UNITED
STATES |
SECURITIES
AND EXCHANGE COMMISSION |
Washington,
D.C. 20549 |
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FORM
8-K |
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CURRENT
REPORT |
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PURSUANT
TO SECTION 13 OR 15(d) OF |
THE
SECURITIES EXCHANGE ACT OF 1934 |
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Date
of Report (Date of earliest event reported): April 27,
2005 |
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AGL
RESOURCES INC. |
(Exact
name of registrant as specified in its charter) |
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Georgia |
1-14174 |
58-2210952 |
(State
or other jurisdiction of incorporation) |
(Commission
File No.) |
(I.R.S.
Employer Identification No.) |
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Ten
Peachtree Place NE Atlanta, Georgia 30309 |
(Address
and zip code of principal executive offices) |
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404-584-4000 |
(Registrant's
telephone number, including area code) |
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Not
Applicable |
(Former
name or former address, if changed since last report) |
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions: |
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[ ]
Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)) |
Item
7.01 Regulation FD Disclosure
For
Immediate Release
contact:
Financial
Brian
Little
Director,
Investor Relations
404 584
4414
blittle@aglresources.com
Media
Nick
Gold
Director,
Media Relations
404 584
3457 (office)
404 275
9501 (cellular)
ngold@aglresources.com
AGL
RESOURCES
EVALUATING
GEORGIA RATE CASE DECISION
ATLANTA—(BUSINESS
WIRE)—April 27, 2005-- Atlanta
Gas Light, a wholly owned subsidiary of AGL Resources (NYSE: ATG), is evaluating
today’s decision by the Georgia Public Service Commission (GPSC) that would
reduce the company’s revenue.
“Our
preliminary review suggests the decision is unsupported by the facts presented
in this case,” said Kevin P. Madden, Executive Vice President for Distribution
and Pipeline Operations. “It also appears to be fundamentally flawed from both a
legal and public policy standpoint. It is our hope that these flaws will be
rebutted appropriately on reconsideration and be reversed.”
The
company’s initial view is that the 3-2 vote by the GPSC, if allowed to stand,
would result in a potential annual revenue reduction of up to $25 million. The
Commission is expected to issue a written order Friday, April 29.
“At that
time, Atlanta Gas Light will fully assess the potential impact on the company
and its customers,” Madden said.
The
company will seek in the coming days to clarify the impact of the decision, but
will consider all available options to modify the decision. This will include
filing for reconsideration, filing a new rate case and appealing to Fulton
Superior Court.
Atlanta
Gas Light, a 149-year-old company, supplies natural gas to 1.6 million homes and
businesses in 237 Georgia communities. The company has not had a rate increase
in 12 years and three years ago agreed to reduce rates by a total of $30 million
over three years.
The
company is seeking a $25.6 million rate increase that would work out to about
$1.39 per month for the average residential customer, well below the inflation
rate. AGL is also seeking to continue a performance-based sharing
mechanism.
The
Commission’s decision appears to abandon after just three years an innovation in
the performance-based rate plan that featured sharing of revenues with Georgia
customers. The plan set an earnings band of 10 to12 percent with three-quarters
of any earnings above 12 percent shared with Georgia customers and one-quarter
retained by AGL.
Instead,
the recommendations adopted by the Commission would set a return on equity of
10.375 percent, well below the average for natural gas distribution companies
across the country and an 11.25 percent rate of return on equity the commission
approved for Georgia Power Co. in December 2004.
“Atlanta
Gas Light has instituted a series of efficiencies since the Commission’s last
approved rate plan for the utility three years ago,” Madden noted. “This has
allowed the company to mitigate rising business costs and maintain lower costs
for customers.
“At the
same time, Atlanta Gas Light has brought excellence to customer service,
provided additional peaking resources for colder weather and added more than
$108 million in capital additions,” Madden added.
“The
recommendations adopted by the Commission would penalize a growing company for
efficiencies and benefits to customers from recent acquisitions by AGL Resources
that have brought new jobs to Georgia,” Madden said. “It also ignores the fact
that there are certain costs over which AGL has little control. To assume that
costs such as employee health care and other expenses will not go up is
unrealistic,” he said. “Such reductions would force substantial budget
reductions and would not be in the public interest.”
About
AGL Resources
AGL
Resources (NYSE: ATG), an Atlanta-based energy services holding company, serves
2.3 million customers in six states through its utility subsidiaries - Atlanta
Gas Light, Elizabethtown Gas in New Jersey, Virginia Natural Gas, Florida City
Gas, Chattanooga Gas, and Elkton Gas in Maryland. A Fortune 1000 company that
ranks number 46 in the Fortune gas and electric utilities sector, AGL Resources
reported 2004 revenue of $1.8 billion and net income of $153 million. The
company also owns Houston-based Sequent Energy Management, an asset manager
serving natural gas wholesale customers throughout the East and Midwest.
As a 70 percent owner in the SouthStar partnership, AGL Resources markets
natural gas to consumers in Georgia under the Georgia Natural Gas brand.
AGL Networks, the company's telecommunications subsidiary, owns and operates
fiber optic networks in Atlanta and Phoenix. The company also owns and
operates Jefferson Island Storage & Hub, a high-deliverability natural gas
storage facility near the Henry Hub in Louisiana. For more information,
visit www.aglresources.com.
Forward-Looking
Statements
Certain
expectations and projections regarding our future performance referenced in this
press release are forward-looking statements. Officers may also make verbal
statements to analysts, investors, regulators, the media and others that are
forward-looking. Forward-looking statements involve matters that are not
historical facts, such as projections of our financial performance, management’s
goals and strategies for our business and assumptions regarding the foregoing.
Because these statements involve anticipated events or conditions,
forward-looking statements often include words such as “anticipate,” “assume,”
“believe,” “can,” “could,” “estimate,” “expect,” “forecast,” “indicate,”
“intend,” “may,” “plan,” “predict,” “project,” “future,” “seek,” “should,”
“target,” “will,” “would,” or similar expressions. Do not unduly rely on
forward-looking statements. They represent our expectations about the future and
are not guarantees. Our expectations are based on currently available
competitive, financial and economic data along with our operating plans. While
we believe that our expectations are reasonable in view of the currently
available information, our expectations are subject to future events, risks and
uncertainties, and there are several factors - many beyond our control - that
could cause results to differ significantly from our expectations. In addition
to the important factors described in this press release and in our filings with
the Securities and Exchange Commission, which we incorporate by reference in
this press release, the following are among the important factors that could
cause our business, results of operations or financial condition in the future
to differ significantly from those expressed in the forward-looking statements:
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changes
in industrial, commercial and residential growth in AGL Resources’ service
territories; |
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changes
in price, supply and demand for natural gas and related
products; |
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impact
of changes in state and federal legislation and regulation, including
orders of various state public service commissions and of the Federal
Energy Regulatory Commission on the gas and electric industries and on AGL
Resources; |
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actions
taken by government agencies, including decisions on base rate increase
requests by state regulators; |
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the
ultimate impact of the Sarbanes-Oxley Act of 2002 and any future changes
in accounting regulations or practices in general with respect to public
companies, the energy industry or AGL Resources' operations
specifically; |
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the
enactment of new accounting standards, or interpretations of existing
accounting standards, by the Financial Accounting Standards Board or the
Securities and Exchange Commission, or SEC, that could impact the way AGL
Resources records revenues, assets and liabilities, which in turn could
adversely affect reported results of operations; |
· |
the
enactment of new auditing standards, or interpretations of existing
auditing standards, by the Public Company Accounting Oversight Board which
could adversely affect AGL Resources' ability to comply with the
requirements of Section 404 of the Sarbanes-Oxley Act of
2002; |
· |
effects
and uncertainties of deregulation and competition, particularly in markets
where prices and providers historically have been regulated, and unknown
issues following deregulation such as the stability of the Georgia retail
gas market, including risks related to energy marketing and risk
management; |
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concentration
of credit risk in marketers that are certificated by the Georgia Public
Service Commission to sell retail natural gas in Georgia, as well as
concentration of credit risk in customers of our wholesale services
segment; |
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utility
and energy industry consolidation; |
· |
performance
of equity and bond markets and the impact on pension and post-retirement
funding costs; |
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impact
of acquisitions and divestitures, including: |
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the
risk that the businesses of NUI Corporation and/or Pivotal Jefferson
Island Storage & Hub, LLC will not be integrated successfully with AGL
Resources or that such integrations may be more difficult, time-consuming
or costly than expected; |
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material
deficiencies in NUI's internal controls that AGL Resources must address
and resolve; |
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revenues
following the acquisitions may be lower than
expected; |
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expected
revenue synergies and cost savings from these two acquisitions may not be
fully realized or realized within the expected time
frame; |
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direct
or indirect effects on AGL Resources' business, financial condition or
liquidity resulting from a change in our credit ratings or the credit
ratings of our counterparties or competitors; |
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interest
rate fluctuations, financial market conditions and general economic
conditions; |
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uncertainties
about environmental issues and the related impact of such
issues; |
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impacts
of changes in weather upon the temperature-sensitive portions of the
business; |
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impact
of ongoing investigations and litigation; |
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impact
of changes in prices on the margins achievable in the unregulated retail
gas marketing business; |
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increases
in competition in the markets served by AGL
Resources; |
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the
availability and price of insurance; |
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the
general effects of deregulation of the energy markets, including industry
restructuring and unbundling of services; |
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the
ability to attract and retain key executives and
employees; |
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fluctuations
in energy commodity prices; |
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acts
of war or terrorism; |
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AGL
Resources’ ability to control operating expenses and to achieve
efficiencies in its existing and acquired
operations; |
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AGL
Resources’ ability to continue to modernize its current and acquired
distribution infrastructures as scheduled and budgeted;
and |
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other
risks described in AGL Resources' documents on file with the
SEC. |
There
also may be other factors that could cause results to differ significantly from
our expectations. Forward-looking statements are only as of the date they are
made, and we do not undertake any obligation to update these statements to
reflect subsequent changes.
Supplemental
Information
Company
management evaluates segment financial performance based on earnings before
interest and taxes (EBIT), which includes the effects of corporate expense
allocations. EBIT is a non-GAAP (accounting principles generally accepted in the
United States of America) financial measure. Items that are not included in EBIT
are financing costs, including debt and interest expense, income taxes and the
cumulative effect of changes in accounting principles. The company evaluates
each of these items on a consolidated level and believes EBIT is a useful
measurement of our performance because it provides information that can be used
to evaluate the effectiveness of our businesses from an operational perspective,
exclusive of the costs to finance those activities and exclusive of income
taxes, neither of which is directly relevant to the efficiency of those
operations.
Operating
margin is a non-GAAP measure calculated as revenues minus cost of gas, excluding
operation and maintenance expense, depreciation and amortization, and taxes
other than income taxes. These items are included in the company’s calculation
of operating income. The company believes operating margin is a better indicator
than operating revenues of the contribution resulting from customer growth,
since cost of gas is generally passed directly through to customers.
EBIT and
operating margin should not be considered as alternatives to, or more meaningful
indicators of, the company’s operating performance than operating income or net
income as determined in accordance with GAAP. In addition, the company’s EBIT or
operating margin may not be comparable to similarly titled measures of another
company.
Any
required reconciliation of non-GAAP financial measures referenced in this press
release and otherwise in the earnings conference call and webcast is attached to
this press release and is available on the company’s website at www.aglresources.com under
the “investor information” section.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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AGL
RESOURCES INC. |
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(Registrant)
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Date:
April 28, 2005 |
/s/
Richard T. O’Brien |
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Executive
Vice President and Chief Financial Officer |