the Long Range Planning Committee shall be reported to the Board of Directors at its meeting next succeeding such action, and shall be subject to revision and alteration by the Board of Directors; provided that no rights of third persons shall be affected by any such revision or alteration. Vacancies in the Long Range Planning Committee shall be filled by the Board of Directors. B. Regular meetings of the Long Range Planning Committee shall be held at such places within or without the State of Georgia and at such times as the Long Range Planning Committee by vote may from time to time determine, and if so determined, no notice thereof need be given. Special meetings of the Long Range Planning Committee may be held at any time or place, either within or without the State of Georgia, whenever called by the Chairman of the Board of Directors, the President, the Board of Directors or the Long Range Planning Committee by vote at a meeting, or by two members of the Committee in writing without a meeting, notice thereof being given to each member of the Committee at least one day before the meeting, by delivering the same to him personally or by sending the same to him by telephone or telegraph or, in the alternative, upon two days notice by mailing same to him at his last known mailing address according to the records of the Corporation. It shall not be requisite to the validity of any meeting of the Long Range Planning Committee that notice thereof shall have been given to any member of the Committee who attends or to any member of the Committee who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. All regular and special meetings of the Long Range Planning Committee shall be general meetings open for the transaction of any business within its powers without special notice of such business, except in cases in which special notice is required by law, by the Charter, by these By-Laws or by the call of such meeting. C. At all meetings of the Long Range Planning Committee a majority of the total number of its members shall constitute a quorum for the transaction of business. Except in cases in which it is by law, by the Charter, by these By-Laws or by resolution of the Board of Directors otherwise provided, a majority of such quorum shall decide any questions that may come before the meeting. In the absence of a quorum, the members of the Committee present by majority vote may adjourn the meeting from time to time, without notice other than by verbal announcement at the meeting, until a quorum shall attend. D. Members of the Long Range Planning Committee may be compensated for their services on an annual basis and/or they may receive a fixed sum for attendance at each meeting of the Long Range Planning Committee and every adjournment thereof; such compensation or fixed sum to be fixed from time to time by resolution of the Board of Directors. The members of the Long Range Planning Committee shall be reimbursed for all reasonable traveling expenses incurred in attending meetings. Nothing in this Section shall preclude a member of the Long Range Planning Committee from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 8. OTHER COMMITTEES. The Board of Directors may by resolution designate such other standing or special committees as it deems desirable and discontinue the same at pleasure. Each such committee shall have such powers and perform such duties, not inconsistent with law, as may be assigned to it by the Board of Directors. Each of the Executive, Audit, Nominating and Compensation and Long Range Planning Committees shall be furnished a secretary to be chosen by each Committee from the employees of the Company. ARTICLE IV. OFFICERS SECTION 1. EXECUTIVE OFFICERS. The Executive Officers of the Corporation shall be a President, one or more Senior Vice Presidents, one or more Vice Presidents, a Secretary, a Treasurer, and a Controller. If the Board of Directors sees fit, it also may elect the Chairman of the Board of Directors and one or more Executive Vice Presidents as Executive Officers of the Corporation. In the event no Executive Vice President is so elected, the Board of Directors may, from time to time determine which, if any, of the Vice Presidents shall perform all or any part of the duties of an Executive Vice President in addition to his duties as Vice President. The Chairman of the Board of Directors and the Executive Officers shall be elected annually by the Board of Directors at its first meeting following the Annual Meeting of Shareholders and each such person shall hold office until the corresponding meeting of the Board of Directors in the next year and until his successor shall have been duly chosen and qualified or until he shall have resigned or shall have been removed in the manner provided in Section II of this Article IV. Any vacancy in any of the above offices may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting. SECTION 2. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of Directors may be chosen from among the Directors of the Corporation and need not be an Executive Officer or employee of the Corporation. The Chairman shall preside at all meetings of the Shareholders, the Board of Directors, and the Executive Committee. He shall have the usual powers and duties incident to the office of the chairman of the board of directors of a corporation and such other powers and duties as from time to time may be assigned to him by the Board of Directors. SECTION 2.1. CHIEF EXECUTIVE OFFICER. The Board may designate as the Chief Executive Officer of the Corporation the President or any other officer of the Corporation including the Chairman if the Chairman is an Executive officer of the Corporation. The Chief Executive Officer of the Corporation shall have general and active management responsibility for the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. Except where by law the signature of the President is required, the Chief Executive Officer shall have the same powers as the President to sign all authorized certificates, contracts, bonds, deeds, mortgages and other instruments. He shall have the usual powers and duties incident to the position of chief executive officer of a corporation and such other powers and duties as from time to time may be assigned by the Board of Directors. The Board of Directors may, or if it does not, the Chief Executive Officer may, from time to time designate an Executive Officer of the Corporation to assume and perform the duties and powers of the Chief Executive Officer during the absence or disability of the Chief Executive Officer. SECTION 3. PRESIDENT. The President shall have immediate supervision of the affairs of the Corporation and maintain a strict oversight over all its affairs and interests, and shall be the Chief Operating Officer of the Corporation. He may sign all authorized certificates, contracts, bonds, deeds, mortgages, and other instruments, except in cases in which the signing thereof shall have been expressly delegated to some other Officer or Agent of the Corporation. In the event there is no Chairman of the Board, the President shall also have all the powers and authority that the Chairman is given in the By-Laws or otherwise. During the absence or disability of the Chairman, the President shall preside at all meetings of the Shareholders, the Board of Directors and the Executive Committee. He shall have the usual powers and duties incident to the office of a president of a corporation and such other powers and duties as from time to time may be assigned to him by the Board of Directors. If the Board designates the President as the Chief Executive Officer of the Corporation, the President shall also have the powers and duties of the Chief Executive Officer. SECTION 4. EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS, AND VICE PRESIDENTS. The Executive Vice Presidents shall be senior in authority among the Vice Presidents. During the absence or disability of the President, the Board of Directors shall designate which of the Executive Vice Presidents shall exercise all the powers and discharge all of the duties of the President, provided, however, that if he is not a Director he shall not preside at any meetings of the Board of Directors or the Executive Committee, and each Vice President shall have such powers and duties as from time to time may be properly delegated to each of them by the President and such other powers and duties as from time to time may be assigned to each of them by the Board of Directors. SECTION 5. SECRETARY. The Secretary shall keep accurate minutes of all meetings of the Shareholders, the Board of Directors and the Executive Committee; he shall see that all notices of said meetings are given in accordance with the law, the Charter and these By-Laws; he shall be custodian of said minutes and of the corporate seal or seals of the Corporation; he shall see that the corporate seal, when required, is affixed to all authorized documents and when so affixed may attest the same; and, in general, he shall have the usual powers and duties incident to the office of a secretary of a corporation and such other powers and duties as from time to time may be assigned to him by the Board of Directors. During his absence or disability, an Assistant Secretary or a Secretary pro tempore shall exercise all his powers and discharge all his duties. SECTION 6.A. TREASURER. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositaries as shall from time to time be selected by the Board of Directors; he shall render to the President and to the Board of Directors, whenever requested, an account of the financial condition of the Corporation; and, in general, he shall perform all the duties incident to the office of a treasurer of a corporation and such other duties as may be assigned to him by the Board of Directors. SECTION 6.B. CONTROLLER. The Controller shall have charge of and be responsible for preparation of financial and management reports, budgeting, rate material, property accounting, taxes and such other duties as are commonly incident to the office of Controller. The Controller shall have such power and duties as from time to time may be properly delegated by the President and such other powers and duties as from time to time may be assigned by the Board of Directors. SECTION 7. ASSISTANT OFFICERS. The Board of Directors may elect one or more Assistant Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers. Each Assistant Vice President, each Assistant Secretary, and each Assistant Treasurer, if any, shall hold office for such period and shall have such authority and perform such duties as the President and the Board of Directors may prescribe. SECTION 8. SUBORDINATE OFFICERS. The Board of Directors may elect such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority and perform such duties as the Board of Directors may prescribe. The Board of Directors may from time to time authorize any officer to appoint and remove subordinate officers and prescribe the powers and duties thereof. The Board of Directors may from time to time authorize the Chairman of the Board of Directors or the President to appoint any employee or officer of the Corporation (except the President, the Secretary or any Assistant Secretary elected by the Board of Directors) as an Assistant Secretary of the Corporation, to prescribe the powers, term, duties and salary, if any, of such Assistant Secretary, and to remove any Assistant Secretary thus appointed. SECTION 9. OFFICERS HOLDING TWO OR MORE OFFICES. Any two of the above mentioned offices, except those of President and Secretary or Assistant Secretary, may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument be required by statute, by the Charter or by these By-Laws to be executed, acknowledged or verified by any two or more officers. SECTION 10. COMPENSATION. The Board of Directors shall have power to fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers. SECTION 11. REMOVAL. Any officer of the Corporation may be removed, with or without cause, by vote of a majority of the entire Board of Directors at a meeting called for that purpose, or (except in case of an officer elected by the Board of Directors) by the Executive Committee or by an officer upon whom such power of removal may have been conferred. ARTICLE V. STOCK SECTION 1. CERTIFICATES. Every Shareholder shall be entitled to a certificate or certificates of stock of the Corporation in form prescribed by the Board of Directors, duly numbered and sealed with the corporate seal of the Corporation, and setting forth the number and kind of shares represented thereby to which each Shareholder is entitled. Such certificates shall be signed by the President or Vice President and by the Secretary or an Assistant Secretary of the Corporation. The Board of Directors may also appoint one or more Transfer Agents and/or Registrars for its stock of any class or classes and may require stock certificates to be countersigned and/or registered by one or more of such Transfer Agents and/or Registrars. If certificates of capital stock of the Corporation are signed by a Transfer Agent and by a Registrar, the signature of the Officers of the Corporation and the seal of the Corporation thereon may be facsimiles, engraved or printed. Any provisions of these By-Laws with reference to the signing and sealing of stock certificates shall include, in cases above permitted, such facsimiles. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates, shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be adopted by the Board of Directors of the Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of the Corporation. SECTION 2. TRANSFER OF SHARES. The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates of stock. SECTION 3. RECORD DATES. The Board of Directors is hereby authorized to fix the time, not exceeding seventy (70) days preceding the date of any meeting of Shareholders, or the date for payment of any dividend, or the date for the allotment of rights, or the date when any change, or conversion, or exchange of capital stock shall go into effect, during which the books of the Corporation shall be closed against transfer of stock. In lieu of providing for the closing of the books against transfers of stock as aforesaid, the Board of Directors shall have the authority to fix in advance a date, not exceeding seventy (70) days preceding (1) the date of any meeting of Shareholders, (2) the date for the payment of any dividend, (3) the date for the allotment of rights, or (4) the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the Shareholders entitled to notice of or to vote at any such meeting, or entitled to receive payment of any such dividend, or to any such allotment or rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case such Shareholders and only such Shareholders, as shall be Shareholders of record on the date so fixed, shall be entitled to such notice of and to vote at such meeting, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. In any case in which the Board of Directors does not provide for the closing of the books against transfer of stock as aforesaid, or fix a record date as aforesaid, the twentieth day preceding the date of the meeting of Shareholders, the dividend payment date or the date for the allotment of rights, shall be the record date for the determination of the Shareholders entitled to notice of and to vote at such meeting, or to receive such dividends or rights, as the case may be. SECTION 4. MUTILATED, LOST OR DESTROYED CERTIFICATES. In case of the loss, mutilation or destruction of any certificates of stock of the Corporation, a new or duplicate certificate may be issued in lieu thereof upon such terms and conditions as the Board of Directors shall prescribe. ARTICLE VI. DIVIDENDS AND FINANCE SECTION 1. DIVIDENDS. Subject to the provisions of the Charter, the Board of Directors may in its discretion declare what, if any, dividends shall be paid upon the stock of the Corporation, or upon any class of such stock. Except as otherwise provided by the Charter, dividends shall be payable upon such dates as the Board of Directors may designate. Before payment of any dividend there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Directors from time to time in their absolute discretion think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purposes as the Directors shall think conducive to the interests of the Corporation, and the Directors may abolish any such reserve in the manner in which it was created. SECTION 2. CHECKS, DRAFTS, ETC. All checks, drafts, or orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall, unless otherwise provided by the Board of Directors, be signed by the Treasurer or an Assistant Treasurer and countersigned by an Executive Officer other than the Treasurer. SECTION 3. ANNUAL REPORTS. A report on the affairs of the Corporation shall be submitted at the annual meeting of the Shareholders. Such statement shall be prepared by such Executive Officer of the Corporation as may be designated by the Board of Directors. If no other Executive Officer is so designated, it shall be the duty of the President to prepare such statement. ARTICLE VII. SUNDRY PROVISIONS SECTION 1. SEAL. The corporate seal of the Corporation shall bear the name of the Corporation and the words "INCORPORATED FEBRUARY 16, 1856 - GEORGIA." If deemed advisable by the Board of Directors, a duplicate seal or duplicate seals may be provided and kept for the necessary purposes of the Corporation. SECTION 2. BOOKS AND RECORDS. The Board of Directors may determine from time to time whether and, if allowed, when and under what conditions and regulations the books and records of the Corporation, or any of them, shall be open to the inspection of Shareholders, and the rights of Shareholders in this respect are and shall be limited accordingly, except as otherwise provided by statute. Under no circumstances shall any Shareholder have the right to inspect any book or record or receive any statement for an illegal or improper purpose. SECTION 3. BONDS. The Board of Directors may require any officer, agent or employee of the Corporation to give a bond to the Corporation, conditioned upon the faithful discharge of his duties, with one or more sureties and in such amount as may be satisfactory to the Board of Directors. SECTION 4. VOTING UPON STOCK IN OTHER CORPORATIONS. Any stock in other corporations, which may from time to time be held by the Corporation, may be represented and voted at any meeting of Shareholders of such other corporations by the President or a Vice President of the Corporation or by proxy executed in the name of the Corporation by its President or a Vice President with the corporate seal affixed and attested by the Secretary or an Assistant Secretary. SECTION 5. EXECUTION OF BONDS, DEBENTURES, EVIDENCES OF DEBT, CHECKS, DRAFTS AND OTHER OBLIGATIONS AND ORDERS FOR PAYMENT OF MONEY. The signatures of any officer or officers of this Corporation executing a corporate bond, debenture or other debt security of the Corporation or attesting the corporate seal thereon, or upon any interest coupons annexed to any such corporate bond, debenture or other debt security of the Corporation, and the corporate seal affixed to any such bond, debenture or other debt security of the Corporation, may be facsimiles, engraved or printed, provided that such bond, debenture or other debt security of the Corporation is authenticated or countersigned with the manual signature of an authorized officer of the corporate trustee designated by the indenture or other agreement under which said security is issued or by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the corporation. In case any officer or officers whose signature or signatures, whether manual or facsimile, shall have been used on any corporate bond, debenture or other debt security shall cease to be an officer or officers of the Corporation for any reason before the same has been delivered by the Corporation, such bond, debenture or other debt security may nevertheless be issued and delivered as though the person or persons whose signatures were used thereon had not ceased to be such officer or officers. Checks, drafts and other orders for the payment of money by the Corporation may, if and as from time to time authorized by the Board of Directors, be signed with facsimile signatures. SECTION 6. AMENDMENTS. Except in cases in which a larger or different vote is required by law, these By-Laws may be altered or amended or repealed by the affirmative vote of a majority of the Directors of the Corporation at a regular or special meeting. SECTION 7. BUSINESS COMBINATIONS. All of the requirements of Sections 14-2-1131 to 1133, inclusive, of the Official Code of Georgia Annotated, as now in effect and as hereafter from time to time amended, shall be applicable to this Corporation and to any business combination approved or recommended by the Board of Directors after the date of the adoption of this By-Law. ATLANTA GAS LIGHT COMPANY EXECUTIVE COMMITTEE Rules for Holding and Conduct of Meetings and Keeping of Records Adopted April 2, 1948 (1) Regular Meetings of the Executive Committee shall be held at such places, on such dates and at such times as such Committee may by resolution determine from time to time, and if so determined no notice thereof need be given. (2) Special Meetings of the Executive Committee may be held whenever called by the Chairman of the Committee or any two or more members of the Committee, by causing notice thereof to be given to each member of the Committee by the Secretary or an Assistant Secretary of the Committee, stating the date, time and place thereof, by mailing such notice to each member of the Committee at his residence or business address at least two days before the meeting or by delivering the same to him personally or by telephoning or telegraphing the same to him at his residence or business address at least one day before the meeting. It shall not be requisite to the validity of any meeting of the Committee that notice thereof shall have been given to any member who attends or to any member who, in writing, executed and filed with the records of the meeting, either before or after the holding thereof, waives such notice. Such Special Meetings shall be held at such places, on such dates and at such times as the notices thereof or waivers shall specify. (3) A majority of the members of the Executive Committee shall constitute a quorum for the transaction of business and may adjourn any meeting from time to time and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting, the affirmative vote of a majority of the members present thereat shall decide any question brought before such meeting, except as otherwise provided by law, by the Charter, by resolution of the Board of Directors, or by the By-Laws of the Corporation. (4) The President of the Corporation shall be ex-officio Chairman of the Executive Committee and shall preside at meetings of the Committee. He may call meetings of the Committee whenever he deems it necessary. In the absence of the Chairman from any meeting of the Committee, a Temporary Chairman shall be chosen who shall perform his duties. (5) The Secretary of the Corporation shall be Secretary of the Executive Committee and shall record the proceedings of the meetings of the Executive Committee in books provided for that purpose. The Assistant Secretaries of the Corporation shall be Assistant Secretaries of the Executive Committee and, in the absence or disability of the Secretary, shall have the powers and duties of the Secretary of the Committee. (6) The foregoing rules and any amendments thereto may be amended, added to, altered or repealed in whole or in part at any meeting of the Executive Committee by the affirmative vote of a majority of all the members of the Committee. EX-10 3 Exhibit 10a ATLANTA GAS LIGHT COMPANY NONQUALIFIED SAVINGS PLAN July, 1995 ATLANTA GAS LIGHT COMPANY NONQUALIFIED SAVINGS PLAN TABLE OF CONTENTS Page ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Account . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Active Participant. . . . . . . . . . . . . . . . . . . 1 1.3 Administrative Committee. . . . . . . . . . . . . . . . 1 1.4 Affiliate . . . . . . . . . . . . . . . . . . . . . . . 1 1.5 Before Tax Account. . . . . . . . . . . . . . . . . . . 1 1.6 Before Tax Contributions. . . . . . . . . . . . . . . . 1 1.7 Before Tax Deferral Election. . . . . . . . . . . . . . 1 1.8 Beneficiary . . . . . . . . . . . . . . . . . . . . . . 1 1.9 Board . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.10 Break in Service. . . . . . . . . . . . . . . . . . . . 2 1.11 Change in Control . . . . . . . . . . . . . . . . . . . 2 1.12 Code. . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.13 Company Contributions . . . . . . . . . . . . . . . . . 5 1.14 Company Stock . . . . . . . . . . . . . . . . . . . . . 5 1.15 Compensation. . . . . . . . . . . . . . . . . . . . . . 5 1.16 Contributions . . . . . . . . . . . . . . . . . . . . . 5 1.17 Controlling Company . . . . . . . . . . . . . . . . . . 5 1.18 Covered Employee. . . . . . . . . . . . . . . . . . . . 5 1.19 Deferral Election . . . . . . . . . . . . . . . . . . . 5 1.20 Disability or Disabled. . . . . . . . . . . . . . . . . 6 1.21 Effective Date. . . . . . . . . . . . . . . . . . . . . 6 1.22 Eligibility Service . . . . . . . . . . . . . . . . . . 6 1.23 Employee. . . . . . . . . . . . . . . . . . . . . . . . 6 1.24 Entry Date. . . . . . . . . . . . . . . . . . . . . . . 6 1.25 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.26 Forfeiture. . . . . . . . . . . . . . . . . . . . . . . 6 1.27 Hour of Service . . . . . . . . . . . . . . . . . . . . 6 1.28 Leave of Absence. . . . . . . . . . . . . . . . . . . . 7 1.29 Matching Account. . . . . . . . . . . . . . . . . . . . 8 1.30 Matching Contributions. . . . . . . . . . . . . . . . . 8 1.31 Maternity or Paternity Leave. . . . . . . . . . . . . . 8 1.32 Named Fiduciary . . . . . . . . . . . . . . . . . . . . 8 1.33 Normal Retirement Age . . . . . . . . . . . . . . . . . 8 1.34 Participant . . . . . . . . . . . . . . . . . . . . . . 8 1.35 Participating Company . . . . . . . . . . . . . . . . . 8 1.36 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.37 Plan Year . . . . . . . . . . . . . . . . . . . . . . . 8 1.38 Qualified Separation. . . . . . . . . . . . . . . . . . 8 1.39 Qualified Spousal Waiver. . . . . . . . . . . . . . . . 8 1.40 Spouse or Surviving Spouse. . . . . . . . . . . . . . . 8 1.41 Retirement Savings Plus Plan or RSP . . . . . . . . . . 9 -i- 1.42 Trust or Trust Agreement. . . . . . . . . . . . . . . . 9 1.43 Trustee . . . . . . . . . . . . . . . . . . . . . . . . 9 1.44 Trust Fund. . . . . . . . . . . . . . . . . . . . . . . 9 1.45 Valuation Date. . . . . . . . . . . . . . . . . . . . . 9 1.46 Year of Vesting Service . . . . . . . . . . . . . . . . 9 ARTICLE II ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . .10 2.1 Initial Eligibility Requirements. . . . . . . . . . . .10 (a) General Rule . . . . . . . . . . . . . . . . . . .10 (b) New Participating Companies. . . . . . . . . . . .10 2.2 Treatment of Interruptions of Service . . . . . . . . .10 (a) Leave of Absence . . . . . . . . . . . . . . . . .10 (b) Reemployment Before Break in Service . . . . . . .10 (c) Reemployment After Break in Service. . . . . . . .10 (d) Reparticipation Upon Reemployment. . . . . . . . .10 2.3 Change in Status. . . . . . . . . . . . . . . . . . . .10 (a) Loss of Covered Employee Status. . . . . . . . . .10 (b) Change to Covered Employee Status. . . . . . . . .11 (c) Change by Participant. . . . . . . . . . . . . . .11 ARTICLE III CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . .12 3.1 Before Tax Contributions. . . . . . . . . . . . . . . .12 (a) Before Tax Contributions . . . . . . . . . . . . .12 (b) Deferral Elections . . . . . . . . . . . . . . . .12 3.2 Matching Contributions. . . . . . . . . . . . . . . . .13 3.3 Form of Contributions . . . . . . . . . . . . . . . . .13 3.4 Timing of Contributions . . . . . . . . . . . . . . . .13 ARTICLE IV PARTICIPANTS' ACCOUNTS; CREDITING AND ALLOCATIONS . . .14 4.1 Establishment of Participants' Accounts . . . . . . . .14 4.2 Allocation and Crediting of Before Tax and Matching Contributions . . . . . . . . . . . . . . . . . . . . .14 4.3 Allocation and Crediting of Investment Experience . . .14 (a) Determination of Earnings or Losses. . . . . . . .14 (b) Formula For Allocation . . . . . . . . . . . . . .14 4.4 Notice to Participants of Account Balances. . . . . . .15 4.5 Good Faith Valuation Binding. . . . . . . . . . . . . .15 4.6 Errors and Omissions in Accounts. . . . . . . . . . . .15 ARTICLE V INVESTMENT OF ACCOUNTS. . . . . . . . . . . . . . . . .16 5.1 Establishment of Trust Fund . . . . . . . . . . . . . .16 (a) No Trust Required. . . . . . . . . . . . . . . . .16 (b) Rabbi Trust Permitted. . . . . . . . . . . . . . .16 (c) Trust Required Upon Change in Control. . . . . . .16 5.2 Investment of Trust Fund. . . . . . . . . . . . . . . .16 5.3 Acquisition of Company Stock. . . . . . . . . . . . . .16 (a) In General . . . . . . . . . . . . . . . . . . . .16 (b) Stock Rights, Warrants or Options. . . . . . . . .16 5.5 Value of Assets . . . . . . . . . . . . . . . . . . . .17 -ii- ARTICLE VI VESTING IN ACCOUNTS . . . . . . . . . . . . . . . . . .18 6.1 General Vesting Rule. . . . . . . . . . . . . . . . . .18 6.2 Vesting Upon Attainment of Normal Retirement Age, Disability or Death . . . . . . . . . . . . . . . . . .18 6.3 Timing of Forfeitures . . . . . . . . . . . . . . . . .18 ARTICLE VII PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . .19 7.1 Benefit Payments Upon Termination of Service For Reasons Other Than Death. . . . . . . . . . . . . . . .19 (a) General Rule Concerning Benefits Payable . . . . .19 (b) Timing of Distribution . . . . . . . . . . . . . .19 7.2 Death Benefits. . . . . . . . . . . . . . . . . . . . .19 7.3 Form of Distribution. . . . . . . . . . . . . . . . . .19 7.4 Beneficiary Designation . . . . . . . . . . . . . . . .19 (a) General. . . . . . . . . . . . . . . . . . . . . .19 (b) No Designation or Designee Dead or Missing . . . .20 7.5 Hardship Withdrawals. . . . . . . . . . . . . . . . . .20 (a) Parameters of Hardship Withdrawals . . . . . . . .20 (b) Unforeseeable Emergency. . . . . . . . . . . . . .20 (c) Application for Hardship Withdrawal. . . . . . . .20 (d) Payment of Withdrawal. . . . . . . . . . . . . . .21 7.6 Unclaimed Benefits. . . . . . . . . . . . . . . . . . .21 7.7 Claims. . . . . . . . . . . . . . . . . . . . . . . . .21 (a) Procedure. . . . . . . . . . . . . . . . . . . . .21 (b) Review Procedure . . . . . . . . . . . . . . . . .21 (c) Satisfaction of Claims . . . . . . . . . . . . . .22 ARTICLE VIII ADMINISTRATION. . . . . . . . . . . . . . . . . . . .23 8.1 Administrative Committee; Appointment and Term of Office. . . . . . . . . . . . . . . . . . . . . . . . .23 8.2 Organization of Administrative Committee. . . . . . . .23 8.3 Powers and Responsibility . . . . . . . . . . . . . . .23 8.4 Records of Administrative Committee . . . . . . . . . .24 8.5 Reporting and Disclosure. . . . . . . . . . . . . . . .24 8.6 Construction of the Plan. . . . . . . . . . . . . . . .25 8.7 Assistants and Advisers . . . . . . . . . . . . . . . .25 8.8 Direction of Trustee. . . . . . . . . . . . . . . . . .25 8.9 Bonding . . . . . . . . . . . . . . . . . . . . . . . .25 8.10 Indemnification . . . . . . . . . . . . . . . . . . . .25 ARTICLE IX ALLOCATION OF AUTHORITY AND RESPONSIBILITIES. . . . . .27 9.1 Controlling Company and Board . . . . . . . . . . . . .27 (a) General Responsibilities . . . . . . . . . . . . .27 (b) Allocation of Authority. . . . . . . . . . . . . .27 (c) Authority of Participating Companies . . . . . . .27 9.2 Administrative Committee. . . . . . . . . . . . . . . .27 9.3 Trustee . . . . . . . . . . . . . . . . . . . . . . . .27 9.4 Limitations on Obligations of Fiduciaries . . . . . . .27 9.5 Delegation. . . . . . . . . . . . . . . . . . . . . . .28 9.6 Multiple Fiduciary Roles. . . . . . . . . . . . . . . .28 -iii- ARTICLE X AMENDMENT, TERMINATION AND ADOPTION . . . . . . . . . .29 10.1 Amendment . . . . . . . . . . . . . . . . . . . . . . .29 10.2 Termination . . . . . . . . . . . . . . . . . . . . . .29 (a) Right to Terminate . . . . . . . . . . . . . . . .29 (b) Dissolution of Trust . . . . . . . . . . . . . . .29 10.3 Adoption of the Plan by a Participating Company . . . .29 (a) Procedures for Participation . . . . . . . . . . .29 (b) Authority under Plan . . . . . . . . . . . . . . .30 (c) Contributions to Plan. . . . . . . . . . . . . . .30 (d) Withdrawal from Plan . . . . . . . . . . . . . . .30 ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . .31 11.1 Nonalienation of Benefits and Spendthrift Clause. . . .31 11.2 Headings. . . . . . . . . . . . . . . . . . . . . . . .31 11.3 Construction, Controlling Law . . . . . . . . . . . . .31 11.4 No Contract of Employment . . . . . . . . . . . . . . .31 11.5 Legally Incompetent . . . . . . . . . . . . . . . . . .31 11.6 Heirs, Assigns and Personal Representatives . . . . . .32 11.7 Unsecured Creditor Rights . . . . . . . . . . . . . . .32 11.8 Legal Action. . . . . . . . . . . . . . . . . . . . . .32 11.9 Severability. . . . . . . . . . . . . . . . . . . . . .32 11.10 Exclusive Benefit; Refund of Contributions. . . . . . .32 11.11 Predecessor Service . . . . . . . . . . . . . . . . . .32 11.12 Plan Expenses . . . . . . . . . . . . . . . . . . . . .32 SCHEDULE A EFFECTIVE DATES FOR PARTICIPATING COMPANIES . . . . . .34 SCHEDULE B ITEMS EXCLUDED FROM "COMPENSATION" UNDER 1.15(3)(i). .35 -iv- ATLANTA GAS LIGHT COMPANY NONQUALIFIED SAVINGS PLAN Effective as of the 1st day of July, 1995, ATLANTA GAS LIGHT COMPANY, a corporation duly organized and existing under the laws of the State of Georgia (the "Controlling Company"), hereby establishes the Atlanta Gas Light Company Nonqualified Savings Plan (the "Plan"). STATEMENT OF PURPOSE A. The primary purpose of the Plan is to recognize the contributions made to the Controlling Company and its participating affiliates by certain employees and to reward those contributions by providing eligible employees with an opportunity to accumulate savings for their future security. B. The Plan is intended to be an unfunded nonqualified deferred compensation plan maintained by the Controlling Company primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees (within the meaning of 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of the Employee Retirement Income Security Act of 1974, as amended), and shall be construed in all respects in accordance with such intended purposes. C. It is anticipated that the Controlling Company may establish a trust fund to maintain and invest the amounts contributed to the Plan. Any such trust fund shall be established under a trust agreement which meets the requirements of a "rabbi trust," pursuant to guidelines issued by the Internal Revenue Service (the "IRS"). D. Regardless of the establishment of a trust fund, all assets of the Plan shall remain assets of the Controlling Company and shall be subject to the general creditors of the Controlling Company. Participants and Beneficiaries shall have only the rights of unsecured creditors with respect to any assets of the Plan. STATEMENT OF AGREEMENT In order to establish the Plan with the purposes and goals as hereinabove described, the Controlling Company hereby sets forth the terms and provisions of the Plan as follows: ARTICLE I DEFINITIONS For purposes of the Plan, the following terms, when used with an initial capital letter, shall have the meanings set forth below unless a different meaning plainly is required by the context. 1.1 Account shall mean, with respect to a Participant or Beneficiary, the amount of money or other property in the Trust Fund, as is evidenced by the last balance posted in accordance with the terms of the Plan to the account record established for such Participant or Beneficiary. The Administrative Committee may establish and maintain separate subaccounts for each Participant and Beneficiary, provided allocations are made to such subaccounts in the manner described in Article IV of the Plan. "Account" shall refer to the aggregate of all separate subaccounts or to individual, separate subaccounts, as may be appropriate in context. 1.2 Active Participant shall mean, for any Plan Year (or any portion thereof), any Covered Employee who is eligible to make contributions to the Plan for that Plan Year. 1.3 Administrative Committee shall mean the committee designated by the Board which shall act on behalf of the Controlling Company to administer the Plan; provided, the Controlling Company may act in lieu of the Administrative Committee as it deems appropriate or desirable. 1.4 Affiliate shall mean, as of any date, (i) a Participating Company, and (ii) any company, person or organization which, on such date, (A) is a member of the same controlled group of corporations [within the meaning of Code 414(b)] as is a Participating Company; (B) is a trade or business (whether or not incorporated) which controls, is controlled by or is under common control with [within the meaning of Code 414(c)] a Participating Company; (C) is a member of an affiliated service group [as defined in Code 414(m)] which includes a Participating Company; or (D) is required to be aggregated with a Participating Company pursuant to regulations promulgated under Code 414(o). 1.5 Before Tax Account shall mean the separate subaccount established and maintained on behalf of a Participant or his Beneficiary to reflect his interest in the Trust Fund attributable to his Before Tax Contributions. 1.6 Before Tax Contributions shall mean the amounts paid by each Participating Company to the Trust Fund at the election of Participants, all pursuant to the terms of 3.1(a). 1.7 Before Tax Deferral Election shall mean a written election by an Active Participant directing the Participating Company of which he is an Employee to withhold a percentage of his current Compensation from his paychecks and to contribute such withheld amount to the Plan as a Before Tax Contribution, all as provided in 3.1(a) and 3.1(d). 1.8 Beneficiary shall mean the person(s) designated in accordance with 7.4 to receive any death benefits that may be payable under the Plan upon the death of a Participant. 1.9 Board shall mean the board of directors of the Controlling Company. A reference to the board of directors of any other Participating Company shall specify it as such. 1.10 Break in Service shall mean, with respect to an Employee, any year during which such Employee fails to complete more than 500 Hours of Service; provided, a Break in Service shall not be deemed to have occurred during any period for which he is granted a Leave of Absence if he returns to the service of an Affiliate within the time permitted as set forth in the Plan. A Break in Service shall be deemed to have commenced on the first day of the year in which it occurs. For purposes of determining whether or not an Employee has incurred a Break in Service, an Employee absent from work due to a Maternity or Paternity Leave shall be credited with (i) the number of Hours of Service with which he normally would have been credited but for the Maternity or Paternity Leave, or (ii) if the Administrative Committee is unable to determine the hours described in (i), 8 Hours of Service for each day of absence included in the Maternity or Paternity Leave; provided, the maximum number of Hours of Service credited for purposes of this Section shall not exceed 501 hours. Hours of Service so credited shall be applied only to the year in which the Maternity or Paternity Leave begins, unless such Hours of Service are not required to prevent the Employee from incurring a Break in Service, in which event such Hours of Service shall be credited to the Employee in the immediately following year. No Hour of Service shall be credited due to Maternity or Paternity Leave as described in this Section unless the Employee furnishes proof satisfactory to the Administrative Committee (A) that his absence from work was due to a Maternity or Paternity Leave and (B) of the number of days he was absent due to the Maternity or Paternity Leave. The Administrative Committee shall prescribe uniform and nondiscriminatory procedures by which to make the above determinations. As used in this Section, the term "year" shall mean the same 12-month period as forms the basis for determining a Year of Vesting Service. 1.11 Change in Control shall mean: (a) the occurrence of any one of the following events (the terms used in this Section 1.11 with an initial capital letter shall have the meanings set forth in Section 1.11(b) unless otherwise defined in the Plan): (1) The acquisition by a Person, together with Affiliates and Associates of such Person, whether by purchase, tender offer, exchange, reclassification, recapitalization, merger or otherwise, of a sufficient number of shares of Company Stock or Company Stock Equivalents to constitute the Person an Acquiring Person; or (2) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by a majority of the Continuing Directors then in office; or (3) Any merger or consolidation the result of which is that less than 90 percent of the common stock, Voting Securities or other equity interests of the surviving or resulting corporation or other Person shall be owned in the aggregate by the former shareholders of the Controlling Company, other than Affiliates or Associates of any party to such merger or consolidation, as the same shall have existed immediately prior to such merger or consolidation; or (4) The sale by the Controlling Company, in one transaction or a series of related transactions, whether in liquidation, dissolution or otherwise, of assets or earning power aggregating more than 50 percent of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons. (b) The following definitions shall apply in determining when a Change in Control has occurred: (1) "Acquiring Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall become the Beneficial Owner of 10 percent or more of the shares of Company Stock then outstanding, but shall not include the Company, any Subsidiary of the Controlling Company, or any Person who or which, together with all Affiliates and Associates of such Person, is the Beneficial Owner of 10 percent or more of the shares of Company Stock as of the effective date of the Plan, any employee benefit plan of the Company or of any Subsidiary of the Company [if approved by a majority of the Continuing Directors], or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan. (2) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and in effect on the effective date of the Plan (the "Exchange Act"). (3) "Associate" shall mean: (A) Any corporation or organization, or parent or subsidiary of such corporation or organization, of which a Person is an officer, director or partner or is, directly or indirectly, the Beneficial Owner of 10 percent or more of any class of equity securities; (B) Any trust or other estate in which a Person has a beneficial interest of 10 percent or more or as to which such Person serves as trustee or in a similar fiduciary capacity; and (C) Any brother or sister (whether by whole or half blood), ancestor, lineal descendant or spouse of a Person, or any such relative of such spouse. (4) "Beneficial Owner" shall mean, with respect to any securities, any Person who, together with such Person's Affiliates and Associates, directly or indirectly: (A) Has the right to acquire such securities (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own: (i) Securities acquired by participation in good faith in a firm commitment underwriting by a Person engaged in business as an underwriter of securities until the expiration of 40 days after the date of such acquisition; or (ii) Securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (iii) Securities issuable upon exercise of rights issued to all shareholders generally, which rights are only exercisable upon separation from the Company Stock, or securities issuable upon exercise of rights that have separated from the Company Stock upon the occurrence of events specified in a rights agreement between the Company and a rights agent; (B) Has the right to vote or dispose of or has Beneficial Ownership (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act) of such securities, including pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, any security under this subparagraph (ii) as a result of an agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding: (i) Arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act; and (ii) Is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (C) With respect to any securities which are Beneficially Owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof), has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described herein or disposing of any voting securities of the Company. (5) "Company Stock Equivalents" shall mean preferred stock or other entity securities of the Controlling Company having the right to be converted by the holders thereof into shares of Company Stock, or having the right to vote generally for the election of directors and on other matters. For purposes of determining the total amount of Company Stock and Company Stock Equivalents owned by any Person, such Company Stock Equivalents shall be equal to the number of shares into which they may be converted by the holders thereof, or in the case of securities that are not convertible having the right to vote, shall be equal to the number of votes they are entitled to cast in elections for directors. (6) "Continuing Director" shall mean: (A) Any member of the Board who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the effective date of the Plan; or (B) Any Person who subsequently becomes a member of the Board who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if such Person's nomination for election or election to the Board is recommended or approved by a majority of the Continuing Directors. (7) "Person" shall mean any individual, firm, corporation, partnership or other entity. (8) "Subsidiary" shall mean any corporation, partnership, joint venture, trust or other entity more than 50 percent of the Voting Securities of which are Beneficially Owned, directly or indirectly, by a Person. (9) "Voting Securities" shall mean any class of then outstanding shares of stock or other beneficial interests entitled to vote in election of directors or other Persons charged with management of a Person." 1.12 Code shall mean the Internal Revenue Code of 1986, as amended, and any succeeding federal tax provisions. 1.13 Company Contributions shall mean Before Tax and Matching Contributions made by the Participating Companies pursuant to the terms of the Plan. 1.14 Company Stock shall mean the common stock of the Controlling Company. 1.15 Compensation shall mean, for any Plan Year, the total of the amounts described in subsections (1) and (2), minus the amount described in subsection (3): (1) all such Participant's wages, as defined in Code 3401(a) for purposes of income tax withholding at the source, that are reportable for federal income tax purposes on IRS Form W-2, but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code 3401(a)(2); plus (2) all before-tax, salary deferral or reduction contributions made to the Plan and other 401(k) and 125 plans (such as the Controlling Company's Flex Plan) of the Participating Companies on behalf of a Participant for such Plan Year [including any contributions made under Code 402(a)(8) or 402(h)]; minus (3) the following: (i) items listed on the attached Schedule B, (ii) any other nonperiodic compensation otherwise reportable for federal income tax purposes, and (iii) any amounts paid or made available to a Participant during the Plan Year while he is not an Active Participant. 1.16 Contributions shall mean, individually or collectively, the Before Tax and Matching Contributions permitted under the Plan. 1.17 Controlling Company shall mean the Atlanta Gas Light Company, a Georgia corporation with its principal office in Atlanta, Georgia, and its successors. 1.18 Covered Employee shall mean any Employee of a Participating Company who as of the last day of the second calendar month immediately preceding a respective Entry Date, had annual base salary in an amount equal to or in excess of the compensation limit designated by the IRS for determining "highly compensated employee" under Code 414(q)(1)(C) plus $10,000 (for example, the 1995 IRS limit is $66,000 plus $10,000 = $76,000). 1.19 Deferral Election shall mean a written election by an Active Participant directing the Participating Company of which he is an Employee to withhold a percentage of his current Compensation from his paychecks and to contribute such withheld amount to the Plan as a Before Tax Contribution, all as provided in 3.1. 1.20 Disability or Disabled shall mean that a Participant is (i) wholly prevented from engaging in any substantially gainful activity by reason of a medically-determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration, and (ii) determined eligible to receive long term disability benefits from a Participating Company's long term disability plan, or if no such plan exists, upon the discretionary determination by the Administrative Committee that the employee meets the definition of "disabled" under the Controlling Company's long-term disability plan. 1.21 Effective Date shall mean July 1, 1995, the date that this Plan initially shall be effective. The effective date of participation in the Plan for each Participating Company shall be the date set forth with respect to the Participating Company in Schedule A hereto. 1.22 Eligibility Service shall mean a 6-consecutive-month period during which an Employee completes no less than 500 Hours of Service; for this purpose, the computation period initially shall be the 6-consecutive-month period beginning on the date the Employee's employment or reemployment commences and thereafter shall be each subsequent 6-consecutive-month period, beginning on the first day of each succeeding month. 1.23 Employee shall mean any individual who is a common law employee of a Participating Company (including officers, but excluding directors who are not officers or otherwise employees). 1.24 Entry Date shall mean every January 1, April 1, July 1 and October 1 during the period in which the Plan remains in effect. 1.25 ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended. 1.26 Forfeiture shall mean, for any Plan Year, the nonvested dollar amount of an Account of a former Participant which is removed from the Account during such Plan Year. Forfeitures shall be used to reduce Matching Contributions. 1.27 Hour of Service shall mean the increments of time described in subsection (a) hereof, as modified by subsections (b), (c) and (d) hereof: (a) (1) Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for an Affiliate during the applicable computation period; (2) Each hour for which an Employee is paid, or entitled to payment, by an Affiliate on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or Leave of Absence; provided: (A) No more than 501 Hours of Service shall be credited under this subsection (2) to an Employee for any single continuous period during which he performs no duties as an employee of an Affiliate (whether or not such period occurs in a single computation period); (B) An hour for which an Employee is directly or indirectly paid, or entitled to payment, on account of a period during which he performs no duties as an employee of an Affiliate shall not be credited as an Hour of Service if such payment is made or due under a plan maintained solely to comply with applicable workers' compensation, unemployment compensation or disability insurance laws; and (C) Hours of Service shall not be credited to an Employee for a payment which solely reimburses such Employee for medical or medically related expenses incurred by him. For purposes of this subsection (2), a payment shall be deemed to be made by or due from an Affiliate regardless of whether such payment is made by or due from an Affiliate directly, or indirectly through, among others, a trust fund or insurer, to which the Affiliate contributes or pays premiums and regardless of whether contributions made or due to the trust fund, insurer or other entity are for the benefit of particular employees or are on behalf of a group of employees in the aggregate; and (3) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by an Affiliate; provided, the same Hours of Service shall not be credited both under subsection (1) or subsection (2), as the case may be, and under this subsection (3); and, provided further, crediting of Hours of Service for back pay awarded or agreed to with respect to periods described in subsection (2) shall be subject to the limitations set forth in that subsection. (b) Each Employee for whom an Affiliate does not keep records of actual Hours of Service shall be credited, in accordance with this Section and applicable regulations promulgated by the Department of Labor, with 45 Hours of Service for each week for which such Employee would be required to be credited with at least 1 Hour of Service. (c) The rate or manner used for crediting Hours of Service may be changed at the direction of the Administrative Committee from time to time so as to facilitate administration and to equitably reflect the purposes of the Plan; provided, no change shall be effective as to any Plan Year for which allocations have been made pursuant to Article IV at the time such change is made; and, provided further, Hours of Service shall be credited and determined in compliance with Department of Labor Regulation 2530.200b-2(b) and (c), 29 CFR Part 2530, as may be amended from time to time, or such other federal regulations as may from time to time be applicable. (d) For purposes of this Section, a "computation period" shall mean the 12-month period that forms the basis for determining an Employee's Years of Eligibility Service or Years of Vesting Service, whichever is applicable. 1.28 Leave of Absence shall mean an excused leave of absence granted to an Employee by an Affiliate in accordance with applicable federal or state law or the Affiliate's personnel policy. Among other things, Leave of Absence shall be granted to an Employee: (a) who leaves the service of an Affiliate, voluntarily or involuntarily, to enter the Armed Forces of the United States; provided, (i) the Employee is legally entitled to reemployment under the veteran's reemployment rights provisions as codified at 38 USC 2021, et seq., its predecessors and successors; and (ii) the Employee applies for and reenters service with an Affiliate within the time, in the manner and under the conditions prescribed by law; (b) for any time such Employee is drawing workers' compensation benefits or is sick, disabled or incapacitated, if he is thereby precluded from properly performing his assigned duties for a temporary period of time; and (c) under such other circumstances as the Administrative Committee shall determine are fair, reasonable and equitable as applied uniformly among Employees under similar circumstances. 1.29 Matching Account shall mean the separate subaccount established and maintained on behalf of a Participant or his Beneficiary to reflect his interest in the Trust Fund attributable to Matching Contributions. 1.30 Matching Contributions shall mean the amounts paid by each Participating Company to the Trust Fund as a match to Participants' Before Tax Contributions, all as pursuant to the terms of 3.2. 1.31 Maternity or Paternity Leave shall mean any period, during which an Employee is absent from work as an employee of an Affiliate (i) because of the pregnancy of such Employee; (ii) because of the birth of a child of such Employee; (iii) because of the placement of a child with such Employee in connection with the adoption of such child by such Employee; or (iv) for purposes of such Employee caring for a child immediately after the birth or placement of such child. 1.32 Named Fiduciary shall mean the Controlling Company, the Board, the Trustee, and the Administrative Committee. 1.33 Normal Retirement Age shall mean age 65. 1.34 Participant shall mean any person who has an Account under the Plan. 1.35 Participating Company shall mean all companies which have adopted or hereafter may adopt the Plan for the benefit of their employees and which continue to participate in the Plan, all as provided in 10.3. 1.36 Plan shall mean the Atlanta Gas Light Company Nonqualified Savings Plan as contained herein and all amendments thereto. The Plan is intended to be an unfunded nonqualified deferred compensation plan for the benefit of a select group of management or highly compensated employees. 1.37 Plan Year shall mean July 1 through December 31, 1995, and thereafter, each 12-month period beginning on January 1 and ending on December 31. 1.38 Qualified Separation shall mean a separation by an employee from the active employ of an Affiliate (i) on or after his obtaining Normal Retirement Age, (ii) on account of his becoming Disabled, (iii) due to his death, or (iv) on account of a Leave of Absence or Maternity or Paternity Leave. 1.39 Qualified Spousal Waiver shall mean a written election executed by a Spouse, delivered to the Administrative Committee and witnessed by a notary public or a representative of the Administrative Committee, which consents to the payment of all or a specified portion of a Participant's death benefit to a Beneficiary other than such Spouse and which acknowledges that such Spouse has waived his right to be the Participant's Beneficiary under the Plan. A Qualified Spousal Waiver shall be valid only with respect to the Spouse who signs it and shall apply only to the alternative Beneficiary designated therein, unless the written election expressly permits other designations without further consent of the Spouse. A Qualified Spousal Waiver shall be irrevocable unless revoked by the Participant by way of (i) a written statement executed by the Participant and delivered to the Administrative Committee or (ii) a written revocation of the nonspouse Beneficiary designation to which such Spouse has consented; provided, any such revocation must be received by the Administrative Committee prior to the Participant's date of death. 1.40 Spouse or Surviving Spouse shall mean, with respect to a Participant, the person who is treated as married to such Participant under the laws of the state in which the Participant resides. The determination of a Participant's Spouse or Surviving Spouse shall be made as of the earlier of the date as of which benefit payments from the Plan to such Participant are made or commence (as applicable) or the date of such Participant's death. In addition, a Participant's former spouse shall be treated as his Spouse or Surviving Spouse to the extent provided under a qualified domestic relations order, as defined in Code 414(p). 1.41 Retirement Savings Plus Plan or RSP shall mean the Atlanta Gas Light Company Retirement Savings Plus Plan. 1.42 Trust or Trust Agreement shall mean a separate agreement between the Controlling Company and the Trustee governing the creation of the Trust Fund, and all amendments thereto. 1.43 Trustee shall mean the party or parties so designated from time to time pursuant to the Trust Agreement. 1.44 Trust Fund shall mean the total amount of cash and other property held by the Trustee (or any nominee thereof) at any time under the Trust Agreement. 1.45 Valuation Date shall mean every March 31, June 30, September 30 and December 31 during the period in which the Plan remains in effect and each interim date on which a valuation of the Trust Fund is made. 1.46 Year of Vesting Service shall mean a Plan Year during which an Employee completes no less than 1,000 Hours of Service; provided: (a) Years of Vesting Service completed prior to a period in which the Participant incurred 5 or more consecutive Breaks in Service shall be disregarded under the Plan if the Participant had no vested interest in his Account at the time the first such Break in Service commenced and the number of such consecutive Breaks in Service equals or exceeds the number of his prior Years of Vesting Service; (b) Years of Vesting Service completed after a period in which the Participant had at least 5 consecutive Breaks in Service shall be disregarded for the purpose of determining his vested interest in that portion of his Account which accrued before such Breaks in Service; and (c) For purposes of this Section, employment with an Affiliate shall be considered employment with the Company, and in the case of a leased employee (within the meaning of Code 414(n)) of any Affiliate, such leased employee shall be considered as being a leased employee of the Company. ARTICLE II ELIGIBILITY 2.1 Initial Eligibility Requirements. (a) General Rule. Except as provided in subsection (b) hereof, every Covered Employee shall become an Active Participant in the Plan on the Entry Date coinciding with or next following the date on which he first has completed Eligibility Service and attained age 21, provided he is a Covered Employee on such date. (b) New Participating Companies. For employees of companies that become Participating Companies after the Effective Date, each Covered Employee employed by a Participating Company on the date such Participating Company first becomes a Participating Company shall become an Active Participant as of such Participating Company's effective date under the Plan, if, as of the Participating Company's effective date, the Covered Employee has completed Eligibility Service and has attained age 21. 2.2 Treatment of Interruptions of Service. (a) Leave of Absence. If a Covered Employee satisfies the eligibility requirements set forth in 2.1 but is on a Leave of Absence on the Entry Date on which he otherwise would have become an Active Participant, he shall become an Active Participant as of the date he subsequently resumes the performance of duties as a Covered Employee in accordance with the terms of his Leave of Absence. (b) Reemployment Before Break in Service. If a Covered Employee satisfies the eligibility requirements set forth in 2.1, separates from service with a Participating Company (and all other Participating Companies) before the Entry Date on which he otherwise would become an Active Participant, and then is reemployed by a Participating Company prior to completing a Break in Service, he shall become an Active Participant as of the later of (i) the Entry Date on which he otherwise would have become an Active Participant if he had not separated from service or (ii) the date he is reemployed as a Covered Employee. (c) Reemployment After Break in Service. If a Covered Employee satisfies the eligibility requirements set forth in 2.1, separates from service with a Participating Company (and all other Participating Companies) before the Entry Date on which he otherwise would become an Active Participant, and then is reemployed as a Covered Employee by a Participating Company after completing a Break in Service, he shall become an Active Participant as of the Entry Date coinciding with or next following his completion of Eligibility Service after his reemployment following the last such Break in Service. (d) Reparticipation Upon Reemployment. If an Active Participant separates from service with a Participating Company (and all other Participating Companies), his active participation in the Plan shall cease immediately, and he again shall become an Active Participant as of the day he is reemployed as a Covered Employee, regardless of whether he has received a distribution of his Account balance under the Plan at the time of his reemployment. However, regardless of whether he again becomes an Active Participant, he shall continue to be a Participant until he no longer has an Account under the Plan. 2.3 Change in Status. (a) Loss of Covered Employee Status. If a Covered Employee (i) satisfies the eligibility requirements set forth in 2.1, (ii) changes his employment status (but remains employed) so that he ceases to be a Covered Employee before the Entry Date on which he otherwise would become an Active Participant, and (iii) then again changes his employment status and becomes a Covered Employee prior to completing a Break in Service, he shall become an Active Participant as of the later of (A) the Entry Date on which he otherwise would have become an Active Participant if he had not ceased to be a Covered Employee or (B) the date he again becomes a Covered Employee. If an Employee covered by this Section does complete a Break in Service prior to again becoming a Covered Employee, his entry to participation in the Plan will be governed by 2.2(c). (b) Change to Covered Employee Status. If an Employee who first satisfies the eligibility requirements of 2.1 while he is not a Covered Employee subsequently changes his employment status so that he becomes a Covered Employee, he shall become an Active Participant on the Entry Date coinciding with or next following his change in status. If, on such date, he has not satisfied the eligibility requirements of 2.1 or is not a Covered Employee, he shall become an Active Participant on the Entry Date coinciding with or next following the date he satisfies the eligibility requirements of 2.1; provided, he is a Covered Employee on such Entry Date. (c) Change by Participant. If an Active Participant changes his status of employment (but remains employed) so that he is no longer a Covered Employee, his active participation in the Plan shall cease immediately, and he shall again become an Active Participant in the Plan as of the day he again becomes a Covered Employee. However, regardless of whether he again becomes an Active Participant, he shall continue to be a Participant until he no longer has an Account under the Plan. ARTICLE III CONTRIBUTIONS 3.1 Before Tax Contributions. (a) Before Tax Contributions. Each Participating Company shall contribute to the Plan, on behalf of each Active Participant employed by such Participating Company and for each payroll period for which such Active Participant has a Before Tax Deferral Election in effect with such Participating Company, a Before Tax Contribution in an amount equal to the amount by which such Active Participant's Compensation has been reduced for such period pursuant to his Before Tax Deferral Election. The amount of the Before Tax Contribution shall be determined in percentage increments of such Active Participant's Compensation for each payroll period. The Active Participant may elect to reduce his Compensation for any period by a maximum of 15 percent; provided, that the total of the Active Participant's Before Tax Contributions to the Plan and to the Retirement Savings Plus Plan shall not exceed 15 percent of his Compensation. (b) Deferral Elections. Each Active Participant, who desires that his Participating Company make a Before Tax Contribution on his behalf, shall complete and deliver to the Participating Company (or its designee) a Before Tax Deferral Election. Such Deferral Election shall provide for the reduction of his Compensation for each payroll period ending or occurring while he is an Active Participant employed by such Participating Company. The Administrative Committee, in its sole discretion, shall prescribe the form of all Deferral Elections and may prescribe such nondiscriminatory terms and conditions governing the use of the Deferral Elections as it deems appropriate. Subject to any modifications, additions or exceptions which the Administrative Committee, in its sole discretion, deems necessary, appropriate or helpful, the following terms shall apply to Deferral Elections: (1) Effective Date. An Active Participant's initial Deferral Election with a Participating Company shall be effective for the first payroll period which ends after the Deferral Election is made and after the effective date of such Deferral Election. If an Active Participant fails to submit a Deferral Election in a timely manner, he shall be deemed to have elected a deferral of zero percent. For purposes of this subsection, the "effective date" of a Deferral Election shall mean: (A) for a Participant who commences participation in the Plan on an Entry Date, that Entry Date; and (B) for a Participant who commences or recommences participation in the Plan on a date other than an Entry Date, the Entry Date next following the Participant's commencement of participation in the Plan. (2) Term. Each Active Participant's Deferral Election with a Participating Company shall remain in effect in accordance with its original terms until the earlier of (A) the date the Active Participant ceases to be an Employee of all Participating Companies, (B) the date the Active Participant revokes such Deferral Election pursuant to the terms of subsection (b)(3) hereof, or (C) the date the Active Participant or the Administrative Committee modifies such Deferral Election pursuant to the terms of subsection (b)(4) or (b)(5) hereof. If a Participant is transferred from the employment of a Participating Company to the employment of another Participating Company, his Deferral Election with the first Participating Company will remain in effect and will apply to his Compensation from the second Participating Company until the earlier of (A), (B) or (C) of the preceding sentence. (3) Revocation. An Active Participant's Deferral Election with a Participating Company shall terminate upon his ceasing to be an Employee of such Participating Company. In addition, an Active Participant may revoke his Before Tax Deferral Election with a Participating Company by delivering a written notice of revocation to such Participating Company (or its designee), and such revocation shall be effective as soon as practicable after the date on which it is received by such Participating Company. An Active Participant who revokes a Before Tax Deferral Election may not enter into a new Deferral Election until the second calendar quarter following the revocation; such new Deferral Election shall then be effective for the first payroll period which begins after the new Deferral Election is made and the applicable March 31, June 30, September 30 and December 31. The Participant shall deliver the new Deferral Election to his Participating Company (or its designee) at least 30 days (or such lesser period as the Administrative Committee may permit) before such March 31, June 30, September 30 and December 31. (4) Modification by Participant. Effective for the first payroll period which begins after a new Deferral Election is made and after any March 31, June 30, September 30 and December 31, an Active Participant may modify any of his existing Deferral Elections to increase or decrease the percentage of his Before Tax Contributions by delivering the new Deferral Election to his Participating Company (or its designee) at least 30 days (or such lesser period as the Administrative Committee may permit) before such March 31, June 30, September 30 and December 31. (5) Compliance with SEC Rule 16b-3. Notwithstanding any other provision of the Plan, the Administrative Committee shall take any and all actions as may be necessary with regard to Deferral Elections made by Participants who are deemed to be "insiders" of the Company under the terms of the Securities Exchange Act of 1934, as amended (the "1934 Act"), in order to meet the requirements of Rule 16b-3 and regulations promulgated thereunder. 3.2 Matching Contributions. For each Active Participant on whose behalf a Participating Company has made, with respect to a payroll period, any Before Tax Contributions, such Participating Company shall make, with respect to such payroll period, a Matching Contribution equal to 65 percent of the aggregate amount of such Before Tax Contributions up to the first 6 percent of the Participant's Compensation (or the difference between the amount of Before Tax Contributions made by the Participant and matched by the Company under the Retirement Savings Plus Plan so that only a total of 6 percent of the Participant's Compensation is matched under both the RSP and the Plan). Matching Contributions for a Plan Year shall be reduced by the amount of any Forfeitures available for reallocation during that Plan Year. 3.3 Form of Contributions. All Contributions shall be paid to the Trustee in the form of cash or Company Stock or a combination thereof, as the Controlling Company or Administrative Committee may determine from time to time. 3.4 Timing of Contributions. Each Participating Company which withholds Before Tax Contributions from an Active Participant's paychecks pursuant to a Deferral Election shall pay such Before Tax Contributions to the Trustee as of the earliest date (not to exceed 90 days from the date on which such amounts otherwise would have been payable to such Active Participants in cash) on which such Contributions can reasonably be transmitted. ARTICLE IV PARTICIPANTS' ACCOUNTS; CREDITING AND ALLOCATIONS 4.1 Establishment of Participants' Accounts. To the extent appropriate, the Administrative Committee shall establish and maintain, on behalf of each Participant and Beneficiary, an Account which shall be divided into segregated subaccounts. The subaccounts shall include Before Tax and Matching Accounts and such other subaccounts as the Administrative Committee shall deem appropriate or helpful. Each Account shall be credited with Contributions allocated to such Account and generally shall be credited with income on investments derived from the assets of such Accounts. Each Account of a Participant or Beneficiary shall be maintained until the value thereof has been distributed to or on behalf of such Participant or Beneficiary. 4.2 Allocation and Crediting of Before Tax and Matching Contributions. As of each Valuation Date coinciding with or immediately following the date on which Before Tax and Matching Contributions are received on behalf of an Active Participant, such Contributions shall be allocated and credited directly to the appropriate Before Tax and Matching Accounts, respectively, of such Active Participant. Matching Contributions shall be allocated to a Participant's Account in the same proportion that his Before Tax Contributions bears to the total Before Tax Contributions of all Participants. 4.3 Allocation and Crediting of Investment Experience. As of each Valuation Date, the Trustee shall determine the fair market value of the Trust Fund which shall be the sum of the fair market values of the Investment Funds. The Administrative Committee shall determine the amount of the Accounts as follows: (a) Determination of Earnings or Losses. As of each Valuation Date, the investment earnings (or losses) of each Investment Fund shall be the amount by which the sum determined in (1) exceeds (or is less than) the sum determined in (2), where (1) and (2) are as follows: (1) The sum of (A) the fair market value of such Investment Fund as of such Valuation Date, plus (B) the amount of any distributions, withdrawals and transfers to other Investment Funds made since the immediately preceding Valuation Date from amounts invested in the Investment Fund; and (2) The sum of (A) the fair market value of the Investment Fund as of the immediately preceding Valuation Date, plus (B) Contributions deposited in and amounts transferred to such Investment Fund since the immediately preceding Valuation Date. (b) Formula For Allocation. As of each Valuation Date and prior to the allocations described in 4.2, and 4.3, each Participant's Account shall be allocated and shall be credited with a portion of such earnings or debited with a portion of such losses of each Investment Fund, as determined in accordance with subsection (a) hereof, in the proportion that (i)(A) the amount credited to such Account that was invested in such Investment Fund as of the immediately preceding Valuation Date, minus (B) any distributions, withdrawals or transfers to other Investment Funds which were made from such Account since such preceding Valuation Date and on or before such current Valuation Date, plus (C) any Contributions deposited in and amounts transferred to such Investment Fund from such Account since the preceding Valuation Date; bears to (ii)(A) the total amount invested in such Investment Fund by all Participants as of the immediately preceding Valuation Date, minus (B) any distributions, withdrawals or transfers to other Investment Funds which were made from such Accounts since such preceding Valuation Date and on or before such current Valuation Date, plus (C) any Contributions deposited in and amounts transferred to such Investment Fund since the preceding Valuation Date. 4.4 Notice to Participants of Account Balances. At least once for each Plan Year, the Administrative Committee shall cause a written statement of a Participant's Account balance to be distributed to the Participant. 4.5 Good Faith Valuation Binding. In determining the value of the Trust Fund and the Accounts, the Trustee and the Administrative Committee shall exercise their best judgment, and all such determinations of value (in the absence of bad faith) shall be binding upon all Participants and Beneficiaries. 4.6 Errors and Omissions in Accounts. If an error or omission is discovered in the Account of a Participant or Beneficiary, the Administrative Committee shall cause appropriate, equitable adjustments to be made as of the Valuation Date coinciding with or immediately following the discovery of such error or omission. ARTICLE V INVESTMENT OF ACCOUNTS 5.1 Establishment of Trust Fund. (a) No Trust Required. The Controlling Company may, but is not required to, establish a trust fund to hold the assets of the Plan. If no trust fund is established, benefits shall be payable from the general assets of the Controlling Company. (b) Rabbi Trust Permitted. If the Controlling Company desires to establish a trust fund, all Contributions are to be paid over to the Trustee to be held in the Trust Fund and invested in accordance with the terms of the Plan and the Trust Agreement. If a Trust Fund is established, it shall exist under an agreement constituting a "rabbi trust" agreement, under which all assets of the Trust Fund shall be considered to be subject to the general creditors of the Controlling Company, and all Plan participants shall be unsecured creditors under such Trust Agreement. (c) Trust Required Upon Change in Control. Upon a Change in Control of the Controlling Company, the Controlling Company must within ten (10) business days after such Change in Control, establish and fully fund a rabbi trust (if and to the extent such a fully funded rabbi trust does not already exist) to pay all benefits accrued by Participants through that date under the Plan. Further, upon a Change of Control, an entity other than the Controlling Company, a Participating Company, any Affiliate or any employee, officer or director of such companies shall be named by the Board as Trustee of the rabbi trust. This subsection 5.1(c) of the Plan shall be irrevocable and may not be amended by the Controlling Company or any other company after the effective date of the Plan (unless required by law). 5.2 Investment of Trust Fund. To the extent a trust fund is established, all Contributions to the Plan shall be invested in Company Stock. 5.3 Acquisition of Company Stock. (a) In General. To the extent that Contributions and investment earnings on Company Stock are paid in cash, the Trustee, as directed by the Administrative Committee, shall effect purchases of Company Stock in compliance with all applicable securities laws, and in its sole discretion, may purchase Company Stock in the open market and/or in privately negotiated transactions with holders of Company Stock and/or the Controlling Company. All purchases of Company Stock by the Trust will be made at a price or prices which, in the judgment of the Trustee, do not exceed the fair market value of such Company Stock as of the date of the purchase. (b) Stock Rights, Warrants or Options. In the event any rights, warrants or options are issued on Company Stock, the Trustee may exercise them for the acquisition of additional Company Stock, to the extent that cash is then available and allocable to the Company Stock Fund. Any Company Stock acquired in this fashion will be treated as Company Stock bought by the Trustee for the net price paid. Any rights, warrants or options on Company Stock which cannot be exercised for lack of available cash may be sold by the Trustee (provided the sale thereof is reasonably practicable), and the proceeds of such a sale shall be treated as a current cash dividend received on Company Stock. 5.5 Value of Assets. For purposes under the Plan for which the value of assets must be determined, the value of such assets shall be the fair market value. For purposes of purchasing or selling Company Stock through an exchange on any day, the fair market value per share of such stock on such day shall be the price of the stock on the New York Stock Exchange at the time of the purchase or sale. For all other purposes under the Plan, the fair market value per share of the Company Stock on any particular day shall be the closing price of such Company Stock as reported on the New York Stock Exchange Composite Transaction listing on the day preceding the particular day in question. If, for any reason, the fair market value per share of Company Stock cannot be ascertained or is unavailable for a particular day, the fair market value of such stock shall be determined as of the nearest preceding day on which such fair market value can be ascertained pursuant to the terms hereof. ARTICLE VI VESTING IN ACCOUNTS 6.1 General Vesting Rule. All Participants shall at all times be fully vested in their Before Tax Account. Except as provided in 6.2, the Matching Account of a Participant shall vest in accordance with the following vesting schedule, based on the total of the Participant's Years of Vesting Service: Years of Vesting Service Vested Percentage of Completed by Participant Participant's Matching Account Less than 3 Years None 3 Years, but less than 4 50% 4 Years, but less than 5 75% 5 Years or more 100% 6.2 Vesting Upon Attainment of Normal Retirement Age, Disability or Death. Notwithstanding 6.1, a Participant's Matching Account shall become 100 percent vested and nonforfeitable upon the occurrence of any of the following events: (a) The Participant's attainment of Normal Retirement Age while still employed as an employee of any Affiliate; (b) The Participant's death while still employed as an employee of any Affiliate; or (c) The Participant's becoming Disabled while still employed as an employee of any Affiliate. 6.3 Timing of Forfeitures. If a Participant who is not yet 100 percent vested in his Matching Account separates from service with all Affiliates, the nonvested amount in his Matching Account shall be immediately forfeited and shall become available as a Forfeiture as of the Valuation Date coincident with or immediately following the date on which such termination occurs; provided, if a Participant has no vested interest in his Account at the time he separates from service, he shall be deemed to have received a cash-out distribution at the time he separates from service, and the forfeiture provisions of this Section shall apply. If such a Participant resumes employment with an Affiliate, such forfeited amount shall not be restored. ARTICLE VII PAYMENT OF BENEFITS 7.1 Benefit Payments Upon Termination of Service For Reasons Other Than Death. (a) General Rule Concerning Benefits Payable. In accordance with the terms of subsection (b) hereof, if a Participant separates from service with all Affiliates for any reason other than death, or if a Participant becomes Disabled but remains an employee of an Affiliate, he (or his Beneficiary, if he dies after such separation from service) shall be entitled to receive a distribution of the total of (i) the entire vested amount credited to his Account, determined as of the Valuation Date coincident with or immediately preceding the date payment of such distribution is to be made, plus (ii) the vested amount of any Contributions made on his behalf since such Valuation Date. For purposes of this subsection, the "date payment of such distribution is to be made" refers to the date established for such purpose by administrative practice, even if actual payment is made at a later date due to delays in the valuation, administrative or any other procedure. (b) Timing of Distribution. Benefits payable to a Participant under this Section shall be distributed as soon as administratively feasible after such Participant becomes Disabled or separates from service with all Affiliates for any reason other than death. 7.2 Death Benefits. If a Participant dies before payment of his benefits from the Plan is made, the Beneficiary or Beneficiaries designated by such Participant in his latest beneficiary designation form filed with the Administrative Committee in accordance with the terms of 7.4 shall be entitled to receive a distribution of the total of (i) the entire vested amount credited to such Participant's Account, determined as of the Valuation Date coincident with or immediately preceding the date payment of such distribution is to be made, plus (ii) any Contributions made on such Participant's behalf since such Valuation Date. For purposes of this subsection, the "date payment of such distribution is to be made" refers to the date established for such purpose by administrative practice, even if actual payment is made at a later date due to delays in the valuation, administrative or any other procedure. Benefits shall be distributed to such Beneficiary or Beneficiaries within 90 days after the date of the Participant's death if it is administratively feasible to make such distribution within such 90-day period; if not, as soon as administratively feasible thereafter within any reasonable period. The Administrative Committee may direct the Trustee to distribute a Participant's Account to a Beneficiary without the written consent of such Beneficiary. 7.3 Form of Distribution. Any distribution to a Participant or his Beneficiary or Beneficiaries shall be made in the form of a single sum payment. The payment shall be made in whole shares of Company Stock and cash representing any fractional shares of stock. Such single sum payment may be divided among multiple Beneficiaries, as applicable. 7.4 Beneficiary Designation. (a) General. Participants shall designate and from time to time may redesignate their Beneficiary or Beneficiaries in such form and manner as the Administrative Committee may determine. A Participant shall be deemed to have named his Spouse, if any, as his sole Beneficiary unless his Spouse consents to the payment of all or a specified portion of the Participant's death benefit to a Beneficiary other than or in addition to the Spouse in a manner satisfying the requirements of a Qualified Spousal Waiver and such other procedures as the Administrative Committee may establish. Notwithstanding the foregoing, a married Participant may designate a nonspouse Beneficiary without a Qualified Spousal Waiver if the Participant establishes to the satisfaction of the Administrative Committee that a Qualified Spousal Waiver may not be obtained because his Spouse cannot be located or such other permissible circumstances exist as the Secretary of the Treasury may prescribe by regulation. If any Participant dies prior to receiving his benefits under the Plan, his Account shall be changed to the name of such deceased Participant's named or deemed Beneficiary or Beneficiaries. (b) No Designation or Designee Dead or Missing. In the event that: (1) a Participant dies without designating a Beneficiary; (2) the Beneficiary designated by a Participant is not surviving when a payment is to be made to such person under the Plan, and no contingent Beneficiary was designated by the Participant; or (3) the Beneficiary designated by a Participant cannot be located by the Administrative Committee within 1 year from the date benefits are to commence to such person; then, in any of such events, the Beneficiary of such Participant with respect to any benefits that remain payable under the Plan shall be the Participant's Surviving Spouse, if any, and if not, then the estate of the Participant. 7.5 Hardship Withdrawals. (a) Parameters of Hardship Withdrawals. A Participant may make a withdrawal on account of hardship from his vested Account. For purposes of this subsection, a withdrawal will be on account of "hardship" only if it is necessary to respond to an "unforeseeable emergency" resulting in a severe financial need of the Participant. A withdrawal based on financial hardship cannot exceed the amount necessary to meet the severe financial need created by the hardship and not reasonably available from other resources of the Participant. The Administrative Committee shall make its determination, as to whether a Participant has suffered a severe financial need as a result of an unforeseeable emergency and whether it is necessary to use a hardship withdrawal from the Plan to satisfy that need on the basis of all relevant facts and circumstances. (b) Unforeseeable Emergency. For purposes of the Plan, an unforeseeable emergency shall be a sudden and unexpected illness or accident of the Participant or of a dependent (as defined in Code Section 152(a)) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved - (i) through reimbursement or compensation by insurance or otherwise; (ii) by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship; or (iii) by cessation of deferrals under the Plan. Examples of events not considered to be unforeseeable emergencies include the need to send a participant's child to college or the desire to purchase a home. (c) Application for Hardship Withdrawal. All applications for hardship withdrawals shall be in writing on a form provided by the Administrative Committee and shall contain such information as the Administrative Committee may reasonably request. (d) Payment of Withdrawal. The amount of a hardship withdrawal shall be paid to a Participant in a single sum in cash as soon as practicable after the Administrative Committee approves the withdrawal application. 7.6 Unclaimed Benefits. In the event a Participant becomes entitled to benefits under the Plan other than death benefits and the Administrative Committee is unable to locate such Participant (after sending a letter, return receipt requested, to the Participant's last known address, and after such further diligent efforts as the Administrative Committee in its sole discretion deems appropriate) within 1 year from the date upon which he becomes so entitled, the Administrative Committee shall direct that such benefits be paid to the Beneficiary of such Participant; provided, if the distribution is payable upon the termination of the Plan, the Administrative Committee shall not be required to wait until the end of such 1-year period. If the Participant and the Beneficiary cannot be located and fail to claim such benefits by the end of the 5th Plan Year following the Plan Year in which such Participant becomes entitled to such benefits, then the full Account of the Participant shall be deemed abandoned and shall be used to reduce the Matching Contributions of the Participating Company or Companies which employed such Participant; provided, in the event such Participant or Beneficiary is located or makes a claim subsequent to the allocation of the abandoned Account but prior to the expiration of the time within which any such person's claim to the Account would expire under appropriate state law, then the amount of the abandoned Account (unadjusted for any investment gains or losses from the time of abandonment) shall be restored (from abandoned Accounts, Trust earnings or Contributions made by the Participating Company or Companies with whom the Participant formerly was employed) and paid to such Participant or Beneficiary, as appropriate; and, provided, further, the Administrative Committee, in its sole discretion, may delay the deemed date of abandonment of any such Account for a period longer than the prescribed 5 Plan Years if it believes that it is in the best interest of the Plan to do so. 7.7 Claims. (a) Procedure. Claims for benefits under the Plan may be filed with the Administrative Committee on forms supplied by the Administrative Committee. The Administrative Committee shall furnish to the claimant written notice of the disposition of a claim within 90 days after the application therefor is filed; provided, if special circumstances require an extension of time for processing the claim, the Administrative Committee shall furnish written notice of the extension to the claimant prior to the termination of the initial 90-day period, and such extension shall not exceed one additional, consecutive 90-day period. In the event the claim is denied, the notice of the disposition of the claim shall provide the specific reasons for the denial, cites of the pertinent provisions of the Plan, and, where appropriate, an explanation as to how the claimant can perfect the claim and/or submit the claim for review. (b) Review Procedure. Any Participant or Beneficiary who has been denied a benefit, or his duly authorized representative, shall be entitled, upon request to the Administrative Committee, to appeal the denial of his claim. To do so, the claimant must make a written request to the Administrative Committee for further consideration of his position. The claimant, or his duly authorized representative, may review pertinent documents related to the Plan and in the Administrative Committee's possession in order to prepare the appeal. The form containing the request for review, together with a written statement of the claimant's position, must be filed with the Administrative Committee no later than 60 days after receipt of the written notification of denial of a claim provided for in subsection (a). The Administrative Committee's decision shall be made within 120 days following the filing of the request for review and shall be communicated in writing to the claimant. If unfavorable, the notice of decision shall explain the reason or reasons for denial and indicate the provisions of the Plan or other documents used to arrive at the decision. (c) Satisfaction of Claims. Any payment to a Participant or Beneficiary or to their legal representative or heirs at law, all in accordance with the provisions of the Plan, shall to the extent thereof be in full satisfaction of all claims hereunder against the Trustee, the Administrative Committee and the Controlling Company, any of whom may require such Participant, Beneficiary, legal representative or heirs at law, as a condition to such payment, to execute a receipt and release therefor in such form as shall be determined by the Trustee, the Administrative Committee or the Controlling Company, as the case may be. If receipt and release shall be required but execution by such Participant, Beneficiary, legal representative or heirs at law shall not be accomplished so that the terms of 7.1 and 7.2 may be fulfilled, such benefits may be distributed or paid into any appropriate court or to such other place as such court shall direct, for disposition in accordance with the order of such court, and such distribution shall be deemed to comply with the requirements of 7.1 and 7.2. ARTICLE VIII ADMINISTRATION 8.1 Administrative Committee; Appointment and Term of Office. (a) The Administrative Committee shall consist of not less than one member who shall be appointed by and serve at the pleasure of the Board. (b) The Board shall have the right to remove any member of the Administrative Committee at any time. A member may resign at any time by written resignation to the Board. If a vacancy in the Administrative Committee should occur, a successor may be appointed by the Board. (c) A written certification shall be given to the Trustee by the Board of all members of the Administrative Committee together with a specimen signature of each member. For all purposes hereunder, the Trustee shall be conclusively entitled to rely upon such certification until the Trustee is otherwise notified in writing. 8.2 Organization of Administrative Committee. The Administrative Committee may elect a Chairman and a Secretary from among its members. In addition to those powers set forth elsewhere in the Plan, the Administrative Committee may appoint such agents, who need not be members of such Administrative Committee, as it may deem necessary for the effective performance of its duties and may delegate to such agents such powers and duties, whether ministerial or discretionary, as the Administrative Committee may deem expedient or appropriate. The compensation of such agents who are not full-time Employees of a Participating Company shall be fixed by the Administrative Committee within limits set by the Board and shall be paid by the Controlling Company (to be divided equitably among the Participating Companies) or from the Trust Fund as determined by the Administrative Committee. The Administrative Committee shall act by majority vote. Its members shall serve as such without compensation. 8.3 Powers and Responsibility. The Administrative Committee shall fulfill the duties of "administrator" as set forth in 3(16) of ERISA and shall have complete control of the administration of the Plan hereunder, with all powers necessary to enable it properly to carry out its duties as set forth in the Plan and the Trust Agreement. The Administrative Committee shall have the following duties and responsibilities: (a) to construe the Plan and to determine all questions that shall arise thereunder; (b) to have all powers elsewhere herein conferred upon it; (c) to decide all questions relating to the eligibility of Employees to participate in the benefits of the Plan; (d) to determine the benefits of the Plan to which any Participant or Beneficiary may be entitled; (e) to maintain and retain records relating to Participants and Beneficiaries; (f) to prepare and furnish to Participants all information required under federal law or provisions of the Plan to be furnished to them; (g) to prepare and furnish to the Trustee sufficient employee data and the amount of Contributions received from all sources so that the Trustee may maintain separate accounts for Participants and Beneficiaries and make required payments of benefits; (h) to prepare and file or publish with the Secretary of Labor, the Secretary of the Treasury, their delegates and all other appropriate government officials all reports and other information required under law to be so filed or published; (i) to provide directions to the Trustee with respect to methods of benefit payment, valuations at dates other than the quarterly Valuation Date and all other matters where called for in the Plan or requested by the Trustee; (j) to engage assistants and professional advisers; (k) to arrange for fiduciary bonding; and (l) to provide procedures for determination of claims for benefits; all as further set forth herein. 8.4 Records of Administrative Committee. (a) Any notice, direction, order, request, certification or instruction of the Administrative Committee to the Trustee shall be in writing and shall be signed by a member of the Administrative Committee. The Trustee and every other person shall be entitled to rely conclusively upon any and all such notices, directions, orders, requests, certifications and instructions received from the Administrative Committee and reasonably believed to be properly executed, and shall act and be fully protected in acting in accordance therewith. (b) All acts and determinations of the Administrative Committee shall be duly recorded by its Secretary or under his supervision, and all such records, together with such other documents as may be necessary for the administration of the Plan, shall be preserved in the custody of such Secretary. 8.5 Reporting and Disclosure. The Administrative Committee shall keep all individual and group records relating to Participants and Beneficiaries and all other records necessary for the proper operation of the Plan. Such records shall be made available to the Participating Companies and to each Participant and Beneficiary for examination during normal business hours except that a Participant or Beneficiary shall examine only such records as pertain exclusively to the examining Participant or Beneficiary and the Plan and Trust Agreement. The Administrative Committee shall prepare and shall file as required by law or regulation all reports, forms, documents and other items required by ERISA and every other relevant statute, each as amended, and all regulations thereunder. This provision shall not be construed as imposing upon the Administrative Committee the responsibility or authority for the preparation, preservation, publication or filing of any document required to be prepared, preserved or filed by the Trustee or by any other Named Fiduciary to whom such responsibilities are delegated by law or by the Plan. 8.6 Construction of the Plan. The Administrative Committee shall take such steps as are considered necessary and appropriate to remedy any inequity that results from incorrect information received or communicated in good faith or as the consequence of an administrative error. The Administrative Committee shall interpret the Plan and shall determine the questions arising in the administration, interpretation and application of the Plan. The Administrative Committee shall endeavor to act, whether by general rules or by particular decisions, so as not to discriminate in favor of or against any person and so as to treat all persons in similar circumstances uniformly. The Administrative Committee shall correct any defect, reconcile any inconsistency or supply any omission with respect to the Plan. 8.7 Assistants and Advisers. (a) The Administrative Committee shall have the right to hire, at the expense of the Controlling Company (to be divided equitably among the Participating Companies), such professional assistants and consultants as it, in its sole discretion, deems necessary or advisable. To the extent that the costs for such assistants and advisers are not so paid by the Controlling Company, they shall be paid at the direction of the Administrative Committee from the Trust Fund as an expense of the Trust Fund. (b) The Administrative Committee and the Participating Companies shall be entitled to rely upon all certificates and reports made by an actuary, accountant or attorney selected pursuant to this 8.7; the Administrative Committee, the Participating Companies, and the Trustee shall be fully protected in respect to any action taken or suffered by them in good faith in reliance upon the advice or opinion of any such actuary, accountant or attorney; and any action so taken or suffered shall be conclusive upon each of them and upon all other persons interested in the Plan. 8.8 Direction of Trustee. The Administrative Committee shall have the power to provide the Trustee with general investment policy guidelines and directions to assist the Trustee respecting investments made in compliance with, and pursuant to, the terms of the Plan. 8.9 Bonding. The Administrative Committee shall arrange for fiduciary bonding as is required by law, but no bonding in excess of the amount required by law shall be required by the Plan. 8.10 Indemnification. The Administrative Committee and each member of that Committee shall be indemnified by the Participating Companies against judgment amounts, settlement amounts (other than amounts paid in settlement to which the Participating Companies do not consent) and expenses reasonably incurred by the Committee or each member of the Committee in connection with any action to which the Committee or any member thereof may be a party (by reason of his service as a member of the Committee) except in relation to matters as to which the Committee or any member thereof shall be adjudged in such action to be personally guilty of gross negligence or willful misconduct in the performance of its or any member's duties. The foregoing right to indemnification shall be in addition to such other rights as such Committee or each Committee member may enjoy as a matter of law or by reason of insurance coverage of any kind. Rights granted hereunder shall be in addition to and not in lieu of any rights to indemnification to which such Committee or each Committee member may be entitled pursuant to the by-laws of the Controlling Company. Service on the Administrative Committee shall be deemed in partial fulfillment of a Committee member's function as an Employee, officer and/or director of the Controlling Company or any Participating Company, if he serves in such other capacity as well. ARTICLE IX ALLOCATION OF AUTHORITY AND RESPONSIBILITIES 9.1 Controlling Company and Board. (a) General Responsibilities. The Controlling Company, as Plan sponsor, and the Board each shall serve as a Named Fiduciary having the following (and only the following) authority and responsibilities: (1) To appoint the Trustee and the Administrative Committee and to monitor each of their performances; (2) To communicate such information to the Trustee and the Administrative Committee as each needs for the proper performance of its duties; and (3) To provide channels and mechanisms through which the Administrative Committee and/or the Trustee can communicate with Participants and Beneficiaries. In addition, the Controlling Company shall perform such duties as are imposed by law or by regulation and shall serve as Plan Administrator in the absence of an appointed Administrative Committee. (b) Allocation of Authority. In the event any of the areas of authority and responsibilities of the Controlling Company and the Board overlap with that of any other Plan fiduciary, the Controlling Company and the Board shall coordinate with such other fiduciaries the execution of such authority and responsibilities; provided, the decision of the Controlling Company and the Board with respect to such authority and responsibilities ultimately shall be controlling. (c) Authority of Participating Companies. Notwithstanding anything herein to the contrary, and in addition to the authority and responsibilities specifically given to the Participating Companies in the Plan, the Controlling Company, in its sole discretion, may grant the Participating Companies such authority and charge them with such responsibilities as the Controlling Company deems appropriate. 9.2 Administrative Committee. The Administrative Committee shall have the authority and responsibilities imposed by Article VIII hereof. With respect to said authority and responsibilities, the Administrative Committee shall be a Named Fiduciary, and as such, shall have no authority or responsibilities other than as granted in the Plan or as imposed as a matter of law. 9.3 Trustee. The Trustee shall be a Named Fiduciary with respect to investment of Trust Fund assets and shall have the powers and duties set forth in the Trust Agreement. 9.4 Limitations on Obligations of Fiduciaries. No fiduciary shall have authority or responsibility to deal with matters other than as delegated to it under the Plan, under the Trust Agreement or by operation of law. A fiduciary shall not in any event be liable for breach of fiduciary responsibility or obligation by another fiduciary (including Named Fiduciaries) if the responsibility or authority for the act or omission deemed to be a breach was not within the scope of such fiduciary's authority or delegated responsibility. 9.5 Delegation. Named Fiduciaries shall have the power to delegate specific fiduciary responsibilities (other than Trustee responsibilities). Such delegations may be to officers or Employees of a Participating Company or to other persons, all of whom shall serve at the pleasure of the Named Fiduciary making such delegation and, if full-time Employees of a Participating Company, without compensation. Any such person may resign by delivering a written resignation to the delegating Named Fiduciary. Vacancies created by any reason may be filled by the appropriate Named Fiduciary or the assigned responsibilities may be reabsorbed or redelegated by the Named Fiduciary. 9.6 Multiple Fiduciary Roles. Any person may hold more than one position of fiduciary responsibility and shall be liable for each such responsibility separately. ARTICLE X AMENDMENT, TERMINATION AND ADOPTION 10.1 Amendment. The provisions of the Plan may be amended at any time and from time to time by the Board; provided: (a) No amendment shall increase the duties or liabilities of the Trustee without the consent of such party; (b) No amendment shall decrease the balance or vested percentage of an Account or eliminate an optional form of benefit; (c) No amendment shall be made which would divert any of the assets of the Trust Fund to any purpose other than the exclusive benefit of Participants and Beneficiaries, except that the Plan and Trust Agreement may be amended retroactively and to affect the Accounts of Participants and Beneficiaries if necessary to cause the Plan and Trust to be qualified and exempt from taxation under the Code; (d) Each amendment shall be approved by the Board by resolution; and (e) No amendment shall be made to Section 5.1(c) of the Plan (unless required by law). 10.2 Termination. (a) Right to Terminate. The Controlling Company expects the Plan to be continued indefinitely, but it reserves the right to terminate the Plan or to completely discontinue Contributions to the Plan at any time by action of the Board. In either event, the Administrative Committee, each Participating Company and the Trustee shall be promptly advised of such decision in writing. (b) Dissolution of Trust. In the event that the Administrative Committee decides to dissolve the Trust, as soon as practicable following the termination of the Plan or the Administrative Committee's decision, whichever is later, the assets under the Plan shall be converted to cash or other distributable assets, to the extent necessary to effect a complete distribution of the Trust assets to the Controlling Company. 10.3 Adoption of the Plan by a Participating Company. (a) Procedures for Participation. The Controlling Company shall become a Participating Company in the Plan as of July 1, 1995. Georgia Gas Company, Georgia Gas Service Company and Chattanooga Gas Company also shall become Participating Companies as of July 1, 1995. Any other company may become a Participating Company and commence participation in the Plan subject to the provisions of this subsection. In order for a company to become a Participating Company, the Administrative Committee must designate such company as a Participating Company and specify the effective date of such designation. The name of any company which shall commence participation in the Plan, along with the effective date of its participation, shall be recorded on Schedule A hereto which shall be appropriately modified each time a Participating Company is added or deleted. To adopt the Plan as a Participating Company, the board of directors of the company must approve a resolution expressly adopting the Plan for the benefit of its eligible employees and accepting designation as a Participating Company, subject to all of the provisions of this Plan and of the Trust. The resolution shall specify the date as of which the designation as a Participating Company shall be effective. A copy of the resolution (certified if requested) of the board of directors of the adopting Participating Company shall be provided to the Administrative Committee. Upon adoption of the Plan by a Participating Company as herein provided, the Employees of such company shall be eligible to participate in the Plan subject to the terms hereof and of the resolution of the Administrative Committee designating the adopting company as such. (b) Authority under Plan. As long as a Participating Company's designation as such remains in effect, such Participating Company shall be bound by, and subject to, all provisions of the Plan and the Trust. The exclusive authority to amend the Plan and the Trust shall be vested in the Administrative Committee, and no Participating Company other than the Controlling Company shall have any right to amend the Plan or the Trust. Any amendment to the Plan or the Trust adopted by the Administrative Committee shall be binding upon every Participating Company without further action by such Participating Company. (c) Contributions to Plan. As long as each Participating Company shall be so designated, such Participating Company shall be required to make Contributions to the Plan at such times and in such amounts as specified in Article III. The Contributions made (or to be made) to the Plan by the Participating Companies shall be allocated between and among such companies in whatever equitable manner or amounts as the Administrative Committee shall determine. (d) Withdrawal from Plan. No Participating Company other than the Controlling Company shall have the right to terminate the Plan. However, any Participating Company may withdraw from the Plan, with the approval of the Administrative Committee, by action of its board of directors, provided such action is communicated in writing to the Administrative Committee. The withdrawal of a Participating Company shall be effective as of the last day of the Plan Year which follows receipt of the notice of withdrawal (unless the Controlling Company consents to a different effective date). In addition, the Administrative Committee may terminate the designation of a Participating Company to be effective on such date as the Administrative Committee specifies. Any such Participating Company which ceases to be a Participating Company shall be liable for all costs accrued through the effective date of its withdrawal or termination. In the event of the withdrawal or termination of a Participating Company as provided in this Section, such Participating Company shall have no right to direct that assets of the Plan be transferred to a successor plan for its employees, unless such transfer is approved by the Controlling Company or Administrative Committee in its sole discretion. ARTICLE XI MISCELLANEOUS 11.1 Nonalienation of Benefits and Spendthrift Clause. None of the Accounts, benefits, payments, proceeds or distributions under the Plan shall be subject to the claim of any creditor of a Participant or Beneficiary or to any legal process by any creditor of such Participant or of such Beneficiary; and neither such Participant nor any such Beneficiary shall have any right to alienate, commute, anticipate or assign any of the Accounts, benefits, payments, proceeds or distributions under the Plan except to the extent expressly provided herein. If any Participant shall attempt to dispose of his Account or the benefits provided for him hereunder or to dispose of the right to receive such benefits, or, in the event there should be an effort to seize such Account or benefits by attachment, execution or other legal or equitable process, such right may pass and be transferred, at the discretion of the Administrative Committee, to such person or persons as may be selected by the Administrative Committee from among the Beneficiaries, if any, theretofore designated by the Participant, or from the Spouse, children or other dependents of the Participant, in such shares as the Administrative Committee may appoint. Any appointments so made by the Administrative Committee may be revoked by it at any time, and further appointments made by it may include the Participant. 11.2 Headings. The headings and subheadings in the Plan have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. 11.3 Construction, Controlling Law. In the construction of the Plan, the masculine shall include the feminine and the feminine the masculine, and the singular shall include the plural and the plural the singular, in all cases where such meanings would be appropriate. Unless otherwise specified, any reference to a section shall be interpreted as a reference to a section of the Plan. The Plan shall be construed in accordance with the laws of the State of Georgia and applicable federal laws. 11.4 No Contract of Employment. Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any benefits shall be construed as giving any Participant, Employee or any person whomsoever the right to be retained in the service of any Affiliate, and all Participants and other Employees shall remain subject to discharge to the same extent as if the Plan had never been adopted. 11.5 Legally Incompetent. The Administrative Committee may in its discretion direct that payment be made and the Trustee shall make payment on such direction, directly to an incompetent or disabled person, whether incompetent or disabled because of minority or mental or physical disability, or to the guardian of such person or to the person having legal custody of such person, without further liability with respect to or in the amount of such payment either on the part of any Participating Company, the Administrative Committee or the Trustee. 11.6 Heirs, Assigns and Personal Representatives. The Plan shall be binding upon the heirs, executors, administrators, successors and assigns of the parties, including each Participant and Beneficiary, present and future. 11.7 Unsecured Creditor Rights. No Participant or Beneficiary shall have any right to, or interest in, any assets of the Trust Fund other than that of a general unsecured creditor of the Controlling Company. 11.8 Legal Action. In any action or proceeding involving the assets held with respect to the Plan or Trust Fund or the administration thereof, the Participating Companies, the Administrative Committee and the Trustee shall be the only necessary parties and no Participants, Employees, or former Employees of the Company, their Beneficiaries or any other person having or claiming to have an interest in the Plan shall be entitled to any notice of process; provided, that such notice as is required by the IRS and the Department of Labor to be given in connection with Plan amendments, termination, curtailment or other activity shall be given in the manner and form and at the time so required. Any final judgment which is not appealed or appealable that may be entered in any such action or proceeding shall be binding and conclusive on the parties hereto, the Administrative Committee and all persons having or claiming to have an interest in the Plan. 11.9 Severability. If any provisions of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included. 11.10 Exclusive Benefit; Refund of Contributions. No part of the Trust Fund shall be used for or diverted to purposes other than the exclusive benefit of the Participants and their Beneficiaries, subject, however, to the payment of all costs of maintaining and administering the Plan and Trust. 11.11 Predecessor Service. In the event a Participating Company maintains the Plan as successor to a predecessor employer who maintained the Plan, service for the predecessor employer shall be treated as service for the Participating Company. 11.12 Plan Expenses. Expenses incurred with respect to administering the Plan and Trust shall be paid by the Trustee from the Trust Fund only to the extent such costs are not paid by the Participating Companies or to the extent the Controlling Company requests that the Trustee reimburse it for its payment of such expenses. IN WITNESS WHEREOF, the Controlling Company has caused this Plan to be executed by its duly authorized officers and its corporate seal to be affixed hereto, all as of the date first above written. ATLANTA GAS LIGHT COMPANY By: /s/ Robert L. Goocher Title: Executive Vice President Attest: /s/ Melanie M. Platt Title: Corporate Secretary [CORPORATE SEAL] SCHEDULE A EFFECTIVE DATES FOR PARTICIPATING COMPANIES Name of Effective Date Participating Company of Participation Atlanta Gas Light Company July 1, 1995 Georgia Gas Company (Draketown) July 1, 1995 Chattanooga Gas Company July 1, 1995 Georgia Gas Service Company July 1, 1995 SCHEDULE B ITEMS EXCLUDED FROM "COMPENSATION" UNDER 1.15(3)(i) PAYROLL CODE DESCRIPTION IMP LIFE Imputed income attributable to employer provided life insurance over $50,000 AWARDS Pay attributable to Y.E.S. Suggestions, Company awards BONUS Christmas bonus BOND PAY N/A INTEREST Mortgage rate interest differential payments CAR ALLO End of year allowance for persons with company cars MOV EXPS Moving expenses PRO CERT Professional certification bonus for attainment of the Professional Engineer, Attorney or Certified Public Accountant designation 3RD PRTY Long term disability benefits paid during the year by 3rd party administrator and included in gross wages E B P Employee bonus plan TUITION Taxable tuition reimbursement GRIP Group replacement insurance plan premium gross-up NTUITION Nontaxable tuition reimbursement MERIT Lump sum merit payments in lieu of salary increases EXEC PAY Executive allowance fund end of year adjustment SETTLEMT (NONPERIODIC) Settlement as a result of arbitration or legal proceedings RS/NQSTK Restricted non-qualified stock PROSPECT For employees who have turned in prospects and merchandise has been sold to them QSTK OPT Qualified stock option 3PRTY TX Tax paid on behalf of employee by 3rd party administrator on long term disability NMOV EXP Nontaxable moving expenses FLEX $$$ FlexBenefits Plan benefit credits FLEX IMP Imputed income attributable to employer provided life insurance over $50,000 under FlexBenefits Plan SEVERANCE PAY Severance Pay EX-10 4 Exhibit 10tt AMENDATORY AGREEMENT The Amendment is entered into this 1st day of June, 1995, between SOUTHERN NATURAL GAS COMPANY ("Company") and ATLANTA GAS LIGHT COMPANY ("Shipper"). WITNESSETH: WHEREAS, Company and Shipper are parties to a firm transportation agreement dated November 1, 1994, (#904460) for 259,812 Mcf per day, as amended March 1, 1995 ("FT Agreement"); and WHEREAS, Shipper has released 4,000 Mcf per day of its capacity under the FT Agreement on a permanent basis to the City of Lawrenceville, Georgia, effective June 1,1995; and WHEREAS, the parties wish to memorialize such permanent release through this amendment to the FT Agreement; NOW THEREFORE, in consideration for the premises and the mutual promises and covenants contained herein, the parties agree as follows: 1. The Transportation Demand set forth in Section 1.1 of the FT Agreement shall be revised to be 255,812 Mcf per day effective June 1,1995. 2. Section 4.1 of the FT Agreement shall be deleted in its entirety and the following Section 4.1 substituted therefor: 4.1 Subject to the provisions hereof, this Agreement shall become effective as of the date first hereinabove written and shall be in full force and effect for a primary term through the following dates: (a) April 30, 2007 for 110,905 Mcf per day of Transportation Demand and June 30, 2007 for 1,000 Mcf per day of Transportation Demand, and shall continue and remain in force and effect for successive terms of one year each after the end of each primary term for the specified volume, unless and until cancelled with respect to the associated volume by either party giving 180 days written notice to the other party prior to the end of the specified primary term or any yearly extension thereof; and (b) February 28, 1998, for 143,907 Mcf per day of Transportation Demand, and shall continue and remain in force and effect for successive terms of one year each thereafter if the parties mutually Amendatory Agreement Page 2 agree in writing to each such yearly extension at least 60 days prior to the end of the primary term or subsequent yearly extension. 3. The current Exhibits A and B to the FT Agreement shall be deleted in their entirety and the First Revised Exhibits A and B attached hereto effective June 1, 1995, shall be substituted therefor. 4. Except as provided herein, the FT Agreement shall remain in full force and effect as written and as amended effective March 1,1995. 5. This Amendment is subject to all applicable, valid laws, orders, rules and regulations of any governmental entity having jurisdiction over the parties or the subject matter hereof. WHEREFORE, the parties have executed this Amendment through their duly authorized representatives to be effective as of the date first written above. ATTEST: SOUTHERN NATURAL GAS COMPANY By: By: /s/ Joel Anderson Title: Secretary Title: Vice President ATTEST: ATLANTA GAS LIGHT COMPANY By: /s/ Melanie M. Platt By: /s/ Stephen J. Gunther Title: Corporate Secretary Title: Vice President SERVICE AGREEMENT NO: 904460 EXHIBIT A The legal description of the Receipt Points listed below are more particularly set forth in Company's Receipt Point catalog, a copy of which can be requested from Company or accessed through SoNet, Company's electronic computer system. MDRQ RECEIPT POINT: ZONE in Mcf 016400 MAIN PASS 69 PA 490 017250 GRAND BAY - MID-LOUISIANA EXCHANGE PA 4,968 017400 WEST DELTA 75 - AMOCO (wd 73) PA 17,384 017500 WEST DELTA 105 PA 9,794 018400 MAIN PASS 289 - M.P. 290 - SHELL PA 19,219 018450 VKGC - MAIN PASS 289 TO SNG PA 9,794 018600 SOUTH PASS 62 - SHELL PA 3,918 020400 SOUTH PASS 60 PA 9,794 022400 MISSISSIPPI CANYON 194 PA 28,588 022800 CARTHAGE - UPRC PA 10,420 023500 MAIN PASS 129 - HALL HOUSTON PA 2,774 023800 MAIN PASS 116 - MAXUS PA 14,691 024950 MISSISSIPPI CANYON 268 - ORYX EXCHANGE PA 25,347 026600 WEST DELTA 89 - AGIP PA 1,959 026950 SOUTH PASS 62 - BP EXCHANGE PA 7,595 027400 MAIN PASS 69(FEDERAL) PA 4,652 028050 MAIN PASS 181 - DIAMOND SHAMROCK EXCHANGE PA 2,449 030000 BAYOU SALE - TEXACO - HORSESHOE BAYOU PA 4,897 037000 MISSISSIPPI CANYON 311 PA 9,794 037400 MISSISSIPPI CANYON 268A - EXXON PA 2,449 046040 OAK GROVE #5 - TAURUS 2 3,428 046050 OAK GROVE #2 - BASIN 2 2,449 046070 OAK GROVE #4 - AMOCO 2 490 046080 OAK GROVE #6 - AMOCO 2 3,428 605200 SABINE - HENRY HUB TO SNG PA 13,884 605300 SEA ROBIN - ERATH TO SNG PA 20,617 664000 LRC - WHITE CASTLE TO SNG PA 3,763 690500 BOURBON LINE (FGT) FROM WEST DELTA 152 PA 16,777 /s/ Stephen J. Gunther /s/ Joel Anderson ATLANTA GAS LIGHT COMPANY SOUTHERN NATURAL GAS COMPANY EFFECTIVE DATE: 9/18/95 EXHIBIT B Page No. 1 of 4 ATLANTA GAS LIGHT COMPANY The legal description of the Delivery Points listed below are more particularly set forth in the Company's Delivery Point catalogs, a copy of which can be requested from Company or accessed through SoNet, Company's electronic computer system. This exhibit reflects Maximum Daily Delivery Quantities for FT Service Agreement No. 904460 and FT-NN Service Agreement No. 904461 Delivery Delivery MDDQ Meter Capability Cont. Point Point in Daily Hourly Press. Description Code MCF (Mcf/d) (Mcf/h) (psig) Notes - ---------------- -------- -------- ------------------ ------ ---------- ATLANTA AREA 683600 257,814 A FULTON IND'IAL 910800 48,000 2,000 LINE EAST POINT 911000 20,000 1,000 LINE 200#-335# SO. ATLANTA #1 911300 137,000 8,200 250 SEWELL ROAD 911400 270,000 14,000 LINE < 335#, B SO. ATLANTA #2 911600 172,000 7,165 LINE MARIETTA 912200 33,000 1,500 REG 300#-500# HAMPTON 913000 4,200 252 290 AGL FARM TAPS 907000 CHATSWORTH 907600 2,127 LINE CATOOSA COUNTY 907800 258 300 RINGGOLD 908000 3,814 275 MACON AREA 911500 53,916 A NORTH MACON 915400 50,000 3,000 LINE EAST MACON 915500 27,500 1,700 LINE WEST MACON 915600 14,400 864 LINE MACON-MVILLE#1 915800 89,395 5,360 LINE D MACON-MVILLE#2 915900 60,000 3,600 LINE D JEFFERSONVILLE 918200 2,110 126 LINE > 400# SAVANNAH AREA 911800 69,327 A SAVANNAH #1 934600 30,000 1,800 125 SAVANNAH #2 934700 46,500 2,790 LINE > 225 # SAVANNAH #3 934800 6,000 250 150 SAVANNAH #4 934900 28,800 1,200 LINE > 400 # GRIFFIN 913400 18,750 290 FORSYTH 917200 2,073 LINE ZEBULON 917400 555 LINE THOMASTON 917600 7,406 150 BARNESVILLE 917800 3,567 250 JACKSON 918000 2,385 LINE > 200 # DANVILLE 918400 350 400 EXHIBIT B Page No. 2 of 4 ATLANTA GAS LIGHT COMPANY The legal description of the Delivery Points listed below are more particularly set forth in the Company's Delivery Point catalogs, a copy of which can be requested from Company or accessed through SoNet, Company's electronic computer system. This exhibit reflects Maximum Daily Delivery Quantities for FT Service Agreement No. 904460 and FT-NN Service Agreement No. 904461 Delivery Delivery MDDQ Meter Capability Cont. Point Point in Daily Hourly Press. Description Code MCF (Mcf/d) (Mcf/h) (psig) Notes - ---------------- -------- -------- ------------------ ------ ---------- DEXTER 918600 410 400 EASTMAN/C'WELL 918800 2,500 400 ALAMO 919200 9,601 750 HAZLEHURST 919400 2,035 400 BAXLEY 919600 3,821 600 JESUP 919800 14,255 450 BRUNSWICK 920200 14,605 150 WARRENTON 930600 4,429 325 BLYTHE 931600 160 300 SANDERSVILLE 932500 6,430 200 S'FIELD-GUYTON 934200 850 REG 380#-400# ROME AREA 940013 29,971 A ROME #1 904200 13,300 800 LINE > 450 # ROME #2 904300 20,000 1,100 260 ROME #3 904400 11,000 540 LINE > 400# SHANNON 906200 1,300 70 150 C AUGUSTA AREA 940016 69,381 A AUGUSTA #1 932000 53,140 3,188 400 AUGUSTA #2 932100 35,000 1,500 LINE AUGUSTA #3 932200 18,333 1,100 450 AUGUSTA #4 932300 19,200 800 LINE NEW-YAT-DAL AR 940018 47,162 A VILLA RICA 909400 150 DALLAS #2 909800 888 53 300 YATES JUNCTION 910100 9,152 548 LINE NEWNAN JUNCT'N 910200 8,500 492 LINE DOUGLASVILLE 910400 LINE > 250# CALHOUN AREA 940019 4,552 A CALHOUN #1 907200 9,640 578 190 CALHOUN #2 907300 9,640 402 LINE > 350 # CTOWN-RMART AR 940020 10,321 A EXHIBIT B Page No. 3 of 4 ATLANTA GAS LIGHT COMPANY The legal description of the Delivery Points listed below are more particularly set forth in the Company's Delivery Point catalogs, a copy of which can be requested from Company or accessed through SoNet, Company's electronic computer system. This exhibit reflects Maximum Daily Delivery Quantities for FT Service Agreement No. 904460 and FT-NN Service Agreement No. 904461 Delivery Delivery MDDQ Meter Capability Cont. Point Point in Daily Hourly Press. Description Code MCF (Mcf/d) (Mcf/h) (psig) Notes - ---------------- -------- -------- ------------------ ------ ---------- CEDARTOWN 903600 7,300 430 250 ROCKMART 903800 7,800 470 250 CAR'LLTON AREA 940026 19,209 A BOWDEN 902800 300 BREMEN 903000 300 CARROLLTON 909000 310 TEMPLE 909200 150 GRAND TOTAL 662,034 ATLANTA GAS LIGHT COMPANY SOUTHERN NATURAL GAS COMPANY By: /s/ Stephen J. Gunther By: /s/ Joel Anderson Vice President Date: September 11, 1995 Date: 9-18-95 EXHIBIT B Page No. 4 of 4 ATLANTA GAS LIGHT COMPANY Service Agreement No. 904460 (A) Company's obligation to deliver gas at each measurement station comprising this Delivery Point is limited to the delivery capacity of Company's facilities (at the measurement station and of the up-stream pipelines serving said station) as it exists from time to time. (B) At a delivery pressure of 300 PSIG, the maximum hourly rate will be 12,000 Mcf; and the maximum daily rate 258,470 Mcf. (C) Maximum hourly rate to be 80 Mcf upon the installation of additional meter (after notification by purchaser) when required increased load. (D) In accordance with ordering Paragraph (B) of the Commission's Order issued December 27, 1973, in Docket No CP74-7, combined deliveries through the Macon-Milledgeville No. 1 and No. 2 Meter Stations for any calendar year may not exceed 20,047,991 Mcf. EX-10 5 Exhibit 10uu Service Package: 3947 Amendment: 1 GAS STORAGE CONTRACT (For Use Under Rate Schedule FS) This Contract is made as of the 1st day of December 1, 1994, by and between TENNESSEE GAS PIPELINE COMPANY, a Delaware corporation herein called "Transporter," and CHATTANOOGA GAS COMPANY, a private corporation of the State of Tennessee, herein called "Shipper." Transporter and Shipper collectively shall be referred to herein as the "Parties." ARTICLE I - SCOPE OF AGREEMENT Following the commencement of service hereunder, in accordance with the terms of Transporter's Rate Schedule FS (Market Area), and of this Agreement, Transporter shall receive for injection for Shipper's account a daily quantity of gas up to Shipper's Maximum Injection Quantity of 5,682 dekatherms (Dth) and Maximum Storage Quantity (MSQ) of 852,286 (Dth) (on a cumulative basis) and on demand shall withdraw from Shipper's storage account and deliver to Shipper a daily quantity of gas up to Shipper's Maximum Daily Withdrawal Quantity (MDWQ) of 7,741 Dth; provided however, that when Shipper's storage balance is equal to or less than 30% of the MSQ but greater than 20% of the MSQ, the Maximum Daily Withdrawal Quantity shall be 6,193 Dth; and provided further, that when Shipper's storage balance is less than or equal to 20% of the MSQ, the Maximum Daily Withdrawal Quantity shall be 6,193 Dth. For demand charge purposes, the MDWQ for balances greater than 30% of the MSQ shall be used. ARTICLE II - SERVICE POINT The point or points at which the gas is to be tendered for delivery by Transporter to Shipper under this Agreement shall be at the storage service point at Transporter's Compressor Station 87-Portland. ARTICLE III - PRICE 1. Shipper agrees to pay Transporter for all natural gas storage service furnished to Shipper hereunder, including compensation for system fuel and losses, at Transporter's legally effective rate or at any effective superseding rate applicable to the type of service specified herein. Transporter's present legally effective rate for said service is contained in Transporter's Tariff as filed with the Federal Energy Regulatory Commission. 2. Shipper agrees to reimburse Transporter for any filing or similar fees, which have not been previously paid by Shipper, which Transporter incurs in rendering service hereunder. Service Package: 3947 Amendment: 1 3. Shipper agrees that Transporter shall have the unilateral right to file with the appropriate regulatory authority and make changes effective in (a) the rates and charges applicable to service pursuant to Transporter's Rate Schedule FS, (b) the rate schedule(s) pursuant to which service hereunder is rendered, or (c) any provision of the General Terms and Conditions applicable to those rate schedules. Transporter agrees that Shipper may protest or contest the aforementioned filings, or may seek authorization from duly constituted regulatory authorities for such adjustment of Transporter's existing FERC Gas Tariff as may be found necessary to assure Transporter just and reasonable rates. ARTICLE IV - INCORPORATION OF RATE SCHEDULE AND TARIFF PROVISIONS This agreement shall be subject to the terms of Transporter's Rate Schedule FS, as filed with the Federal Energy Regulatory Commission, together with the General Terms and Conditions applicable thereto (including any changes in said Rate Schedule or General Terms and Conditions as may from time to time be filed and made effective by Transporter). ARTICLE V - TERM OF AGREEMENT This Agreement shall be effective as of the December 1, 1994 and shall remain in force and effect until November 1, 2000, ("Primary Term") and on a month to month basis thereafter unless terminated by either Party upon at least thirty (30) days prior written notice to the other Party; provided, however, that if the Primary Term is one year or more, then unless Shipper elects upon one year's prior written notice to Transporter to request a lesser extension term, the Agreement shall automatically extend upon the expiration of the Primary Terms for a term of five years; and shall automatically extend for successive five year terms thereafter unless Shipper provides notice described above in advance of the expiration of a succeeding term; provided further, if the FERC or other governmental body having jurisdiction over the service rendered pursuant to this Agreement authorizes abandonment of such service, this Agreement shall terminate on the abandonment date permitted by the FERC or such other governmental body. This Agreement will terminate upon notice from Transporter in the event Shipper fails to pay all of the amount of any bill for service rendered by Transporter hereunder in accordance with the terms and conditions of Article VI of the General Terms and Conditions of Transporters Tariff. ARTICLE VI - NOTICES Except as otherwise provided in the General Terms and Conditions applicable to this Agreement, any notice under this Agreement shall be in writing and mailed to the post office address of the Party intended to receive the same, as follows: Service Package: 3947 Amendment: 1 TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY P. O. Box 2511 Houston, Texas 77252-2511 Attention: Transportation Services SHIPPER: NOTICES: CHATTANOOGA GAS COMPANY 6125 PRESERVATION DRIVE CHATTANOOGA, TN 37416 Attention: Mr. K. A. Royse BILLING: CHATTANOOGA GAS COMPANY C/O ATLANTA GAS LIGHT COMPANY 303 PEACHTREE STREET, N.E ATLANTA, GA 30308-3249 Attention: MS. LAURIE HENRY or to such other address as either Party shall designate by formal written notice to the other. ARTICLE VII - ASSIGNMENT Any company which shall succeed by purchase, merger or consolidation to the properties, substantially as an entirety, of Transporter or of Shipper, as the case may be, shall be entitled to the rights and shall be subject to the obligations of its predecessor in title under this Agreement. Otherwise no assignment of the Agreement or any of the rights or obligations thereunder shall be made by Shipper, except pursuant to the General Terms and Conditions of Transporter's FERC Gas Tariff. It is agreed, however, that the restrictions on assignment contained in this article shall not in any way prevent either Party to the Agreement from pledging or mortgaging its rights thereunder as security for its indebtedness. ARTICLE VIII - MISCELLANEOUS 8.1 The interpretation and performance of this Agreement shall be in accordance with and controlled by the laws of the State of Texas, without regard to doctrines governing choice of law. 8.2 If any provision of this Agreement is declared null and void, or voidable, by court of competent jurisdiction, then that provision will be considered severable at either Party's option; and if the severability option is exercised, the remaining provisions of the Agreement shall remain in full force and effect. Service Package: 3947 Amendment: 1 8.3 Unless otherwise expressly provided in this Agreement or Transporter's Tariff, no modification of or supplement to the terms and provisions stated in this Agreement shall be or become effective, until Shipper has submitted a request for change through the TENN-SPEED 2 System and Shipper has been notified through TENN-SPEED 2 of Transporter's agreement to such change. 8.4 Transporter and Shipper agree that this Agreement, as of the date hereof, shall supersede and cancel the Gas Storage Contract 3947 Amendment 0 dated November 1, 1993 between the Parties hereto. IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their authorized agents. TENNESSEE GAS PIPELINE COMPANY BY /s/ Lawrence G. Williams LAWRENCE G. WILLIAMS Agent and Attorney-in-Fact CHATTANOOGA GAS COMPANY BY /s/ K A Royse Title President Date 11/18/94 GAS STORAGE SERVICE AGREEMENT EXHIBIT "A" TO FIRM GAS STORAGE SERVICE AGREEMENT DATED DECEMBER 1, 1994 BETWEEN TENNESSEE GAS PIPELINE COMPANY AND CHATTANOOGA GAS COMPANY SERVICE PACKAGE: 3947 AMENDMENT: 1 SERVICE PACKAGE MSQ: 852,286 MAXIMUM DAILY INJECTION QUANTITY: 5,682 MAXIMUM DAILY WITHDRAWAL QUANTITY (MDWQ): 7,741 STORAGE BALANCE STORAGE BALANCE MAXIMUM DAILY WITHDRAWAL FROM DTH TO DTH QUANTITY DTH Ratchet 0 from 255,687 Ratchet 0 to 852,286 Ratchet 0 7,741 Ratchet I from 170,458 Ratchet I to 255,686 Ratchet I 6,193 Ratchet II from 0 Ratchet II to 170,457 Ratchet II 6,193 SERVICE POINT: Compressor Station 87 - Portland INJECTION METER: 060020 WITHDRAWAL METER: 070020
STORAGE STORAGE BALANCE BALANCE MDWQ\ METER METER NAME COUNTY ST ZONE I/W LEG FROM TO MDIQ 070020 TGP-Portland Sumner TN 01 W 100 Ratchet 0 Ratchet 0 Ratchet 0 7,741 Storage Withdrawal from 255,687 to 852,286 Ratchet I Ratchet I Ratchet I 6,193 from 170,458 to 255,686 Ratchet II Ratchet II Ratchet II 6,193 from 0 to 170,457 060020 TGP-Portland Sumner TN 01 I 100 5,682 Storage Injection
EX-10 6 Exhibit 10vv (LETTERHEAD OF TENNESSEE GAS PIPELINE APPEARS HERE) August 25, 1995 Mr. Ken A. Royse Chattanooga Gas Company 6125 Preservation Drive Chattanooga, TN 37416 RE: Amendment No. 2 to Gas Storage Agreement Dated December 1, 1994 Service Package No. 3947 Dear Mr. Royse: Enclosed for retention is a fully executed original of Amendment No. 2 to Service Package No. 3947 dated December 1, 1994 referenced above. If you have any questions, please do not hesitate to contact me at (713) 757-3614. Sincerely, TENNESSEE GAS PIPELINE COMPANY /s/ Rick Lisenbe Rick Lisenbe Southern Accounts RL/mdm Enclosure (LETTERHEAD OF TENNESSEE GAS PIPELINE APPEARS HERE) August 9, 1995 Mr. Ken A. Royse Chattanooga Gas Company 6125 Preservation Drive Chattanooga, TN 37416 Re: Amendment No. 2 to Gas Storage Contract Dated December 1, 1994 Service Package No. 3947 Dear Mr. Royse: TENNESSEE GAS PIPELINE COMPANY (Transporter) AND CHATTANOOGA GAS COMPANY (Shipper) agree to amend the above referenced gas storage contract effective July 1, 1995, to increase the Maximum Daily Withdrawal Quantity (MDWQ) when Shipper's storage balance is equal to or less than 30% of the Maximum Storage Quantity (MSQ) and 20% of the MSQ, respectively, as reflected in the attached Exhibit A-1 and as described below. The parties agree to amend Article I of the subject gas storage contract as follows: Following the commencement of services hereunder, in accordance with the terms of Transporter's Rate Schedule FS, and of this Agreement, Transporter shall receive for injection for Shipper's account a daily quantity of gas up to Shipper's Maximum Injection Quantity of 5,682 dekatherms (Dth) and Maximum Storage Quantity (MSQ) of 852,286 (Dth) (on a cumulative basis) and on demand shall withdraw from Shipper's storage account and deliver to Shipper a daily quantity of gas up to Shipper's Maximum Daily Withdrawal Quantity (MDWQ) of 7,741 Dth; provided however, that when Shipper's storage balance is equal to or less than 30% of the MSQ but greater than 20% of the MSQ, the Maximum Daily Withdrawal Quantity shall be 6,314 Dth; and provided further, that when Shipper's storage balance is less than or equal to 20% of the MSQ, the Maximum Daily Withdrawal Quantity shall be 6,314 Dth. For demand charge proposes, the MDWQ for balances greater than 30% of the MSQ shall be used. Except as amended herein, all terms and provisions of the above referenced gas storage contract shall remain in full force and effect as written. If the foregoing is in accordance with your understanding of our agreement, please so indicate by signing and returning to my attention both originals of this letter. Upon Tennessee's execution, an original will be forwarded to you for your files. CHATTANOOGA GAS COMPANY August 9, 1995 Service Package No.: 3947 Amendment Number: 2 Amendment Effective Date: July 1, 1995 Page -2- Should you have any questions, please do not hesitate to contact me at (713) 757-3614. Sincerely, /s/ Rick Lisenbe Rick Lisenbe Southern Accounts ACCEPTED AND AGREED TO This 23rd day August, 1995. TENNESSEE GAS PIPELINE COMPANY By: /s/ Lawrence G. Williams Title: Agent and Attorney-in-Fact Date: 8/23/95 ACCEPTED AND AGREED TO This 15th day August, 1995. CHATTANOOGA GAS COMPANY By: /s/ Kenneth A. Royse Title: President Date: 8/15/95 GAS STORAGE SERVICE AGREEMENT EXHIBIT "A" TO FIRM GAS STORAGE SERVICE AGREEMENT DATED DECEMBER 1, 1994 BETWEEN TENNESSEE GAS PIPELINE COMPANY AND CHATTANOOGA GAS COMPANY SERVICE PACKAGE: 3947 AMENDMENT: 2 SERVICE PACKAGE MSQ: 852,286 MAXIMUM DAILY INJECTION QUANTITY: 5,682 MAXIMUM DAILY WITHDRAWAL QUANTITY (MDWQ): 7,741 STORAGE BALANCE STORAGE BALANCE MAXIMUM DAILY WITHDRAWAL FROM DTH TO DTH QUANTITY DTH Ratchet 0 from 255,687 Ratchet 0 to 852,286 Ratchet 0 7,741 Ratchet I from 170,458 Ratchet I to 255,686 Ratchet I 6,314 Ratchet II from 0 Ratchet II to 170,457 Ratchet II 6,314 SERVICE POINT: Compressor Station 87 - Portland INJECTION METER: 060020 WITHDRAWAL METER: 070020
STORAGE STORAGE BALANCE BALANCE MDWQ\ METER METER NAME COUNTY ST ZONE I/W LEG FROM TO MDIQ 070020 TGP-Portland Sumner TN 01 W 100 Ratchet 0 Ratchet 0 Ratchet 0 7,741 Storage Withdrawal from 255,687 to 852,286 Ratchet I Ratchet I Ratchet I 6,314 from 170,458 to 255,686 Ratchet II Ratchet II Ratchet II 6,314 from 0 to 170,457 060020 TGP-Portland Sumner TN 01 I 100 5,682 Storage Injection
EX-10 7 Exhibit 10ww (LETTERHEAD OF TENNESSEE GAS PIPELINE APPEARS HERE) September 26, 1995 Mr. Kenneth Royse Chattanooga Gas Company 6125 Preservation Drive Chattanooga, TN 37416 Dear Mr. Royse: Attached for your records is the fully executed amendment to Chattanooga's TGP Storage Agreement No. 3999 for the increase in deliverability. If you have questions, please give me a call at (423) 694-1679 or Rick Lisenbe at (713) 757-3614. Best regards, /s/ Margie Klepper Margie Klepper Central Region Attachments CHATTANOOGA GAS COMPANY August 10,1995 Page 2 Contract Number: 3999 Amendment number: 1 Amendment effective date: July 1, 1995 ACCEPTED AND AGREED TO This 21st Day of August, 1995 TENNESSEE GAS PIPELINE COMPANY By: /s/ Lawrence G. Williams Title: Agent and Attorney-in-Fact ACCEPTED AND AGREED TO This 15th Day of August, 1995 CHATTANOOGA GAS COMPANY By: /s/ Kenneth A. Royse, President Title: Agent and Attorney-in-Fact GAS STORAGE SERVICE AGREEMENT EXHIBIT "A" AMENDMENT #1 TO GAS STORAGE SERVICE AGREEMENT DATED November 1, 1993 BETWEEN TENNESSEE GAS PIPELINE COMPANY AND CHATTANOOGA GAS CO CHATTANOOGA GAS CO EFFECTIVE DATE OF AMENDMENT: July 1, 1995 RATE SCHEDULE: FS SERVICE PACKAGE: 3999 SERVICE PACKAGE MSQ: 197,390 WITHDRAWAL QUANTITY: 1,359 INJECTION QUANTITY: 1,316 SERVICE POINT: PORTLAND METER METER NAME COUNTY ST ZONE I/W LEG TOTAL- BILLABLE- TQ TQ 060020 TGP-PORTLAND SUMNER TN 01 I 100 1,316 1,316 STORAGE INJECTION Total Injection TQ: 1,316 1,316 070020 TGP-PORTLAND SUMNER TN 01 W 100 1,359 1,359 STORAGE WITHDRAWAL Total Withdrawal TQ: 1,359 1,359 NUMBER OF INJECTION POINTS: 2 NUMBER OF WITHDRAWAL POINTS: 2 Note: Exhibit "A" is a reflection of the contract and all amendments as of the amendment effective date. GAS STORAGE SERVICE AGREEMENT EXHIBIT "A-1" SHOWING REQUESTED CHANGES AMENDMENT #1 TO GAS STORAGE SERVICE AGREEMENT DATED November 1, 1993 BETWEEN TENNESSEE GAS PIPELINE COMPANY AND CHATTANOOGA GAS CO CHATTANOOGA GAS CO EFFECTIVE DATE OF AMENDMENT: July 1, 1995 RATE SCHEDULE: FS SERVICE PACKAGE: 3999 SERVICE PACKAGE MSQ: 0 WITHDRAWAL QUANTITY: 26 INJECTION QUANTITY: 0 SERVICE POINT: PORTLAND METER METER NAME COUNTY ST ZONE I/W LEG TOTAL- BILLABLE- TQ TQ Total Injection TQ: 0 0 070020 TGP-PORTLAND SUMNER TN 01 W 100 26 26 STORAGE WITHDRAWAL Total Withdrawal TQ: 26 26 NUMBER OF INJECTION POINTS AFFECTED: 1 NUMBER OF WITHDRAWAL POINTS AFFECTED: 2 EX-10 8 Exhibit 10xx (LETTERHEAD OF ATLANTA GAS LIGHT COMPANY APPEARS HERE) September 26, 1994 Mr. Les Culpepper South Georgia Natural Gas Company Post Office Box 2563 Birmingham, AL 35202 2563 Subject: Notice of Call Back of Firm Transportation Capacity Dear Mr. Culpepper: Pursuant to Section 9 of Rate Schedule FT of South Georgia Natural Gas Company's (South Georgia) FERC Gas Tariff, Atlanta Gas Light Company (Atlanta) reduced its Transportation Demand under its FT Service Agreements for Valdosta and Montezuma with South Georgia during the Summer Season (April through September) from a combined total of 11,877 Mcf/d to a combined total of 5,939 Mcf/d. Section 9 provides that a Shipper that elected to reduce its Transportation Demand has a one-time right to increase its Summer Season Transportation Demand for the remaining Summer Seasons under its FT Service Agreement, up to the Transportation Demand in effect prior to the reduction. Atlanta hereby gives South Georgia notice of Atlanta's election to increase its Summer Season Transportation Demand for the City of Valdosta by 3,628 Mcf/d, for a total Summer Season Transportation Demand of 8,878 Mcf/d and to increase its Summer Season Transportation Demand for the City of Montezuma by 687 Mcf/d, for a total Summer Season Transportation Demand of 1,377 Mcf/d. If you have any questions concerning the election, please do not hesitate to contact the undersigned. Sincerely, /s/ Stephen J. Gunther Vice President Gas Supply & Federal Regulation Attachment Attachment FT Shipper's Name: Atlanta Gas Light Company Summer Transportation Demand: 5,939 Mcf/day Winter Transportation Demand: 11,877 Mcf/day The undersigned authorized representative hereby notifies South Georgia Natural Gas Company that the FT Shipper referenced above elects to increase the Summer Transportation Demand under its FT Service Agreement to 10,255 Mcf/day for the remaining summer seasons under its FT Service Agreement. By: /s/ Stephen J. Gunther Stephen J. Gunther Title: Vice President Date: September 26, 1994 (Please return this form by October 1, 1994, to Les Culpepper at South Georgia Natural Gas Company, P.O. Box 2563, Birmingham, AL 35202-2563; Fax No. 205-326-2038.) EX-10 9 Exhibit 10yy ATLANTA GAS LIGHT CO. August 10, 1995 Page 2 Contract Number: 3923 Amendment number: 1 Amendment effective date: July 1, 1995 ACCEPTED AND AGREED TO This 7 Day of Nov, 1995 TENNESSEE GAS PIPELINE COMPANY By: /s/ Lawrence G. Williams Title: Agent and Attorney-in-Fact ACCEPTED AND AGREED TO This 4th Day of Oct, 1995 ATLANTA GAS LIGHT CO. By: /s/ Stephen J. Gunther Title: Agent and Attorney-in-Fact GAS STORAGE SERVICE AGREEMENT EXHIBIT "A" AMENDMENT #1 TO GAS STORAGE SERVICE AGREEMENT DATED November 1, 1993 BETWEEN TENNESSEE GAS PIPELINE COMPANY AND ATLANTA GAS LIGHT CO ATLANTA GAS LIGHT CO EFFECTIVE DATE OF AMENDMENT: July 1, 1995 RATE SCHEDULE: FS SERVICE PACKAGE: 3923 SERVICE PACKAGE MSQ: 1,174,258 WITHDRAWAL QUANTITY: 8,699 INJECTION QUANTITY: 7,829 SERVICE POINT: PORTLAND METER METER NAME COUNTY ST ZONE I/W LEG TOTAL- BILLABLE- TQ TQ 060020 TGP-PORTLAND SUMNER TN 01 I 100 7,829 7,829 STORAGE INJECTION Total Injection TQ: 7,829 7,829 070020 TGP-PORTLAND SUMNER TN 01 W 100 8,699 8,699 STORAGE WITHDRAWAL Total Withdrawal TQ: 8,699 8,699 NUMBER OF INJECTION POINTS: 1 NUMBER OF WITHDRAWAL POINTS: 1 Note: Exhibit "A" is a reflection of the contract and all amendments as of the amendment effective date. GAS STORAGE SERVICE AGREEMENT EXHIBIT "A-1" SHOWING REQUESTED CHANGES AMENDMENT #1 TO GAS STORAGE SERVICE AGREEMENT DATED November 1, 1993 BETWEEN TENNESSEE GAS PIPELINE COMPANY AND ATLANTA GAS LIGHT CO ATLANTA GAS LIGHT CO EFFECTIVE DATE OF AMENDMENT: July 1, 1995 RATE SCHEDULE: FS SERVICE PACKAGE: 3923 SERVICE PACKAGE MSQ: 0 WITHDRAWAL QUANTITY: 166 INJECTION QUANTITY: 0 SERVICE POINT: PORTLAND METER METER NAME COUNTY ST ZONE I/W LEG TOTAL- BILLABLE- TQ TQ Total Injection TQ: 0 0 070020 TGP-PORTLAND SUMNER TN 01 W 100 166 166 STORAGE WITHDRAWAL Total Withdrawal TQ: 166 166 NUMBER OF INJECTION POINTS AFFECTED: 0 NUMBER OF WITHDRAWAL POINTS AFFECTED: 1 EX-10 10 Exhibit 10zz ATLANTA GAS LIGHT CO. August 10, 1995 Page 2 Contract Number: 3998 Amendment number: 1 Amendment effective date: July 1, 1995 ACCEPTED AND AGREED TO This 7th Day of Nov, 1995 TENNESSEE GAS PIPELINE COMPANY By: /s/ Lawrence G. Williams Title: Agent and Attorney-in-Fact ACCEPTED AND AGREED TO This 24th Day of Oct, 1995 ATLANTA GAS LIGHT CO. By: /s/ Stephen J. Gunther Title: Agent and Attorney-in-Fact GAS STORAGE SERVICE AGREEMENT EXHIBIT "A" AMENDMENT #1 TO GAS STORAGE SERVICE AGREEMENT DATED November 1, 1993 BETWEEN TENNESSEE GAS PIPELINE COMPANY AND ATLANTA GAS LIGHT CO ATLANTA GAS LIGHT CO EFFECTIVE DATE OF AMENDMENT: July 1, 1995 RATE SCHEDULE: FS SERVICE PACKAGE: 3998 SERVICE PACKAGE MSQ: 271,959 WITHDRAWAL QUANTITY: 1,873 INJECTION QUANTITY: 1,814 SERVICE POINT: PORTLAND METER METER NAME COUNTY ST ZONE I/W LEG TOTAL- BILLABLE- TQ TQ 060020 TGP-PORTLAND SUMNER TN 01 I 100 1,814 1,814 STORAGE INJECTION Total Injection TQ: 1,814 1,814 070020 TGP-PORTLAND SUMNER TN 01 W 100 1,873 1,873 STORAGE WITHDRAWAL Total Withdrawal TQ: 1,873 1,873 NUMBER OF INJECTION POINTS: 1 NUMBER OF WITHDRAWAL POINTS: 1 Note: Exhibit "A" is a reflection of the contract and all amendments as of the amendment effective date. GAS STORAGE SERVICE AGREEMENT EXHIBIT "A-1" SHOWING REQUESTED CHANGES AMENDMENT #1 TO GAS STORAGE SERVICE AGREEMENT DATED November 1, 1993 BETWEEN TENNESSEE GAS PIPELINE COMPANY AND ATLANTA GAS LIGHT CO ATLANTA GAS LIGHT CO EFFECTIVE DATE OF AMENDMENT: July 1, 1995 RATE SCHEDULE: FS SERVICE PACKAGE: 3998 SERVICE PACKAGE MSQ: 0 WITHDRAWAL QUANTITY: 36 INJECTION QUANTITY: 0 SERVICE POINT: PORTLAND METER METER NAME COUNTY ST ZONE I/W LEG TOTAL- BILLABLE- TQ TQ Total Injection TQ: 0 0 070020 TGP-PORTLAND SUMNER TN 01 W 100 36 36 STORAGE WITHDRAWAL Total Withdrawal TQ: 36 36 NUMBER OF INJECTION POINTS AFFECTED: 0 NUMBER OF WITHDRAWAL POINTS AFFECTED: 1 EX-13 11 Exhibit 13 Management's Discussion and Analysis of Results of Operations and Financial Condition (GRAPH APPEARS HERE) The following discussion and analysis cover events affecting the Company's results of operations for each of the three years ended September 30, 1995, financial condition and factors expected to impact future operations. Results of Operations Fiscal Year 1995 Compared with Fiscal Year 1994 OPERATING REVENUES Operating revenues decreased 11.4% in 1995 compared with 1994 primarily due to (1) a decrease in the cost of the Company's gas supply recovered from customers under the purchased gas provisions of the Company's rate schedules and (2) decreased volumes of gas sold to firm service customers as a result of weather that was 17% warmer in 1995 than in 1994. The decrease in operating revenues was offset partly by an increase of approximately 37,000 in the number of customers served. COST OF GAS Cost of gas decreased 22.4% in 1995 compared with 1994 primarily due to (1) a decrease in the cost of the Company's gas supply recovered from customers under the purchased gas provisions of the Company's rate schedules and (2) decreased volumes of gas sold to firm service customers as a result of weather that was 17% warmer in 1995 than in 1994. The Company's cost of gas per therm was 29.7 cents in 1995 and 37.7 cents in 1994. Variations in the cost of purchased gas are passed through to customers under the purchased gas adjustment provisions of the Company's rate schedules. Overrecoveries or underrecoveries of purchased gas costs are charged or credited to cost of gas and are included in current assets or liabilities, thereby eliminating the effect that recovery of gas costs would have on net income otherwise. OPERATING MARGIN Operating margin increased 6.1% in 1995 compared with 1994 primarily due to an increase of approximately 37,000 in the number of customers served. RESTRUCTURING COSTS In November 1994, the Company announced a corporate restructuring plan in response to increased competition and changes in the federal and state regulatory environments in which the Company operates. The restructuring plan provided for reengineering the Company's business processes and streamlining the Company's statewide field organizations. As a result of restructuring, the Company has combined offices and established centralized call centers, as well as a network of locations throughout the Company's service area where customers can pay their bills. During 1995, the Company reduced the average number of employees by approximately 500 through voluntary retirement and severance programs and attrition. The Company, however, anticipates a slight increase in employees during fiscal 1996. During 1995, the Company recorded restructuring costs of $61.4 million related to the early retirement and severance programs and $8.9 million related to office closings and costs to exit the Company's appliance merchandising and 22 real estate investment operations. The Company anticipates that restructuring costs should be offset within three years with lower operating costs. As a result of the restructuring, the Company expects considerable reductions in future annual operating expenses, which should enable the Company to be more competitive. OTHER OPERATING EXPENSES Operation and maintenance expenses increased 1.7% in 1995 compared with 1994 primarily due to an increase of $17 million in expenses related to Atlanta Gas Light Company's (AGL's) Integrated Resource Plan (IRP). The Company is recovering such IRP program expenses through an IRP Cost Recovery Rider approved by the Georgia Public Service Commission (Georgia Commission). As a result, IRP program costs do not affect net income. Operation and maintenance expenses excluding IRP expenses decreased 5.4% in 1995 compared with 1994 primarily due to (1) decreased labor costs as a result of the Company's restructuring plan, (2) decreased uncollectible accounts expenses and (3) decreased regulatory commission expenses. Depreciation expense increased 5.6% in 1995 compared with 1994 primarily due to increased depreciable plant in service. The composite straight-line depreciation rate was approximately 3.2% for utility property other than transportation equipment during 1995 and 1994. Income taxes decreased $19.6 million in 1995 compared with 1994 primarily due to decreased taxable income. Taxes other than income taxes decreased $0.4 million primarily due to decreased payroll taxes as a result of the Company's restructuring plan. The decrease in taxes other than income taxes was offset partly by increased ad valorem taxes. OTHER INCOME Other income decreased $1.8 million in 1995 compared with 1994 primarily due to (1) decreased income from propane operations as a result of warmer weather and (2) decreased income from merchandise operations. INTEREST CHARGES Total interest charges decreased $0.1 million in 1995 compared with 1994 primarily due to increased allowance for funds used during construction-debt. Interest on long-term debt decreased $0.5 million in 1995 compared with 1994 due to decreased amounts of long-term debt outstanding. The decreased interest expense on long-term debt was offset by a $0.5 million increase in other interest expenses primarily due to increased interest rates on short-term debt. NET INCOME AND DIVIDENDS On November 3, 1995, the Company's Board of Directors declared a two-for-one stock split of the common stock effected in the form of a 100% stock dividend to shareholders of record on November 17, 1995, and payable on December 1, 1995. All references to number of shares and to per share amounts in Management's Discussion and Analysis of Results of Operations and Financial Condition have been restated retroactively to reflect the stock split. Net income for 1995 was $30.8 million, compared with $63.2 million for 1994. Earnings per share of common stock were $0.50 in 1995 compared with $1.17 in 1994. Dividends per share of common stock were $1.04 for 1995 and 1994. The decreases in net income and earnings per share were primarily due to the cost of the Company's restructuring plan. The decreases in net income and earnings per share were offset partly by (1) increased operating margin as a result of an increase of approximately 37,000 in the number of customers served and (2) decreased other operating expenses as a result of the Company's restructuring plan. Excluding charges recorded during 1995 related to the Company's restructuring plan, net income and earnings per share would have been approximately $73.9 million and $1.32, respectively. Fiscal Year 1994 Compared with Fiscal Year 1993 OPERATING REVENUES Operating revenues increased 6.2% in 1994 compared with 1993 primarily due to (1) an increase in the cost of the Company's gas supply recovered from customers under the purchased gas provisions of the Company's rate schedules, (2) increased volumes of gas sold, (3) revenue increases granted by the Georgia Commission effective October 1, 1993, and the Tennessee Public Service Commission (Tennessee Commission) effective February 1, 1994, and (4) an increase of approximately 35,000 in the number of customers served. Although weather was 10% warmer in 1994 than in 1993, volumes of gas sold to firm service customers increased slightly due to (1) increased consumption by firm service customers and (2) the increase of approximately 35,000 in the number of customers served. COST OF GAS Cost of gas increased 5.1% in 1994 compared with 1993 primarily due to (1) an increase in the cost of the Company's gas supply recovered from customers under the purchased gas provisions of the Company's rate schedules and (2) increased volumes of gas sold. The Company's cost of gas per therm was 37.7 cents in 1994 and 36.8 cents in 1993. Variations in the cost of purchased gas are passed through to customers under the purchased gas adjustment provisions of the Company's rate schedules. OPERATING MARGIN Operating margin increased 7.9% in 1994 compared with 1993 primarily due to (1) increased consumption by firm service customers, (2) revenue increases granted by the Georgia and Tennessee Commissions and (3) an increase of approximately 35,000 in the number of customers served. OTHER OPERATING EXPENSES Operation and maintenance expenses increased 9.8% in 1994 compared with 1993 primarily due to increased (1) postretirement benefits other than pensions, (2) costs for labor and labor-related expenses and (3) outside services employed. Also, in 1994 the Company began to incur expenses for programs associated with the 23 implementation of AGL's IRP. The Company is recovering such IRP program expenses through an IRP Cost Recovery Rider approved by the Georgia Commission. As a result, IRP program costs do not affect net income. Operation and maintenance expenses excluding IRP expenses increased 8.5% in 1994, compared with 1993. Depreciation expense decreased 5.8% in 1994 compared with 1993 due to the implementation of updated depreciation rates approved by the Georgia Commission, effective October 1, 1993. The composite straight-line depreciation rate was approximately 3.2% for utility property other than transportation equipment during 1994 and 3.6% during 1993. Income taxes increased $5.8 million in 1994 compared with 1993 primarily due to an increase in taxable income. Taxes other than income taxes increased $2.1 million in 1994 compared with 1993 primarily due to increased ad valorem taxes. OTHER INCOME Other income decreased $1.1 million in 1994 compared with 1993 primarily due to decreased interest income associated with income tax refunds related to prior years. INTEREST CHARGES Interest charges increased 1.9% in 1994 compared with 1993 primarily due to increased amounts of short-term debt outstanding. NET INCOME AND DIVIDENDS Net income for 1994 was $63.2 million, compared with $57.5 million for 1993. Earnings per share of common stock were $1.17 in 1994, compared with $1.08 in 1993. Dividends per share of common stock were $1.04 for 1994 and 1993. The increases in 1994 net income and earnings per share were primarily due to (1) increased consumption by firm service customers, (2) rate increases granted by the Georgia and Tennessee Commissions and (3) an increase of approximately 35,000 in the number of customers served. The increases were offset partly by (1) increased other operating expenses, (2) increased interest charges and (3) decreased other income. Impact of Inflation Inflation impacts the prices the Company must pay for labor and other goods and services required for operation, maintenance and capital improvements. The Company's rate schedules include purchased gas adjustment provisions that permit the increases in gas costs to be passed on to its customers. Increases in costs not recovered through the purchased gas adjustment provisions and other similar rate riders must be recovered through timely filings for rate relief. Financial Condition Financing COMMON STOCK On June 16, 1995, the Company issued and sold approximately 3 million shares of its common stock at $16.81 per share, resulting in net proceeds of $48.6 million. Proceeds from that sale of common stock were used to finance the Company's capital expenditure program and for other corporate purposes. The Company also issued 1,092,486; 1,144,270; and 1,029,228 shares of common stock during fiscal 1995, 1994 and 1993, respectively, for its Retirement Savings Plus Plan, Dividend Reinvestment and Stock Purchase Plan and Long-Term Stock Incentive Plan, which increased common equity by approximately $18 million, $20 million and $19.5 million, respectively. PREFERRED STOCK During October 1992, the Company issued an aggregate of 445,000 shares of $100 par or stated value preferred stock consisting of two classes of preferred stock and represented by 1,780,000 depositary receipts at $25 per receipt with a dividend rate of 7.70%. Net proceeds from the issuance were $42.8 million and were used to repay short-term debt and for other corporate purposes. LONG-TERM DEBT During fiscal year 1994, the Company issued $194.5 million principal amount of Medium-Term Notes, Series C, with maturity dates ranging from 10 to 30 years and with interest rates ranging from 5.9% to 7.2%. The notes are issued under an Indenture dated as of December 1, 1989, as supplemented and modified, and are unsecured and rank on a parity with all other unsecured indebtedness of the Company. Net proceeds from the notes were used to repay short-term debt, to refund the remaining $125 million principal balance of the Company's only outstanding series of First Mortgage Bonds and for other corporate purposes. Approximately $105 million principal amount of Medium-Term Notes, Series C was unissued as of September 30, 1995, and 1994. During fiscal year 1994, pursuant to the request of the Company, the Trustee released and discharged the lien of and canceled the First Mortgage Bond Indenture, thereby removing the lien from the public utility properties owned by AGL. During fiscal year 1993, the Company issued $194 million principal amount of Medium Term Notes, Series B, with maturity dates ranging from 7 to 30 years and with interest rates ranging from 7.15% to 8.25%. The Series B notes are unsecured and rank on a parity with all other unsecured indebtedness of the Company. Net proceeds from the Series B notes were used to redeem $7.5 million principal amount of First Mortgage Bonds 7% Series due 1992, $110 million principal amount of First Mortgage Bonds 9.30% Series due 1992, to repay short-term debt and for other corporate purposes. SHORT-TERM DEBT Because the Company's business is highly seasonal, short-term debt is used to meet seasonal working capital requirements. The Company also funds a portion of its capital expenditures with short-term debt. The Company's lines of credit with various banks provide for direct borrowings from the banks and are subject to annual renewal. The current lines of credit vary from $20 million in the summer months to $250 million for peak winter financing. Short-term debt decreased $44.4 million from the amount outstanding as of September 30, 1994, to $51 million as of September 30, 1995. For additional information concerning short-term debt, see Note 7 in Notes to Consolidated Financial Statements. 24 Capital Requirements Capital expenditures for construction of distribution facilities, purchase of equipment and other general improvements were $121.7 million during 1995. (GRAPH APPEARS HERE) In addition, the Company invested $32.6 million in Sonat Marketing Company, L.P., for a 35% ownership interest. The Company estimates that capital requirements will total approximately $335 million for the three years ending September 30, 1998. During the same period, approximately $1.2 million will be required to fund preferred stock purchase fund obligations. The Company plans to fund those expenditures through a combination of internal sources and the issuance of short-term and long-term debt and common stock. As a result of the implementation of Order 636 issued by the Federal Energy Regulatory Commission (FERC), the Company's inventory of natural gas stored underground increased by $40.8 million during fiscal 1994. Natural gas stored underground decreased $33.3 million to $111.2 million as of September 30, 1995, primarily due to a decrease in the cost of gas injected into storage. Ratios and Coverages On September 30, 1995, the Company's capitalization ratios consisted of 47.4% long-term debt, 5.0% preferred stock and 47.6% common equity. As shown in the Selected Financial Data on page 42, the times interest earned and ratio of earnings to fixed charges decreased in 1995 compared with 1994 primarily due to decreased earnings. The times interest earned and ratio of earnings to fixed charges increased in 1994 compared with 1993 primarily due to increased earnings. The weighted average cost of long-term debt decreased from 8.2% on September 30, 1993, to 7.6% on September 30, 1995. The decrease was due to the redemption of high coupon long-term debt and lower interest rates for new issues of long-term debt. The weighted average cost of preferred stock was 7.5% on September 30, 1993, 1994 and 1995. The return on average common equity was 11% for 1993; 11.6% for 1994; and 4.9% for 1995. Earnings applicable to common stock in 1995 included a charge for restructuring of $43.1 million after income taxes. Regulatory Activity ORDER 636 In 1992, FERC issued Order 636 which, among other things, mandated the unbundling of interstate pipeline sales service and established certain open access transportation regulations that became effective beginning in the 1993-1994 heating season. In Order 636, FERC acknowledged that, without special recovery mechanisms, certain costs that previously were recovered in the pipelines' rate for bundled sales services no longer could be recovered by the pipelines in a restructured environment. Those costs, referred to as transition costs, include such things as unrecovered gas costs, gas supply realignment costs and various stranded costs resulting from unbundling. Accordingly, Order 636 included a recovery mechanism that allows the pipeline companies to pass through to their customers any prudently incurred transition costs attributable to compliance with Order 636. The Company, based on filings with FERC by its pipeline suppliers, estimates that its portion of such costs from all of its pipeline suppliers would be approximately $92.5 million. Such filings currently are pending before FERC for final approval, and the transition costs are being collected subject to refund. Approximately $68 million of such costs have been incurred by the Company as of September 30, 1995, and are being recovered from its customers under the purchased gas provisions of the Company's rate schedules. Transition costs have not affected the total cost of gas to the Company's customers significantly because (1) the Company purchases its wellhead gas supplies based upon market prices that are below the cost of gas previously embedded in the bundled pipeline sales service rates and (2) many elements of transition costs previously were embedded in the rates for the pipelines' bundled sales service. GAS COST RECOVERY FILING Gas purchasing decisions made by local distribution companies (LDCs) in the restructured environment may be subject to greater review by state regulatory commissions. AGL is now required to make an annual gas cost recovery filing with the Georgia Commission. Prior to industry restructuring mandated under Order 636, the cost of bundled pipeline sales service was reviewed and approved by FERC. Because of diminished review by FERC, LDCs face greater accountability and risks related to their purchasing practices for gas supply, transportation and storage services. The purchasing practices of AGL are subject to review under legislation passed in Georgia in 1994 as described below. The Georgia General Assembly enacted legislation establishing procedures for determining appropriate gas supply plans and gas cost adjustment factors applicable to firm service customers. 25 The legislation requires the Company to file a gas supply plan with the Georgia Commission on or before August 1 of each year for the subsequent fiscal year. Purchases made pursuant to an approved plan may be recovered under the purchased gas provisions of AGL's rate schedules. By requiring the Georgia Commission to review AGL's plan prior to the purchase of gas supply, transportation and storage services, AGL's proposed purchasing practices are preapproved in a regulatory proceeding. The Georgia Commission has approved AGL's gas supply plans for fiscal years 1995 and 1996 with minor modifications pursuant to the legislative requirements. Gas supply plans for both years include the recovery of transition costs that currently are being collected by AGL's pipeline suppliers. RATE FILINGS Since 1991, rate cases have been filed by AGL under a statute that requires the Georgia Commission to consider AGL's revenues and expenses during the period when the rates will be in effect. The statute allows rate filings by gas utilities to reflect estimated operations during the 12-month period beginning five months from the proposed effective date of the rates. On March 31, 1993, AGL made a rate filing with the Georgia Commission seeking an increase in revenues of $62.5 million annually based upon a test year ending September 30, 1994. During the course of the rate proceedings, the Company modified its requested increase to $47 million to reflect changes in conditions expected during the test year. On September 29, 1993, the Georgia Commission approved an annual increase in revenues of approximately $11.2 million, effective October 1, 1993. On May 1, 1995, Chattanooga Gas Company (Chattanooga) filed a rate proceeding with the Tennessee Commission seeking an increase in revenues of $5.2 million annually. On September 27, 1995, a settlement agreement was reached that provides for an annual increase in revenues of approximately $2.5 million, effective November 1, 1995. On August 3, 1993, Chattanooga made a rate filing with the Tennessee Commission seeking an increase in revenues of $5.7 million annually. On December 31, 1993, Chattanooga entered into a settlement agreement that provided for an annual rate increase of $3.45 million, effective February 1, 1994. WEATHER NORMALIZATION The Georgia and Tennessee Commissions have authorized weather normalization adjustment riders (WNARs), which are designed to offset the impact that unusually cold or warm weather has on customer billings and the Company's operating margin. Because fiscal years 1995, 1994 and 1993 were warmer than normal, the WNARs had a positive impact on net income and net cash flow from operating activities. The WNARs increased net income by $27.3 million in 1995, $12.6 million in 1994 and $4.7 million in 1993. Environmental Matters AGL has identified nine sites in Georgia where it currently owns all or part of a manufactured gas plant (MGP) site. In addition, AGL has identified other sites in Georgia and Florida that AGL does not now own, but that may have been associated with the operation of MGPs by AGL or its predecessors. Preliminary assessments and subsequent site investigations have revealed environmental impacts at and near some of those sites. AGL has entered into consent orders with the Georgia Environmental Protection Division with respect to certain of those sites pursuant to which AGL is obligated to investigate and to clean up, if necessary. The Company has estimated the investigation and remediation expenses likely to be associated with the former MGP sites. Based upon a thorough analysis of the potentially applicable requirements, the Company has estimated that, under the most favorable circumstances reasonably possible, the future cost of investigating and remediating the former MGP sites could be as low as approximately $28.6 million. Alternatively, the Company has estimated that, under the least favorable circumstances reasonably possible, the future cost of investigating and remediating the former MGP sites could be as high as approximately $109 million. The Company cannot estimate at this time the amount of any other future expenses or liabilities, or the impact on those estimates of future environmental regulatory changes, that may be associated with or related to the MGP sites, including expenses or liabilities relating to any litigation. At the present time, no amount within the range can be identified as a better estimate than any other estimate. Therefore, the low end of that range and a corresponding regulatory asset have been recorded in the financial statements. With regard to other legal proceedings related to the former MGP sites, the Company is or expects to be a party to claims or counterclaims on an ongoing basis. Among such matters, the Company intends to continue to pursue insurance coverage and contributions from potentially responsible parties. Management currently believes that the outcome of MGP-related litigation in which the Company is involved will not have a material adverse effect on the financial condition and results of operations of the Company. The Georgia Commission has approved the recovery by AGL of Environmental Response Costs, as defined below, pursuant to an Environmental Response Cost Recovery Rider (ERCRR), effective October 1, 1992. For purposes of the ERCRR, Environmental Response Costs include investigation, testing, remediation and litigation costs and expenses or other liabilities relating to or arising from MGP sites. The ERCRR authorized AGL to recover from its customers Environmental Response Costs that it may incur in succeeding 12-month periods ending June 30th, net of working capital benefits resulting from deferred income taxes, amortized over a 60-month recovery period beginning each October 1. The carrying costs to AGL of such Environmental Response Costs during the period of amortization are subject to recovery from any amounts that may be received from insurance carriers and 26 former owners and operators of MGP sites. Any such amounts received are shared equally by AGL and its customers. In connection with the ERCRR, the staff of the Georgia Commission has undertaken a financial and management process audit related to the MGP sites, clean-up activities at the sites and Environmental Response Costs that have been incurred for purposes of the ERCRR. The result of such audit is not expected to have a significant effect on the Company's consolidated financial statements. Competition The Company competes to supply natural gas to interruptible customers who are capable of switching to alternative fuels, including fuel oil, coal, propane, electricity and, in some cases, combustible wood by-products. The Company also competes to supply gas to interruptible customers who might seek to bypass the Company's distribution system. On February 17, 1995, the Georgia Commission approved a settlement that permits the Company to negotiate contracts with customers who have the option of bypassing the Company's facilities (Bypass Customers) and receiving natural gas from other suppliers. The bypass avoidance contracts (Negotiated Contracts) can be renewable, provided that the initial term does not exceed five years, unless a longer term specifically is authorized by the Georgia Commission. The rate provided by the Negotiated Contract may be lower than AGL's filed rate, but not less than AGL's marginal cost of service to the potential Bypass Customer. Service pursuant to a Negotiated Contract may commence without Georgia Commission action, once a copy of the contract is filed with the Georgia Commission. Negotiated Contracts may be rejected by the Georgia Commission within 90 days of filing; absent such action, however, the Negotiated Contracts remain effective. None of the Negotiated Contracts filed with the Georgia Commission have been rejected. The settlement also provides for a bypass loss recovery mechanism to operate until the earlier of September 30, 1998, or the effective date of new rates for AGL resulting from a general rate case. In addition to Negotiated Contracts, which are designed to serve existing and potential Bypass Customers, the Company's Interruptible Transportation and Sales Maintenance (ITSM) Rider continues to permit discounts for short-term transactions to compete with alternative fuels. Revenue shortfalls, if any, from interruptible customers - as measured by the test-year interruptible revenues determined by the Georgia Commission in the Company's 1993 rate case - continue to be recovered under the ITSM Rider. The settlement approved by the Georgia Commission also provides that AGL may continue to file contracts for Georgia Commission approval if the service cannot be provided through the ITSM Rider, existing rate schedules or the Negotiated Contract procedures. An example would be a long-term service contract to compete with alternative fuels where physical bypass was not the relevant competition. Accounting Developments The Company adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121), effective October 1, 1994. That statement requires entities to review long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There was no significant effect on the consolidated financial statements as a result of the adoption of SFAS 121. The Company adopted Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS 112), effective October 1, 1994. That statement requires accrual of the cost of post- employment benefits, other than pensions and postretirement benefits, either during the period that the employee renders service or at the date of the event giving rise to the benefit. There was no significant effect on the consolidated financial statements as a result of the adoption of SFAS 112. The Company adopted Statement of Financial Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS 106), effective October 1, 1993. That statement requires accrual of postretirement benefits during the years an employee provides service. Previously the costs of those benefits, which include health care and life insurance benefits, were recorded using the pay-as-you-go method. In its September 29, 1993, rate case decision, the Georgia Commission approved a five-year phase-in of SFAS 106 expense that defers a portion of SFAS 106 expense for future recovery. The Company records a regulatory asset for the deferred portion of SFAS 106 expense. On June 14, 1993, the Tennessee Commission issued an order resulting from a generic docket that approved the recovery of SFAS 106 expense, which is funded through an external trust. Approximately $8.7 million and $8 million of net periodic postretirement benefits costs for fiscal years 1995 and 1994, respectively, were recovered from customers. The remainder was deferred for future recovery through amortization and recognized as a regulatory asset in the financial statements of the Company consistent with regulatory decisions. The Company has funded through an external trust SFAS 106 expenses recovered from customers in excess of the pay-as- you-go amounts. The Company adopted Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes"(SFAS 109), effective October 1, 1993. Under SFAS 109, deferred tax balances are measured at the tax rates that will apply during the period the taxes become payable and are adjusted whenever new rates are enacted. Due to the regulated nature of the Company's utility business, the principal effect of the adoption of SFAS 109 was to record a regulatory liability. There was no significant effect on the consolidated financial statements as a result of the adoption of SFAS 109. 27 Statements of Consolidated Income For the years ended September 30, --------------------------------- In millions, except per share amounts 1995 1994 1993 - ------------------------------------------------------------------------- Operating Revenues $1,063.0 $1,199.9 $1,130.3 Cost of Gas 571.8 736.8 701.0 - ------------------------------------------------------------------------- Operating Margin 491.2 463.1 429.3 - ------------------------------------------------------------------------- Other Operating Expenses Operation 213.5 207.0 187.6 Restructuring costs 70.3 Maintenance 30.4 32.8 30.9 Depreciation of utility plant other than transportation equipment 58.5 55.4 58.8 Income taxes 16.0 34.3 28.2 Taxes other than income taxes 25.6 26.0 23.9 - ------------------------------------------------------------------------- Total other operating expenses 414.3 355.5 329.4 - ------------------------------------------------------------------------- Operating Income 76.9 107.6 99.9 - ------------------------------------------------------------------------- Other Income Allowance for funds used during construction-equity 0.2 0.2 0.4 Other income and deductions 1.9 5.0 6.2 Income taxes (0.7) (2.0) (2.3) - ------------------------------------------------------------------------- Total other income-net 1.4 3.2 4.3 - ------------------------------------------------------------------------- Income Before Interest Charges 78.3 110.8 104.2 - ------------------------------------------------------------------------- Interest Charges Interest on long-term debt 42.7 43.2 43.5 Allowance for funds used during construction-debt (0.3) (0.2) (0.5) Other interest 5.1 4.6 3.7 - ------------------------------------------------------------------------- Total interest charges 47.5 47.6 46.7 - ------------------------------------------------------------------------- Net Income 30.8 63.2 57.5 Dividends on Preferred Stock 4.4 4.5 4.3 - ------------------------------------------------------------------------- Earnings Applicable to Common Stock $ 26.4 $ 58.7 $ 53.2 - ------------------------------------------------------------------------- Earnings Per Share of Common Stock (Note 4) $ 0.50 $ 1.17 $ 1.08 - ------------------------------------------------------------------------- Average Number of Common Shares Outstanding (Note 4) 52.4 50.2 49.2 - ------------------------------------------------------------------------- See notes to consolidated financial statements. 28 Statements of Consolidated Cash Flows For the years ended September 30, --------------------------------- In millions 1995 1994 1993 - ------------------------------------------------------------------------- Cash Flows from Operating Activities Net income $ 30.8 $ 63.2 $ 57.5 Adjustments to reconcile net income to net cash flow from operating activities Noncash restructuring costs 52.9 Depreciation and amortization 62.5 59.2 62.4 Deferred income taxes 4.2 13.6 21.0 Other 3.8 6.3 5.8 - ------------------------------------------------------------------------- 154.2 142.3 146.7 Changes in assets and liabilities Receivables 10.0 8.7 (23.3) Inventories 43.3 (38.5) (32.9) Deferred purchased gas adjustment (13.8) 20.8 (15.1) Accounts payable 14.7 (6.0) (3.1) Other-net 1.6 5.4 6.1 - ------------------------------------------------------------------------- Net cash flow from operating activities 210.0 132.7 78.4 - ------------------------------------------------------------------------- Cash Flows from Financing Activities Sale of common stock, net of expenses 50.4 2.4 2.6 Sale of preferred stock, net of expenses 42.8 Short-term borrowings, net (44.4) (36.0) 22.9 Redemptions, purchase fund and sinking fund requirements of preferred stock and long-term debt (15.0) (125.7) (169.8) Sale of long-term debt 194.5 194.0 Common stock dividends (44.3) (42.9) (42.4) Preferred stock dividends (4.4) (4.5) (4.0) - ------------------------------------------------------------------------- Net cash flow from financing activities (57.7) (12.2) 46.1 - ------------------------------------------------------------------------- Cash Flows from Investing Activities Utility plant expenditures (120.8) (122.0) (120.7) Investment in joint venture (32.6) Nonutility capital expenditures (0.4) (0.1) (0.6) Cost of removal, net of salvage 1.9 1.6 (1.1) - ------------------------------------------------------------------------- Net cash flow from investing activities (151.9) (120.5) (122.4) - ------------------------------------------------------------------------- Net increase in cash and cash equivalents 0.4 2.1 Cash and cash equivalents at beginning of year 3.3 3.3 1.2 - ------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 3.7 $ 3.3 $ 3.3 - ------------------------------------------------------------------------- Cash Paid During the Year for Interest $ 48.4 $ 51.1 $ 42.8 Income taxes $ 28.6 $ 18.0 $ 16.9 - ------------------------------------------------------------------------- See notes to consolidated financial statements. 29 Consolidated Balance Sheets September 30, Assets In millions 1995 1994 - ------------------------------------------------------------------------- Utility Plant $1,919.9 $1,833.2 Less accumulated depreciation 583.3 553.6 - ------------------------------------------------------------------------- Utility plant-net 1,336.6 1,279.6 - ------------------------------------------------------------------------- Nonutility Property and Investments (less accumulated depreciation of $2.9 in 1995 and $2.8 in 1994) 46.3 17.8 - ------------------------------------------------------------------------- Current Assets Cash and cash equivalents 3.7 3.3 Receivables Gas (less allowance for uncollectible accounts of $2.5 in 1995 and $2.4 in 1994) 36.9 45.2 Merchandise (less allowance for uncollectible accounts of $1.9 in 1995 and $0.4 in 1994) 5.3 8.0 Other 9.6 7.3 Unbilled revenues 17.5 18.8 Inventories Natural gas stored underground 111.2 144.5 Liquefied natural gas 14.3 17.8 Liquefied petroleum gas 1.8 3.6 Materials and supplies 7.8 9.1 Merchandise 1.0 4.4 Other 10.9 9.1 - ------------------------------------------------------------------------- Total current assets 220.0 271.1 - ------------------------------------------------------------------------- Deferred Debits and Other Assets Unrecovered environmental response costs 34.9 30.5 Unrecovered integrated resource plan costs 9.9 11.4 Prepaid pension costs 7.1 Unrecovered postretirement benefits costs 7.2 3.6 Unamortized cost to repurchase long-term debt 4.9 6.3 Other 14.8 15.5 - ------------------------------------------------------------------------- Total deferred debits and other assets 71.7 74.4 - ------------------------------------------------------------------------- Total $1,674.6 $1,642.9 - ------------------------------------------------------------------------- See notes to consolidated financial statements. 30 Statements of Consolidated Common Stock Equity For the years ended September 30, --------------------------------- In millions, except per share amounts 1995 1994 1993 - ------------------------------------------------------------------------- Common Stock (Note 4) $5 par value; authorized 100.0 shares; outstanding, 54.9 in 1995, 50.8 in 1994 and 49.6 in 1993 Beginning of year $127.1 $124.2 $121.7 Issuance of common stock Public sale 7.5 Employees' benefit plans, dividend reinvestment and stock purchase plan and long-term stock incentive plan 2.7 2.9 2.5 - ------------------------------------------------------------------------- End of year 137.3 127.1 124.2 - ------------------------------------------------------------------------- Premium on Capital Stock (Note 4) Beginning of year 241.3 224.2 207.2 Issuance of common stock Public sale 41.1 Employees' benefit plans, dividend reinvestment and stock purchase plan and long-term stock incentive plan 15.3 17.1 17.0 - ------------------------------------------------------------------------- End of year 297.7 241.3 224.2 - ------------------------------------------------------------------------- Earnings Reinvested Beginning of year 150.1 143.6 143.2 Net income 30.8 63.2 57.5 Cash dividends Preferred stock (4.4) (4.5) (4.3) Common stock ($1.04 a share in 1995, 1994 and 1993) (54.2) (52.2) (51.1) Other (1.7) - ------------------------------------------------------------------------- End of year 122.3 150.1 143.6 - ------------------------------------------------------------------------- Total common stock equity $557.3 $518.5 $492.0 - ------------------------------------------------------------------------- See notes to consolidated financial statements. 32 Notes to Consolidated Financial Statements 1. Summary of Significant Accounting Policies PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the financial statements of Atlanta Gas Light Company and its wholly owned subsidiaries, Chattanooga Gas Company, Georgia Gas Company, Georgia Gas Service Company, Georgia Energy Company and Trustees Investments, Inc. (collectively, the Company). Intercompany balances and transactions have been eliminated. SYSTEM OF ACCOUNTS Atlanta Gas Light Company (AGL) and Chattanooga Gas Company (Chattanooga) are public utilities that distribute and transport natural gas and are subject to regulation by the Georgia Public Service Commission (Georgia Commission) and the Tennessee Public Service Commission (Tennessee Commission), respectively, with respect to their rates for service, maintenance of their accounting records and various other matters. The consolidated financial statements are prepared in accordance with generally accepted accounting principles, which give appropriate recognition to the rate-making and accounting practices and policies of the Georgia and Tennessee Commissions. BASIS OF ACCOUNTING The Company's consolidated financial statements reflect regulatory actions by the Georgia and Tennessee Commissions that result in the recognition of revenues and expenses in different time periods than do enterprises that are not rate regulated. In accordance with Statement of Financial Accounting Standards No.71, "Accounting for the Effects of Certain Types of Regulation" (SFAS 71), regulatory assets and liabilities are recorded and represent regulator-approved deferrals resulting from the rate-making process. SFAS 71 assets and liabilities recorded on September 30 consist of the following: (Millions of dollars) 1995 1994 - ------------------------------------------------------------------------ Assets: Unrecovered environmental response costs $34.9 $30.5 Unrecovered integrated resource plan costs 9.9 11.4 Unrecovered postretirement benefits costs 7.2 3.6 Unamortized cost to repurchase long-term debt 4.9 6.3 - ------------------------------------------------------------------------ Total $56.9 $51.8 ======================================================================== Liabilities: Unamortized investment tax credit $30.3 $32.2 Regulatory tax liability 23.3 26.7 Deferred purchased gas adjustment 6.3 20.1 Other 15.0 5.5 - ------------------------------------------------------------------------ Total $74.9 $84.5 ======================================================================== UTILITY PLANT AND DEPRECIATION Utility plant is stated at original cost. The Company adds to utility plant all direct labor and material costs of plant construction and related indirect construction costs, including administrative, engineering and general overhead, taxes and an allowance for funds used during construction (AFUDC). The portion of AFUDC attributable to equity funds is included in other income, and the portion attributable to borrowed funds is shown as a reduction in interest charges in the statements of consolidated income. The Company's AFUDC rates of 9.32% in fiscal 1995 and 1994, and 9.93% in fiscal 1993, were the cost of capital approved by the Georgia Commission in the Company's rate proceedings. The original cost of property retired or otherwise disposed of, plus the cost of dismantling, less salvage, is charged to accumulated depreciation. Maintenance, repairs and minor additions, renewals and betterments to property are charged to operations. 33 The Company changed its method of calculating book depreciation from a composite straight-line rate to individual utility plant account straight-line rates, as approved by the Georgia Commission, effective October 1, 1993. The composite straight-line depreciation rate was approximately 3.2% for utility property other than transportation equipment during 1995 and 1994 and 3.6% during 1993. Transportation equipment is depreciated over a period of five to 10 years. DEFERRED PURCHASED GAS ADJUSTMENT The Company's rate schedules include purchased gas adjustment provisions that permit the recovery of purchased gas costs. The purchased gas adjustment factor is revised periodically to reflect changes in the cost of purchased gas without formal rate proceedings. Any overrecoveries or underrecoveries of gas costs are charged or credited to cost of gas and are included in current assets or liabilities. OPERATING REVENUES Revenues are based on rates approved by the Georgia and Tennessee Commissions. Customers' base rates may not be changed without formal approval of the Georgia and Tennessee Commissions. The Company recognizes revenues on the accrual basis, which includes estimated amounts for gas delivered but not yet billed. The Georgia and Tennessee Commissions have authorized Weather Normalization Adjustment Riders. Such riders are designed to offset the impact that unusually cold or warm weather has on the Company's operating margin. Certain of the Company's interruptible customers purchase gas directly from gas producers and marketers. The Georgia and Tennessee Commissions have approved programs whereby the Company bills a transportation charge on those purchases. INCOME TAXES The Company adopted Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS 109), effective October 1, 1993. For fiscal 1995 and 1994, deferred income taxes were provided for temporary differences between book and taxable income. For fiscal 1993, deferred income taxes primarily were provided for significant timing differences between book and taxable income. Investment tax credits have been deferred and are being amortized by credits to income in accordance with regulatory treatment over the estimated life of the related properties. STATEMENT OF CASH FLOWS For purposes of reporting cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Noncash investing and financing transactions included the issuance of common stock for the Retirement Savings Plus Plan, Dividend Reinvestment and Stock Purchase Plan and Long-Term Stock Incentive Plan of $16.2 million in 1995, $17.6 million in 1994 and $16.9 million in 1993. OTHER Gas inventories are stated at cost on a principally first-in, first-out method. Merchandise and materials and supplies inventories are stated at lower of average cost or market. Consistent with the rate treatment prescribed by the Georgia and Tennessee Commissions, the Company expenses vacation pay as those benefits are paid. The computation of earnings per share of common stock is based upon the weighted average number of common shares outstanding during each year as adjusted for the two-for-one stock split. See Note 4. Certain reclassifications have been made in 1994 and 1993 to conform with the 1995 financial statement presentation. 2.Income Tax Expense In accordance with SFAS 109, deferred tax balances are measured at the tax rates that will apply during the period the taxes become payable and are adjusted whenever new rates are enacted. Due to the regulated nature of the Company's utility business, the principal effect of the adoption of SFAS 109 was to record a regulatory liability that is being amortized over approximately 30 years. There was no significant effect on net income as a result of the adoption of SFAS 109. Components of income tax expense shown in the consolidated income statements are as follows: (Million of dollars) 1995 1994 1993 - ------------------------------------------------------------------------- Included in operating expenses: Current income taxes Federal $16.4 $19.7 $ 7.7 State 2.5 3.1 0.9 Deferred income taxes Federal (1.1) 11.5 18.1 State (0.2) 1.5 3.0 Amortization of investment tax credits (1.6) (1.5) (1.5) - ------------------------------------------------------------------------- Total 16.0 34.3 28.2 - ------------------------------------------------------------------------- Included in other income: Current income taxes Federal 0.5 1.2 2.1 State 0.1 0.2 0.3 Deferred income taxes Federal 0.1 0.5 (0.1) State 0.1 - ------------------------------------------------------------------------- Total 0.7 2.0 2.3 - ------------------------------------------------------------------------- Total income tax expense $16.7 $36.3 $30.5 ========================================================================= 34 A reconciliation between the statutory federal income tax rate and the effective rate is as follows: (Millions of dollars) 1995 - ------------------------------------------------------------------------- % of Pretax Amount Income - ------------------------------------------------------------------------- Computed tax expense $16.6 35.0 State income tax, net of federal income tax benefit 1.3 2.7 Amortization of investment tax credits (1.6) (3.4) Other-net 0.4 0.8 - ------------------------------------------------------------------------- Total income tax expense $16.7 35.1 ========================================================================= 1994 - ------------------------------------------------------------------------- % of Pretax Amount Income - ------------------------------------------------------------------------- Computed tax expense $34.8 35.0 State income tax, net of federal income tax benefit 3.2 3.2 Amortization of investment tax credits (1.5) (1.5) Other-net (0.2) (0.2) - ------------------------------------------------------------------------- Total income tax expense $36.3 36.5 ========================================================================= 1993 - ------------------------------------------------------------------------- % of Pretax Amount Income - ------------------------------------------------------------------------- Computed tax expense $30.6 34.8 State income tax, net of federal income tax benefit 2.5 2.8 Amortization of investment tax credits (1.5) (1.7) Other-net (1.1) (1.2) - ------------------------------------------------------------------------- Total income tax expense $30.5 34.7 ========================================================================= Components that give rise to the net deferred income tax liability as of September 30 are as follows: (Millions of dollars) 1995 1994 - ------------------------------------------------------------------------- Deferred tax liabilities: Property - accelerated depreciation and other property related items $187.1 $170.9 Other 15.8 14.6 - ------------------------------------------------------------------------- Total deferred tax liabilities 202.9 185.5 - ------------------------------------------------------------------------- Deferred tax assets: Deferred investment tax credits 11.7 12.5 Alternative minimum tax 12.3 10.9 Other 40.1 27.5 - ------------------------------------------------------------------------- Total deferred tax assets 64.1 50.9 - ------------------------------------------------------------------------- Net deferred tax liability $138.8 $134.6 ========================================================================= 3.Employee Benefit Plans The Company has a noncontributory defined benefit retirement plan covering substantially all of its employees. The plan's assets consist primarily of marketable securities, corporate obligations, U.S. government obligations, insurance contracts, real estate investments and cash equivalents. The plan provides pension benefits that are based upon years of service and the employee's highest 36 consecutive months' compensation out of the last 60 months worked. The Company's funding policy is to make the annual contribution required by applicable regulations and recommended by its actuary. The Company has an excess benefit plan that is unfunded and provides supplemental benefits to certain officers after retirement. In September 1994, the Company established a voluntary early retirement plan for certain officers of the Company that is unfunded and provides supplemental pension benefits to participants who elected early retirement. The annual expense and accumulated benefits of such plans are not significant. Net periodic pension costs for the plans include service cost, interest cost, return on pension assets and straight-line amortization of unrecognized initial net assets over approximately 16 years. Net periodic pension costs include the following components: (Millions of dollars) 1995 1994 1993 - ------------------------------------------------------------------------- Service cost $ 4.5 $ 5.5 $ 5.0 Interest cost 14.9 13.2 11.2 Actual return on assets (17.0) (3.3) (9.7) Net amortization and deferral 5.9 (6.2) 0.8 - ------------------------------------------------------------------------- Net periodic pension cost $ 8.3 $ 9.2 $ 7.3 - ------------------------------------------------------------------------- Actuarial assumptions used were: Discount rate 8.3% 8.3% 8.0% Rate of increase in compensation levels 5.0% 5.0% 5.5% Expected long-term rate of return on assets 8.3% 8.3% 8.5% ========================================================================= The following schedule sets forth the plans' funded status as of June 30, 1995, and 1994, and amounts recognized in the Company's consolidated balance sheets as of September 30, 1995, and 1994: (Millions of dollars) 1995 1994 - ------------------------------------------------------------------------- Actuarial present value of benefit obligations Vested benefit obligation $ 175.6 $ 119.9 - ------------------------------------------------------------------------- Accumulated benefit obligation $ 178.3 $ 123.5 - ------------------------------------------------------------------------- Projected benefit obligation $(207.4) $(162.0) Plan assets at fair value 163.9 134.2 - ------------------------------------------------------------------------- Plan assets less than projected benefit obligation (43.5) (27.8) Unrecognized net loss 34.1 35.9 Remaining unrecognized net assets at date of initial adoption (5.2) (6.0) Unrecognized prior service cost 4.3 5.0 - ------------------------------------------------------------------------- Prepaid (accrued) pension costs $ (10.3) $ 7.1 ========================================================================= The plans' change in status from a prepaid to an accrued balance is primarily a result of expenses related to the Company's restructuring plan. During 1995, the Company incurred a curtailment loss of $6 million and a loss associated with incentive benefits of $25.3 million related to the restructuring plan. The effect of the curtailment loss and incentive loss was to increase the Company's accumulated benefit obligation and projected benefit obligation by $25.3 million and $31.3 million, respectively. The Company's Retirement Savings Plus Plan (RSPPlan), a 401(k) plan, provides participants a mechanism for making contributions for retirement savings. Each participant may contribute amounts up to 15% of eligible compensation. The Company makes a contribution equal to 65% (50% prior to January 1, 1994) of the participant's contribution not to exceed 3.9% (3% prior to January 1, 1994) of the participant's compensation for the plan year. The Company's contribution was $3.3 million for 1995, $3.4 million for 1994 and $2.8 million for 1993. 35 On July 1, 1995, the Company established a Nonqualified Savings Plan (NSP), an unfunded, nonqualified plan similar to the Company's RSP Plan. The NSP provides an opportunity for eligible employees to make contributions for retirement savings. The Company's contribution during 1995 to the NSP was not significant. In January 1988, the Atlanta Gas Light Company Leveraged Employee Stock Ownership Plan (LESOP), acting through its Trustee, purchased 2 million shares of common stock of the Company for $11.75 per share, with the proceeds of a loan secured by such common stock. The Company has not guaranteed the repayment of the loan. The loan is expected to be repaid from regular cash dividends on the Company's common stock paid to the LESOP and from Company contributions to the LESOP as approved by the Company's Board of Directors. The principal balance of the loan was $5.3 million as of September 30, 1995, and $7.6 million as of September 30, 1994. The loan is payable on December 31, 1997, with interest payable quarterly at 80% of the prime rate of interest. The Company's contribution to the LESOP was $0.8 million for 1995, $0.8 million for 1994 and $0.9 million for 1993. The Company's Long-Term Stock Incentive Plan (LTSIP) provides that incentive and nonqualified stock options, restricted stock and stock appreciation rights may be granted to key employees of the Company. The exercise price of any shares under option must be at least equal to the fair market value on the date of the grant. The options granted become exercisable six months after the date of grant and expire 10 years after the date of grant. Option transactions during the three years ended September 30, 1995, are as follows: Shares Exercise Price - ------------------------------------------------------------------------ Outstanding Sept. 30, 1992 300,002 $13.75-17.44 Granted 152,870 18.94-21.13 Exercised (62,220) 13.75-17.44 Forfeited (2,308) 17.44 - ------------------------------------------------------------------------ Outstanding Sept. 30, 1993 388,344 $13.75-21.13 Granted 234,994 18.56 Exercised (4,000) 13.75 Forfeited (21,626) 20.44-20.81 - ------------------------------------------------------------------------ Outstanding Sept. 30, 1994 597,712 $13.75-21.13 Granted 325,576 16.00-19.25 Exercised (46,264) 13.75-18.94 Forfeited (11,508) 15.94-20.44 - ------------------------------------------------------------------------ Outstanding Sept. 30, 1995 865,516 $13.75-21.13 ======================================================================== As of September 30, 1995, and 1994, there were 850,678 and 597,712 options, respectively, which were exercisable. As of September 30, 1995, 1,346,386 shares were reserved under the LTSIP. In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for retired employees. Substantially all of the Company's employees become eligible for those benefits if they reach retirement age while working for the Company. Prior to 1994, the cost of retiree health care and life insurance benefits was recognized as expense as claims or premiums were paid. For fiscal 1993, those costs totaled approximately $3 million. Effective October 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions"(SFAS 106), which requires accrual of postretirement benefits other than pensions during the years an employee provides service. In its September 29, 1993, rate case decision, the Georgia Commission approved a five-year phase-in of SFAS 106 expense that defers a portion of SFAS 106 expense for future recovery. The Company has recorded a regulatory asset for the deferred portion of SFAS 106 expense. On June 14, 1993, the Tennessee Commission issued an order resulting from a generic docket that approved the recovery of SFAS 106 expense that is funded through an external trust. Net periodic postretirement benefits costs for fiscal 1995 and 1994 include the following components: (Millions of dollars) 1995 1994 - ------------------------------------------------------------------------ Service cost $ 0.9 $ 1.0 Interest cost 7.6 6.5 Actual return on assets (0.3) Amortization of transition obligation 4.2 4.1 - ------------------------------------------------------------------------ Net postretirement benefits costs $12.4 $11.6 ======================================================================== Approximately $8.7 million and $8 million of net periodic postretirement benefits costs for fiscal years 1995 and 1994, respectively, were recovered from customers. The remaining $3.7 million and $3.6 million for 1995 and 1994, respectively, were deferred for future recovery through amortization and recognized as a regulatory asset in the financial statements of the Company consistent with regulatory decisions. The Company has funded through an external trust SFAS 106 expense recovered from customers in excess of the pay-as-you-go amounts. The following schedule sets forth the plan's funded status as of September 30, 1995, and 1994: (Millions of dollars) 1995 1994 - ------------------------------------------------------------------------ Retirees $ 94.1 $ 49.1 Fully eligible active plan participants 9.3 28.1 Other active plan participants 14.5 16.0 - ------------------------------------------------------------------------ Total accumulated postretirement benefit obligation 117.9 93.2 Plan assets at fair value 8.0 4.6 - ------------------------------------------------------------------------ Accumulated postretirement benefit obligation in excess of plan assets 109.9 88.6 Unrecognized transition obligation (73.6) (77.7) Unrecognized loss (6.2) (7.3) - ------------------------------------------------------------------------ Accrued postretirement benefits costs $ 30.1 $ 3.6 ======================================================================== 36 During 1995, the Company recorded a curtailment loss of $22.9 million associated with its restructuring plan. The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation for pre-Medicare eligibility is 11.5% in 1995, decreasing 0.5% per year to 6.0% in the year 2006 and an additional 0.25% to 5.75% in 2007. The rate for post-Medicare eligibility is 10.0% in 1995, decreasing 0.5% per year to 5.5% in the year 2004 and an additional 0.25% to 5.25% in 2005. Increasing the assumed health care cost trend rate by 1% would increase the accumulated postretirement benefit obligation as of September 30, 1995, by approximately $7.7 million and the accrued postretirement benefits cost by approximately $0.5 million for fiscal 1995. The assumed discount rate used in determining the postretirement benefit obligation was 7.75% in 1995 and 8.25% in 1994. 4. Common Stock On November 3, 1995, the Company's Board of Directors declared a two-for-one stock split of the common stock effected in the form of a 100% stock dividend to shareholders of record on November 17, 1995, and payable on December 1, 1995. In fiscal 1996, the Company will record a credit to common stock and a debit to premium on capital stock of approximately $137.5 million to transfer the amount of the par value of the stock dividend to common stock. All references to number of shares and to per share amounts in the consolidated financial statements and related notes have been restated retroactively to reflect the stock dividend. On June 16, 1995, the Company issued and sold approximately 3 million shares of its common stock at $16.81 per share, resulting in net proceeds of $48.6 million. Proceeds from that sale of common stock were used to finance the Company's capital expenditure program and for other corporate purposes. The Company also issued 1,092,486; 1,144,270; and 1,029,228 shares of its common stock during the years ended September 30, 1995, 1994, and 1993, respectively, to its Dividend Reinvestment and Stock Purchase Plan, RSP Plan and LTSIP. As of September 30, 1995, 2,995,774 shares of common stock were reserved for issuance pursuant to the Company's Dividend Reinvestment and Stock Purchase Plan, RSP Plan, NSP and LTSIP. 5. Preferred Stock The Company is required under its charter to offer to purchase or call for redemption 4,100 shares of preferred stock for each of the five years ending September 30, 2000. The issues are callable at the option of the Company, in whole or in part, upon 30 days' notice. Shares reacquired by the Company to satisfy future requirements and reported as if canceled were 7,715; 8,715; and 9,715, as of September 30, 1995, 1994, and 1993, respectively. The Company's charter contains provisions limiting the issuance of additional shares of preferred stock. The most restrictive of those provisions requires gross income, as defined, for a specified 12-month period to be at least equal to 1.5 times the sum of annualized interest requirements on outstanding indebtedness and the dividend requirements on outstanding preferred stock, including the preferred stock being issued. Based on earnings for fiscal 1995, the Company's gross income was 1.55 times the sum of its interest and preferred stock dividend requirements. During October 1992, the Company issued an aggregate of 445,000 shares of $100 par or stated value preferred stock consisting of two classes of preferred stock and represented by 1,780,000 depositary receipts at $25 per receipt with a dividend rate of 7.70%. Net proceeds from the issuance were $42.8 million and were used to repay short-term debt and for other corporate purposes. As of September 30, 1995, the Company had 10 million shares of authorized but unissued preferred stock, no par value. The outstanding preferred stock, net of current maturities, as of September 30 is as follows: (Millions of dollars) 1995 1994 - ------------------------------------------------------------------------ $100 par or stated value (callable at option of Company) Redeemable preferred stock 4.72% - Current call price $103.00 $ 1.5 $ 1.5 7.70% - Current call price (a) 44.5 44.5 7.84% - Current call price $101.96 4.6 4.6 8.32% - Current call price $102.08 4.9 4.9 Nonredeemable preferred stock 4.50% - Current call price $105.25 2.0 2.0 5.00% - Current call price $105.00 1.0 1.0 - ------------------------------------------------------------------------ Total $58.5 $58.5 ======================================================================== (a) Not redeemable prior to December 1, 1997. Redeemable at par, thereafter. The outstanding shares of preferred stock net of previously reacquired shares and shares reacquired during the year for purchase fund requirements are as follows: 1995 1994 1993 - ------------------------------------------------------------------------ 4.50% Series Outstanding 20,000 20,000 20,000 Reacquired 4.72% Series Outstanding 15,285 15,285 15,285 Reacquired 5.00% Series Outstanding 10,000 10,000 10,000 Reacquired 7.70% Series Outstanding 445,000 445,000 445,000 Reacquired 7.84% Series Outstanding 47,797 47,802 49,302 Reacquired 5 1,500 198 8.32% Series Outstanding 50,004 50,004 50,219 Reacquired 215 70 - ------------------------------------------------------------------------ Total Outstanding 588,086 588,091 589,806 Reacquired 5 1,715 268 ======================================================================== 37 6. Long-Term Debt Medium-term notes Series A, Series B and Series C were issued under an Indenture dated December 1, 1989, as supplemented and modified. The notes are unsecured and rank on a parity with all other unsecured indebtedness of the Company. During 1994 and 1993, the Company issued $194.5 million and $194 million principal amount of such notes, respectively. The annual maturities of long-term debt for the five years ending September 30, 2000, are $50 million in 2000. On December 15, 1993, the Company redeemed at par its $125 million principal amount First Mortgage Bonds 8-1/4% series due 1996, the last series outstanding under its First Mortgage Bond Indenture. Pursuant to the request of the Company, during fiscal 1994 the Trustee released and discharged the lien of and canceled the Indenture, thereby removing the lien from the public utility properties owned by AGL. The outstanding long-term debt, net of current maturities, as of September 30 is as follows: (Millions of dollars) 1995 1994 - ------------------------------------------------------------------------ Medium-term notes Series A (1) $ 60.0 $ 60.0 Series B (2) 300.0 300.0 Series C (3) 194.5 194.5 - ------------------------------------------------------------------------ Total $554.5 $554.5 ======================================================================== (1) Interest rates from 8.90% to 9.10% with maturity dates from 2000 to 2021. (2) Interest rates from 7.15% to 8.70% with maturity dates from 2000 to 2023. (3) Interest rates from 5.90% to 7.20% with maturity dates from 2004 to 2024. 7. Short-Term Debt The Company's lines of credit with various banks provide for direct borrowings from the banks and are subject to annual renewal. The current lines of credit vary throughout the year from $20 million in the summer months to $250 million for peak winter financing. Certain of the lines are on a commitment fee basis. As of September 30, 1995, the Company had $55 million available on its lines of credit. The Company's short-term borrowings consisted of the following: (Millions of dollars) 1995 1994 1993 - ------------------------------------------------------------------------ Short-term debt outstanding at end of year $ 51.0 $ 95.4 $131.4 Maximum amounts of short-term debt outstanding at any month end during the year 155.0 229.4 135.5 Average amounts of short-term debt outstanding at any month end during the year (a) 51.5 69.3 51.5 - ------------------------------------------------------------------------ Weighted Average Interest Rates 1995 1994 1993 - ------------------------------------------------------------------------ Short-term debt outstanding at end of year 5.9% 5.1% 3.3% Average amounts of short-term debt outstanding at any month end during the year (a) 5.7% 3.6% 3.3% - ------------------------------------------------------------------------ (a) Average amount outstanding during the year calculated based on daily outstanding balances. Weighted average interest rate during the year calculated based on interest expense and average amount outstanding during the year. 8. Commitments and Contingencies The Company has agreements for firm pipeline and storage capacity that expire at various dates through 2011. The aggregate amount of required payments under such agreements totals approximately $1.4 billion, with annual required payments during the following five years of $208 million in 1996, $199 million in 1997, $185 million in 1998, $83 million in 1999 and $82 million in 2000. The Company's total payments of fixed charges under all agreements were $230 million in 1995, $232 million in 1994 and $225 million in 1993. The purchased gas adjustment provisions of the Company's rate schedules permit the recovery of gas costs from the Company's customers. In 1992, the Federal Energy Regulatory Commission (FERC) issued Order 636 which, among other things, mandated the unbundling of interstate pipeline sales service and established certain open access transportation regulations that became effective beginning in the 1993- 1994 heating season. Order 636 permits the Company's pipeline suppliers to pass through to the Company any prudently incurred transition costs, such as unrecovered gas costs, gas supply realignment costs and stranded costs. The Company estimates its portion of such costs from all of its pipeline suppliers would approximate $92.5 million based upon filings with FERC by the pipeline suppliers. Approximately $68 million of such costs have been incurred by the Company as of September 30, 1995, and are being recovered from its customers under the purchased gas provisions of the Company's rate schedules. Total rental expense for property and equipment was $6.3 million in 1995, $6.5 million in 1994 and $5.9 million in 1993. Minimum rentals under noncancelable operating leases total $38.1 million. Annual rentals are as follows: 1996 - $8 million; 1997 - $6.9 million; 1998 - $4.7 million; 1999 - $4.2 million; 2000 - $4.1 million; and thereafter - $10.2 million. The Company is involved in litigation arising in the normal course of business. Management believes that the ultimate resolution of such litigation will not have a material adverse effect on the consolidated financial statements of the Company. 9. Customers and Suppliers Refunds Pursuant to orders of FERC, the Company has received refunds from its interstate natural gas suppliers. Those refunds are a result of FERC orders adjusting the price of various pipeline services purchased by the Company from its suppliers in prior periods. The Company passes the refunds on to its customers under plans approved by the Georgia and Tennessee Commissions. On August 23, 1995, the Georgia Commission approved a $38.5 million plus interest refund of deferred purchased gas costs. The refund resulted from the overrecovery of gas costs by the Company through the purchased gas provisions of the Company's rate schedules. The refund was credited to customers' bills in September 1995. 38 On September 7, 1994, the Georgia Commission approved a $13.5 million refund of deferred purchased gas costs. The refund resulted from the overrecovery of gas costs by the Company through the purchased gas provisions of the Company's rate schedules. The refund was credited to customers' bills beginning in September 1994. 10. Environmental Matters AGL has identified nine sites in Georgia where it currently owns all or part of a manufactured gas plant (MGP) site. In addition, AGL has identified other sites in Georgia and Florida that AGL does not now own, but that may have been associated with the operation of MGPs by AGL or its predecessors. Preliminary assessments and subsequent site investigations have revealed environmental impacts at and near some of those sites. AGL has entered into consent orders with the Georgia Environmental Protection Division with respect to certain of those sites pursuant to which AGL is obligated to investigate and to clean up, if necessary. The Company has estimated the investigation and remediation expenses likely to be associated with the former MGP sites. Based upon a thorough analysis of the potentially applicable requirements, the Company has estimated that, under the most favorable circumstances reasonably possible, the future cost of investigating and remediating the former MGP sites could be as low as approximately $28.6 million. Alternatively, the Company has estimated that, under the least favorable circumstances reasonably possible, the future cost of investigating and remediating the former MGP sites could be as high as approximately $109 million. The Company cannot estimate at this time the amount of any other future expenses or liabilities, or the impact on those estimates of future environmental regulatory changes, that may be associated with or related to the MGP sites, including expenses or liabilities relating to any litigation. At the present time, no amount within the range can be identified as a better estimate than any other estimate. Therefore, the low end of that range and a corresponding regulatory asset have been recorded in the financial statements. With regard to other legal proceedings related to the former MGP sites, the Company is or expects to be a party to claims or counterclaims on an ongoing basis. Among such matters, the Company intends to continue to pursue insurance coverage and contributions from potentially responsible parties. Management currently believes that the outcome of MGP-related litigation in which the Company is involved will not have a material adverse effect on the financial condition and results of operations of the Company. The Georgia Commission has approved the recovery by AGL of Environmental Response Costs, as defined below, pursuant to an Environmental Response Cost Recovery Rider (ERCRR), effective October 1, 1992. For purposes of the ERCRR, Environmental Response Costs include investigation, testing, remediation and litigation costs and expenses or other liabilities relating to or arising from MGP sites. The ERCRR authorized AGL to recover from its customers Environmental Response Costs that it may incur in succeeding 12-month periods ending June 30, net of working capital benefits resulting from deferred income taxes, amortized over a 60-month recovery period beginning each October 1. The carrying costs to AGL of such Environmental Response Costs during the period of amortization are subject to recovery from any amounts that may be received from insurance carriers and former owners and operators of MGP sites. Any such amounts received are shared equally by AGL and its customers. In connection with the ERCRR, the staff of the Georgia Commission has undertaken a financial and management process audit related to the MGP sites, clean-up activities at the sites and Environmental Response Costs that have been incurred for purposes of the ERCRR. The result of such audit is not expected to have a significant effect on the Company's consolidated financial statements. 11. Fair Value of Financial Instruments The Company has estimated the fair value of its financial instruments, the carrying value of which differed from fair value using available market information and appropriate valuation methodologies. Considerable judgment is required in developing the estimates of fair value presented herein, and therefore the values are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The carrying amount and the estimated fair value of such financial instruments as of September 30, 1995, and 1994 consist of the following: Carrying Estimated (Millions of dollars) Amount Fair Value - ------------------------------------------------------------------------ 1995 Long-term debt including current portion $554.5 $571.5 Redeemable cumulative preferred stock, including current portion 55.8 56.6 - ------------------------------------------------------------------------ 1994 Long-term debt including current portion $569.5 $532.3 Redeemable cumulative preferred stock, including current portion 55.8 51.6 - ------------------------------------------------------------------------ The estimated fair values are determined based on the following: Long-term debt - interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities. Redeemable cumulative preferred stock - quoted market price and dividend rates for preferred stock with similar terms. The fair value estimates presented herein are based on information available to management as of September 30, 1995. Management is not aware of any subsequent factors that would affect the estimated fair value amounts significantly. 39 12. Corporate Restructuring In November 1994, the Company announced a corporate restructuring plan and began its implementation during fiscal 1995. As a result of the restructuring, the Company has combined offices and established centralized customer service centers. During 1995, the Company reduced the average number of employees by approximately 500 through voluntary retirement and severance programs and attrition. The Company, however, anticipates a slight increase in employees during fiscal 1996. The Company recorded $43.1 million, after income taxes, in restructuring- related expenses during 1995. The principal effects of the restructuring charges were to increase the Company's obligations with respect to pension benefits and postretirement benefits other than pensions. 13. Joint Venture On August 31, 1995, the Company signed an agreement with Sonat Inc. (Sonat) to form a joint venture to acquire the business of Sonat Marketing Company, a wholly owned subsidiary of Sonat. The joint venture, Sonat Marketing Company L.P. (Sonat Marketing), offers natural gas sales, transportation, risk management and storage services to natural gas users in key natural gas producing and consuming areas of the United States. The Company invested $32.6 million for a 35% ownership interest in Sonat Marketing. The Company's 35% investment is being accounted for under the equity method. The excess of the purchase price over the estimated fair value of the net tangible assets of approximately $23 million has been allocated preliminarily to intangible assets consisting of customer lists, computer software and goodwill. Such amount is expected to be amortized over a period not to exceed 30 years. The Company has certain rights for a period of five years to sell its interest to Sonat at a predetermined fixed price, as defined, or for fair market value at any time. During September 1995, the Company purchased gas totaling $23.7 million from Sonat Marketing and its affiliates and as of September 30, 1995, the Company had a payable to Sonat Marketing of $23.7 million. 14. Subsequent Event The Company has announced its plan to form a holding company, AGL Resources Inc., of which AGL will become a wholly owned subsidiary. The change in corporate structure requires, among other things, the approval of the Company's shareholders and is expected to be voted upon at the 1996 Shareholders Meeting. 15. Quarterly Financial Data (Unaudited) Quarterly financial data for fiscal 1995 and 1994 are summarized as follows: (Millions, except per share data) Operating Operating Quarter Ended Revenues Income - ------------------------------------------------------------------------ 1995 December 31, 1994 $328.8 $14.1 March 31, 1995 448.2 48.9 June 30, 1995 177.5 12.2 September 30, 1995 (a) 108.5 1.7 - ------------------------------------------------------------------------ 1994 December 31, 1993 $361.9 $37.9 March 31, 1994 500.2 60.5 June 30, 1994 191.2 7.6 September 30, 1994 146.6 1.6 - ------------------------------------------------------------------------ Earnings (Loss) Per Share of Net Income Common Quarter Ended (Loss) Stock (c) - ------------------------------------------------------------------------ 1995 (b) December 31, 1994 $ 1.8 $ 0.01 March 31, 1995 37.3 0.70 June 30, 1995 1.4 0.01 September 30, 1995 (9.7) (0.20) - ------------------------------------------------------------------------ 1994 December 31, 1993 $26.3 $ 0.51 March 31, 1994 50.4 0.98 June 30, 1994 (3.8) (0.10) September 30, 1994 (9.7) (0.22) - ------------------------------------------------------------------------ (a) During the fourth quarter of fiscal 1995, the Company recorded a refund to its customers of $38.5 million plus interest. See Note 9. (b) Quarterly net income (loss) and earnings per share data for 1995 include the effects of charges for restructuring costs as follows: $28.4 million and $0.56 for the quarter ended December 31, 1994, $13.0 million and $0.25 for the quarter ended March 31, 1995, $1.1 million and $0.02 for the quarter ended June 30, 1995 and $0.6 million and $0.01 for the quarter ended September 30, 1995. Earnings per share have been adjusted to reflect the effects of a two-for-one stock split. See Note 4. (c) Earnings per share are calculated based on the weighted average number of shares outstanding during the quarter. That total differs from the earnings per share as shown on the statements of consolidated income, which is based on the weighted average number of shares outstanding for the entire year. The wide variance in quarterly earnings results from the highly seasonal nature of the business. 40 Independent Auditors' Report To the Shareholders and Board of Directors of Atlanta Gas Light Company: We have audited the accompanying consolidated balance sheets of Atlanta Gas Light Company and subsidiaries as of September 30, 1995, and 1994, and the related statements of consolidated income, common stock equity and cash flows for each of the three years in the period ended September 30, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Atlanta Gas Light Company and subsidiaries as of September 30, 1995, and 1994, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1995, in conformity with generally accepted accounting principles. As discussed in the notes to the consolidated financial statements, in 1994 the Company changed its methods of accounting for postretirement benefits other than pensions and for income taxes. Atlanta, Georgia November 27, 1995 DELOITTE & TOUCHE LLP Management's Responsibility for Financial Reporting The consolidated financial statements and related information are the responsibility of management. The financial statements have been prepared in conformity with generally accepted accounting principles appropriate in the circumstances. The financial information contained elsewhere in this Annual Report is consistent with that in the financial statements. The Company maintains a system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded from loss and that transactions are executed and recorded in accordance with established procedures. The concept of reasonable assurance is based on the recognition that the cost of maintaining a system of internal accounting controls should not exceed related benefits. The system of internal accounting controls is supported by written policies and guidelines. The financial statements have been audited by Deloitte & Touche LLP, independent auditors. Their audits were made in accordance with generally accepted auditing standards, as indicated in the Independent Auditors' Report, and included a review of the system of internal accounting controls and tests of transactions to the extent they considered necessary to carry out their responsibilities. The Board of Directors pursues its responsibility for reported financial information through its Audit Committee. The Audit Committee meets periodically with management and the independent auditors to assure that they are carrying out their responsibilities and to discuss internal accounting controls, auditing and financial reporting matters. Robert L. Goocher J. Michael Riley Executive Vice President and Vice President-Finance and Accounting Chief Financial Officer 41 Selected Financial Data For the years ended September 30, --------------------------------- In millions, except per share amounts 1995 1994 1993 - ------------------------------------------------------------------------ Income Statement Data Operating revenues $1,063.0 $1,199.9 $1,130.3 Cost of gas 571.8 736.8 701.0 - ------------------------------------------------------------------------ Operating margin 491.2 463.1 429.3 - ------------------------------------------------------------------------ Other operating expenses Operation 213.5 207.0 187.6 Restructuring costs 70.3 Maintenance 30.4 32.8 30.9 Depreciation 58.5 55.4 58.8 Income taxes 16.0 34.3 28.2 Taxes other than income taxes 25.6 26.0 23.9 - ------------------------------------------------------------------------ Total other operating expenses 414.3 355.5 329.4 - ------------------------------------------------------------------------ Operating income 76.9 107.6 99.9 Other income (expense)-net 1.4 3.2 4.3 - ------------------------------------------------------------------------ Income before interest charges 78.3 110.8 104.2 Interest charges 47.5 47.6 46.7 - ------------------------------------------------------------------------ Income before cumulative effect of change in accounting 30.8 63.2 57.5 Cumulative effect of change in accounting - ------------------------------------------------------------------------ Net income 30.8 63.2 57.5 Dividends on preferred stock 4.4 4.5 4.3 - ------------------------------------------------------------------------ Earnings applicable to common stock 26.4 58.7 53.2 Common dividends paid 54.2 52.2 51.1 - ------------------------------------------------------------------------ Earnings reinvested $ (27.8) $ 6.5 $ 2.1 ======================================================================== Common Stock Data (1) Average shares outstanding 52.4 50.2 49.2 Earnings per share Income before cumulative effect of change in accounting $ 0.50 $ 1.17 $ 1.08 Cumulative effect of change in accounting - ------------------------------------------------------------------------ Total $ 0.50 $ 1.17 $ 1.08 Dividends paid per share $ 1.04 $ 1.04 $ 1.04 Dividend payout ratio 208.0% 88.9% 96.3% Book value per share(2) $ 10.15 $ 10.20 $ 9.90 Market value per share(2) $ 19.31 $ 15.31 $ 18.81 ======================================================================== Balance Sheet Data (2) Total assets $1,674.6 $1,642.9 $1,533.0 Long-term liabilities Take-or-pay charges payable Accrued environmental response costs $ 28.6 $ 24.3 $ 19.6 Accrued pension costs $ 10.3 Accrued postretirement benefits costs $ 30.1 $ 3.6 - ------------------------------------------------------------------------ Capitalization Long-term debt $ 554.5 $ 569.5 $ 500.7 Preferred stock-redeemable 55.8 55.8 56.0 -nonredeemable 3.0 3.0 3.0 Common equity 557.3 518.5 492.0 - ------------------------------------------------------------------------ Total $1,170.6 $1,146.8 $1,051.7 ======================================================================== Financial Ratios (2) Capitalization Long-term debt 47.4% 49.6% 47.6% Preferred stock-redeemable 4.8% 4.9% 5.3% -nonredeemable 0.2% 0.3% 0.3% Common equity 47.6% 45.2% 46.8% - ------------------------------------------------------------------------ Total 100.0% 100.0% 100.0% - ------------------------------------------------------------------------ Return on average common equity 4.9% 11.6% 11.0% - ------------------------------------------------------------------------ Times charges earned before income taxes(3) Total interest 1.99 3.08 2.86 Total interest and preferred dividends 1.83 2.82 2.63 Fixed(4) 1.95 3.00 2.80 ======================================================================== (1) Adjusted for two-for-one stock splits paid in the form of a 100% stock dividend on December 1, 1995, and on December 1, 1986. (2) Year-End. 42 - ------------------------------------------------------------------------ 1992 1991 1990 1989 1988 1987 1986 1985 - ------------------------------------------------------------------------ $ 994.6 $ 963.8 $1,000.9 $ 938.6 $ 975.6 $ 983.5 $1,008.3 $1,164.7 590.5 579.9 632.3 616.6 675.5 694.9 750.9 927.6 - ------------------------------------------------------------------------ 404.1 383.9 368.6 322.0 300.1 288.6 257.4 237.1 - ------------------------------------------------------------------------ 170.7 165.2 159.2 145.6 134.3 122.4 114.1 104.6 29.5 28.6 28.1 25.3 24.0 22.4 21.3 18.0 54.9 50.2 46.3 43.2 36.1 31.2 28.1 24.9 25.6 26.2 23.4 13.1 19.9 34.8 22.7 23.4 23.2 19.2 18.5 16.4 12.5 11.5 10.5 9.9 - ------------------------------------------------------------------------ 303.9 289.4 275.5 243.6 226.8 222.3 196.7 180.8 - ------------------------------------------------------------------------ 100.2 94.5 93.1 78.4 73.3 66.3 60.7 56.3 2.6 1.8 (2.7) 5.6 5.4 3.4 3.0 3.9 - ------------------------------------------------------------------------ 102.8 96.3 90.4 84.0 78.7 69.7 63.7 60.2 47.4 46.9 44.8 41.9 32.7 30.3 34.5 30.5 - ------------------------------------------------------------------------ 55.4 49.4 45.6 42.1 46.0 39.4 29.2 29.7 2.9 - ------------------------------------------------------------------------ 55.4 49.4 45.6 42.1 48.9 39.4 29.2 29.7 1.0 1.1 1.3 1.5 1.5 1.6 1.7 1.9 - ------------------------------------------------------------------------ 54.4 48.3 44.3 40.6 47.4 37.8 27.5 27.8 49.6 47.4 43.4 39.8 34.6 29.6 22.8 19.4 - ------------------------------------------------------------------------ $ 4.8 $ 0.9 $ 0.9 $ 0.8 $ 12.8 $ 8.2 $ 4.7 $ 8.4 ======================================================================== 48.2 46.6 43.8 43.0 39.6 37.0 33.0 30.6 $ 1.13 $ 1.04 $ 1.01 $ 0.94 $ 1.13 $ 1.02 $ 0.83 $ 0.91 0.07 - ------------------------------------------------------------------------ $ 1.13 $ 1.04 $ 1.01 $ 0.95 $ 1.21 $ 1.02 $ 0.83 $ 0.91 $ 1.03 $ 1.02 $ 0.98 $ 0.94 $ 0.88 $ 0.80 $ 0.70 $ 0.63 91.2% 98.1% 97.0% 98.9% 72.7% 78.4% 84.3% 69.2% $ 9.70 $ 9.42 $ 8.97 $ 8.83 $ 8.72 $ 7.91 $ 7.59 $ 7.13 $ 18.81 $ 17.19 $ 15.19 $ 13.81 $ 13.31 $ 10.69 $ 10.56 $ 8.06 ======================================================================== $1,428.6 $1,350.3 $1,291.8 $1,237.0 $1,195.1 $ 922.3 $ 845.8 $ 768.5 $ 5.0 $ 15.0 $ 27.0 $ 37.9 $ 86.6 $ 25.0 - ------------------------------------------------------------------------ $ 476.5 $ 458.3 $ 440.4 $ 378.5 $ 381.2 $ 279.4 $ 299.8 $ 247.3 11.5 12.8 15.0 16.1 17.4 18.7 19.8 21.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 472.1 448.2 397.3 383.2 370.4 295.8 277.4 221.7 - ------------------------------------------------------------------------ $ 963.1 $ 922.3 $ 855.7 $ 780.8 $ 772.0 $ 596.9 $ 600.0 $ 493.0 ======================================================================== 49.5% 49.7% 51.5% 48.5% 49.4% 46.8% 50.0% 50.1% 1.2% 1.4% 1.8% 2.0% 2.2% 3.1% 3.3% 4.3% 0.3% 0.3% 0.3% 0.4% 0.4% 0.5% 0.5% 0.6% 49.0% 48.6% 46.4% 49.1% 48.0% 49.6% 46.2% 45.0% - ------------------------------------------------------------------------ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% - ------------------------------------------------------------------------ 11.8% 11.4% 11.4% 10.8% 14.2% 13.2% 11.0% 13.7% - ------------------------------------------------------------------------ 2.66 2.56 2.47 2.37 2.92 3.32 2.56 2.78 2.60 2.50 2.40 2.30 2.80 3.16 2.43 2.62 2.62 2.53 2.44 2.35 2.89 3.27 2.54 2.76 ======================================================================== (3) Interest charges exclude the debt portion of allowance for funds used during construction. (4) Fixed charges consist of interest on short- and long-term debt, other interest charges and the estimated interest component of rentals. 43 Gas Sales and Statistics For the years ended September 30, --------------------------------- 1995 1994 1993 - ------------------------------------------------------------------------ Operating Revenues (Millions of Dollars) Sales of gas Residential $ 610.6 $ 700.7 $ 658.2 Commercial 243.2 285.8 268.1 Industrial 169.4 172.1 154.2 Transportation revenues 23.9 22.6 33.8 Miscellaneous revenues 15.9 18.7 16.0 - ------------------------------------------------------------------------ Total $1,063.0 $1,199.9 $1,130.3 ======================================================================== Therms Sold (Millions) Residential 916.8 1,003.1 1,001.4 Commercial 454.0 478.9 478.5 Industrial 526.0 424.8 388.7 Therms Transported 722.8 697.4 795.6 - ------------------------------------------------------------------------ Total 2,619.6 2,604.2 2,664.2 ======================================================================== Number of Customers (Average in Thousands) Residential 1,250.4 1,215.2 1,182.7 Commercial 100.0 98.0 95.7 Industrial 2.6 2.5 2.5 - ------------------------------------------------------------------------ Total 1,353.0 1,315.7 1,280.9 ======================================================================== Sales, Average Residential Customer Gas sold (Therms) 733 825 847 Revenue (Dollars) 488.32 576.61 556.52 Revenue per therm (Cents) 66.6 69.9 65.7 Degree Days-Atlanta Area 30-year normal 2,991 2,991 3,021 Actual 2,121 2,565 2,852 Percentage of actual to 30-year normal 70.9 85.8 94.4 Gas Account (Millions of Therms) Natural gas purchased 1,406.9 1,453.6 1,629.9 Natural gas withdrawn from storage 520.7 500.3 276.4 Gas transported 722.8 697.4 795.6 - ------------------------------------------------------------------------ Total send-out 2,650.4 2,651.3 2,701.9 Less Unaccounted for 20.4 37.2 29.0 Company use 10.4 9.9 8.7 - ------------------------------------------------------------------------ Sold to customers and transported 2,619.6 2,604.2 2,664.2 ======================================================================== Cost of Gas (Millions of Dollars) Natural gas purchased $ 389.4 $ 550.1 $ 595.7 Natural gas withdrawn from storage 182.4 186.7 105.3 - ------------------------------------------------------------------------ Total $ 571.8 $ 736.8 $ 701.0 ======================================================================== Gas Plant-End of Year (Millions of Dollars) Gross plant $1,919.9 $1,833.2 $1,740.6 Net plant $1,336.6 $1,279.6 $1,217.9 Gross plant investment per customer (Thousands of Dollars) $ 1.4 $ 1.4 $ 1.4 Capital Expenditures (Millions of Dollars) $ 121.7 $ 122.5 $ 122.2 Gas Mains-Miles of 3" Equivalent 28,520 27,972 27,390 Employees-Average 3,249 3,764 3,764 Average Btu Content of Gas 1,027 1,032 1,027 ======================================================================== (1) Includes $46.8 million of net utility plant related to the purchase of Chattanooga Gas Company on October 1, 1988. 44 - ------------------------------------------------------------------------ 1992 1991 1990 1989 1988 1987 1986 1985 - ------------------------------------------------------------------------ $ 575.7 $ 550.2 $ 560.4 $ 517.9 $ 534.3 $ 513.9 $ 471.9 $ 474.9 231.5 226.0 241.3 227.0 239.7 244.0 242.7 261.7 140.9 144.1 157.9 149.8 168.1 205.8 284.6 424.5 36.6 37.8 35.4 36.5 27.0 17.3 7.9 2.3 9.9 5.7 5.9 7.4 6.5 2.5 1.2 1.3 - ------------------------------------------------------------------------ $ 994.6 $ 963.8 $1,000.9 $ 938.6 $ 975.6 $ 983.5 $1,008.3 $1,164.7 ======================================================================== 915.4 819.5 866.1 858.5 854.1 809.0 722.8 734.6 433.9 402.8 433.2 436.2 445.7 461.0 443.5 467.7 445.0 455.1 455.5 437.9 491.8 606.0 755.9 953.4 901.8 862.6 802.6 828.3 686.7 477.7 277.6 46.0 - ------------------------------------------------------------------------ 2,696.1 2,540.0 2,557.4 2,560.9 2,478.3 2,353.7 2,199.8 2,201.7 ======================================================================== 1,152.2 1,124.0 1,099.8 1,072.5 1,010.6 971.4 927.9 880.7 93.7 92.0 90.8 88.5 79.8 76.2 73.6 70.6 2.5 2.5 2.5 2.4 2.1 2.1 2.0 1.9 - ------------------------------------------------------------------------ 1,248.4 1,218.5 1,193.1 1,163.4 1 092.5 1,049.7 1,003.5 953.2 ======================================================================== 794 729 788 800 845 833 779 834 499.65 489.50 509.55 482.89 528.70 529.03 508.57 539.23 62.9 67.1 64.7 60.3 62.6 63.5 65.3 64.7 3,021 3,021 3,021 3,021 3,021 3,021 3,021 3,021 2,552 2,273 2,409 2,520 2,715 2,760 2,509 2,663 84.5 75.2 79.7 83.4 89.9 91.4 83.1 88.1 1,555.4 1,563.0 1,616.7 1,610.6 1,616.4 1,831.8 1,882.5 2,117.3 263.3 148.2 168.7 148.4 216.6 85.0 70.9 84.4 901.8 862.6 802.6 828.3 686.7 477.7 277.6 46.0 - ------------------------------------------------------------------------ 2,720.5 2,573.8 2,588.0 2,587.3 2,519.7 2,394.5 2,231.0 2,247.7 16.2 24.4 19.3 15.0 34.2 34.9 24.9 40.1 8.2 9.4 11.3 11.4 7.2 5.9 6.3 5.9 - ------------------------------------------------------------------------ 2,696.1 2,540.0 2,557.4 2,560.9 2,478.3 2,353.7 2,199.8 2,201.7 ======================================================================== $ 487.9 $ 502.5 $ 547.0 $ 534.8 $ 563.4 $ 619.6 $ 677.6 $ 851.0 102.6 77.4 85.3 81.8 112.1 75.3 73.3 76.6 - ------------------------------------------------------------------------ $ 590.5 $ 579.9 $ 632.3 $ 616.6 $ 675.5 $ 694.9 $ 750.9 $ 927.6 ======================================================================== $1,634.8 $1,517.0 $1,392.3 $1,293.2 $1,121.2 $1,004.5 $ 876.8 $ 764.5 $1,157.4 $1,081.4 $ 992.7 $ 924.2 $ 810.6 $ 725.8 $ 623.6 $ 535.1 $ 1.3 $ 1.2 $ 1.2 $ 1.1 $ 1.0 $ 1.0 $ 0.9 $ 0.8 $ 132.9 $ 141.9 $ 119.9 $ 160.9(1)$123.6 $ 135.5 $ 118.8 $ 93.2 26,936 26,623 25,987 25,421 22,631 21,339 20,424 19,557 3,794 3,820 3,768 3,764 3,544 3,467 3,356 3,194 1,024 1,025 1,028 1,026 1,026 1,026 1,027 1,027 ======================================================================== 45 Shareholder Information Stock Listing Atlanta Gas Light Company's common stock is traded on the New York Stock Exchange (NYSE) under the symbol ATG. It appears in newspaper financial section stock listings as AtlGas or AtlaGasLt. Ownership The 55 million outstanding shares of the Company's common stock are owned by 17,242 shareholders of record in 50 states, the District of Columbia and seven foreign countries. Market Prices and Dividends The following table reflects the quarterly high and low closing sales prices, as reported in the listing of the NYSE composite transactions for shares of the Company's common stock for the fiscal years 1995 and 1994, and the quarterly dividends paid per share. Dividends Quarter Ended High Low Paid Per Share - ------------------------------------------------------------------------ 1995 September 30, 1995 $19.31 $16.94 $0.26 June 30, 1995 18.31 17.13 0.26 March 31, 1995 17.38 15.00 0.26 December 31, 1994 16.25 14.69 0.26 - ------------------------------------------------------------------------ 1994 September 30, 1994 $17.63 $15.19 $0.26 June 30, 1994 18.25 16.81 0.26 March 31, 1994 19.31 17.06 0.26 December 31, 1993 19.44 17.31 0.26 - ------------------------------------------------------------------------ Annual Meeting It is anticipated that the 1996 Annual Meeting of Shareholders will be held in late February at the offices of the Company, 303 Peachtree Street, N.E., Atlanta, Georgia. Proxies for the meeting of shareholders will be solicited by the Board of Directors in a separate communication. A formal notice of the meeting, proxy statement and form of proxy is expected to be mailed to shareholders during January 1996. Shareholder Reports, Form 10-K and Inquiries Additional copies of this report and of the Company's Form 10-K Annual Report to the Securities and Exchange Commission (excluding exhibits) can be obtained by writing to or calling the Corporate Secretary's Office, Atlanta Gas Light Company, Post Office Box 4569, Atlanta, Georgia 30302, (404) 584-3794. Shareholder inquiries also should be directed to the Corporate Secretary's office. Shareholder Services Available Direct deposit of cash dividends and automated stock purchase services are available. For information, shareholders should contact Wachovia Bank of North Carolina, N.A., at the address listed below. Transfer Agent, Registrar and Dividend Disbursing Agent Wachovia Bank of North Carolina, N.A. Corporate Trust Department Post Office Box 3001 Winston-Salem, North Carolina 27102 (800) 633-4236 Financial Inquiries Financial analysts and professional investment managers are invited to contact: J. Michael Riley Vice President - Finance and Accounting Atlanta Gas Light Company Post Office Box 4569 Atlanta, Georgia 30302 (404) 584-3954 46 Where To Buy Stock The Company's common and preferred stock may be purchased through a brokerage firm. A shareholder of record holding the Company's common stock in his or her name may purchase common stock through the Company's Dividend Reinvestment and Stock Purchase Plan. See the section titled "Dividend Reinvestment and Stock Purchase Plan" for details. Where To Sell Stock The Company's common or preferred stock held in certificated form may be sold through a brokerage firm. The common stock held in the Dividend Reinvestment and Stock Purchase Plan may be sold through a brokerage firm or may be sold through the Dividend Reinvestment and Stock Purchase Plan by sending written authorization to Wachovia Bank of North Carolina, N.A., at the address listed on page 46. Dividend Reinvestment and Stock Purchase Plan The Company's Dividend Reinvestment and Stock Purchase Plan provides common shareholders with an economical and convenient method for purchasing additional shares of the Company's common stock without paying any brokerage fees or service charges. Dividends reinvested through the plan are used to purchase shares of common stock directly from the Company. The Company will issue the shares to the plan participants without brokerage commissions. Common shareholders whose shares are registered in names other than their own (for example, shares registered in the name of a broker or bank nominee) either must arrange for the holder of record to participate in the plan or have the shares they wish to enroll in the plan transferred into their own name. Participants also may invest optional cash payments through the plan in amounts ranging from a minimum of $25 to a maximum of $5,000 per month. The same amount of money need not be sent with each payment, and there is no obligation to make an optional cash payment each month. Optional cash payments must be received by the 25th day of the month. If payments are received after the 25th day of the month, they will be deemed, for reinvestment purposes, to have been received in the next month. The price of shares purchased for the account of each participant in the plan will be the last sale price of the common stock as reported in the listing of the NYSE composite transactions on the date of such purchase. If the common stock is not traded on the date of purchase, the price will be that of the preceding day on which the stock was traded. To obtain a prospectus describing the Dividend Reinvestment and Stock Purchase Plan and enrollment information, you may write to or call the Corporate Secretary's Office, Atlanta Gas Light Company, Post Office Box 4569, Atlanta, Georgia 30302, (404) 584-3794. How To Transfer Stock A transfer of stock is required whenever the registration of a stock certificate is changed. A change in registration generally occurs when stock held in other than "nominee" or "street name" is sold. Changes in name, co-ownership, and tenancy also require a transfer. A transfer can be accomplished by properly filling in the stock assignment form on the reverse side of the stock certificate and endorsing the assignment form exactly as the registration is shown on the face of the certificate. The signature or signatures of the transferor must be guaranteed either by a commercial bank or a brokerage firm that is a member of one of the major stock exchanges. The certificate with the properly completed assignment then can be sent to Wachovia Bank of North Carolina, N.A., at the address listed on page 46. For your protection, certificates should be sent by registered or certified insured mail. Stock Registration A purchaser of the Company's stock either can have the stock certificate delivered or can leave the shares with the broker. Stock left with the broker generally is held in the brokerage firm's name and referred to as "street name" stock. The purchaser generally is referred to as the beneficial owner. A purchaser who elects to take physical possession of the stock receives a certificate or certificates representing the number of shares purchased. The stock is registered on the Company's books in the name of the purchaser, who becomes a shareholder of record. Safekeeping of Certificates When a shareholder receives stock certificates, they should be safeguarded by placing them in a secure place, such as a bank safe deposit box. A separate certificate record should be maintained that includes each certificate number, purchase date, date of issue, amount paid and exact registration. The Company does not safeguard certificates for shareholders. If you are a participant in the Company's Dividend Reinvestment and Stock Purchase Plan, you may deposit the certificates you hold in the plan for safekeeping; however, all dividends on those shares must be reinvested. Lost or Stolen Certificates If a stock certificate is lost or stolen, the shareholder should notify Wachovia Bank of North Carolina, N.A., immediately in writing so a "stop" can be placed on the missing certificate. The letter should describe the certificate in as much detail as possible, including the certificate number, date issued and registration. Once a "stop" has been placed on the missing certificate, the shareholder will be sent an affidavit that must be completed, signed, notarized and returned to Wachovia Bank of North Carolina, N.A., before a replacement certificate can be issued. The shareholder also must purchase an irrevocable indemnity bond for the lost stock certificate. The cost of the bond is 2% of the market value of the missing certificate, (minimum $10.00), calculated at the time the indemnity bond is issued. Information regarding lost or stolen certificates should be sent to Wachovia Bank of North Carolina, N.A., at the address listed on page 46. 47 PAGE 22 GRAPH: Bar graph reflects consolidated operating revenues, operating expenses and operating expenses as a percentage of operating revenues for the fiscal years ended September 30, 1991 through 1995, inclusive. For dollar amounts with respect to operating revenues, please refer to "Selected Financial Data" included at pages 42 and 43 herein. Operating expenses, in millions, for the five years ended September 30, 1995 are as follows: 1991: $869, 1992: $895, 1993: $1,030, 1994: $1,092, 1995: $986. Operating expenses as a percentage of operating revenues for this same period are as follows: 90%, 90%, 91%, 91% and 93%. 1995 data is footnoted: (a) Operating expenses include restructuring costs of $70.3 million. PAGE 25 GRAPH: Bar graph reflects consolidated capital expenditures for the fiscal years ended September 30, 1991 through 1995, inclusive. For dollar amounts, please refer to "Gas Sales and Statistics" included at pages 44 and 45 herein. EX-21 12 Exhibit 21 ATLANTA GAS LIGHT COMPANY FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 1995 Subsidiaries of the Registrant The Company has eight active wholly -- owned subsidiaries, AGL Resources Inc., AGL Energy Services, Inc., AGL Investments, Inc., Georgia Gas Company, Georgia Gas Service Company, Georgia Energy Company and Trustees Investments, Inc., all Georgia corporations and Chattanooga Gas Company, a Tennessee corporation. Financial statements of the subsidiaries are included in the consolidated financial statements which are a part of the Company's Form 10-K. EX-23 13 Exhibit 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 33-31674, 33-36231, 33-50301, 33-62155, and 33-52907 on Forms S-8 and Registration Statement Nos. 33-50233 and 33-52905 on Forms S-3 of our reports dated November 27, 1995, appearing and incorporated by reference in this Annual Report on Form 10-K of Atlanta Gas Light Company for the year ended September 30, 1995. /s/ Deloitte & Touche LLP DELOITTE & TOUCHE LLP Atlanta, Georgia December 22, 1995 EX-24 14 Exhibit 24 POWERS OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David R. Jones, Robert L. Goocher and Albert G. Norman, Jr., and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K for the fiscal year ended September 30, 1995 and any and all amendments to such Annual Report, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This 3rd day of November, 1995. /s/ Frank Barron, Jr. /s/ Albert G. Norman, Jr. Frank Barron, Jr. Albert G. Norman, Jr. /s/ W. Waldo Bradley /s/ D. Raymond Riddle W. Waldo Bradley D. Raymond Riddle /s/ Otis A. Brumby, Jr. /s/ Dr. Betty L. Siegel Otis A. Brumby, Jr. Dr. Betty L. Siegel /s/ L. L. Gellerstedt, Jr. /s/ Ben J. Tarbutton, Jr. L. L. Gellerstedt, Jr. Ben J. Tarbutton, Jr. /s/ David R. Jones /s/ Charles McKenzie Taylor David R. Jones Charles McKenzie Taylor /s/ Felker W. Ward, Jr. Kenneth D. Lewis Felker W. Ward, Jr. EX-27 15
UT 1,000,000 12-MOS SEP-30-1995 OCT-01-1994 SEP-30-1995 PER-BOOK 1337 46 220 63 9 1675 137 298 122 557 56 3 555 51 0 0 0 0 0 0 453 1675 1063 16 398 986 77 1 78 48 31 4 26 54 43 210 0.50 0.50
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