Cascade Natural Gas Corporation Announces Earnings Guidance.

Business Editors

SEATTLE--(BUSINESS WIRE)--June 20, 2002

Cascade Natural Gas Corporation (NYSE:CGC) announces earnings guidance. For the fiscal year third quarter ending June 30, 2002, a loss of $0.16 to $0.18 per share is expected. Full fiscal year earnings are expected to be between $1.02 and $1.08 per share.

Demand for gas-fired electric generation, already weak during the first two quarters of the fiscal year, has been almost nonexistent in the third quarter to date. Mild weather in western states, especially cool weather in the populous California markets, has depressed demand for electricity. At the same time, strong spring snowmelt in western mountains has created a glut of hydropower, depressing wholesale electric prices and displacing power from the Company's electric generation customers. The shift in electric market conditions is expected to have a negative impact on Cascade's per share earnings, compared to the Company's expectations in April. The negative impact of electric generation on the third quarter could be $0.07 to $0.09. If the current activity level for generating customers continues to prevail for the remainder of the fiscal year, the negative effect on full-year earnings could be as much as $0.22 per share. It is possible that electric markets will improve after the end of the spring snowmelt. If gas consumption by the generators during the fourth quarter is comparable to the lowest level experienced for the same period in the past five years, the negative effect on full-year earnings would be reduced from $0.22 to about $0.16.

Also, based on management's analysis of the latest information, the Company is recording a non-cash charge to earnings in the amount of $2.8 million with respect to a claim by Enron Canada Corp. Last winter, the Company terminated a contract to purchase gas from Enron Canada due to concerns about that company's ability to fulfill its obligation to deliver. Enron Canada claims termination payments of $3.7 million are due. Management believes the termination was fully justified and intends to contest any payment. However, the circumstances surrounding the termination are complex, and the ultimate result is uncertain. This charge will reduce fiscal third quarter and full year earnings by $0.16 per share.

Cascade Natural Gas Corporation is a local distribution company providing natural gas service to over 200,000 customers in the states of Washington and Oregon.

Statements contained in this report that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual future results to differ materially. Such risks and uncertainties with respect to the Company include, among others, its ability to successfully implement internal performance goals, competition from alternative forms of energy, consolidation in the energy industry, the failure or inability of key natural gas suppliers to honor their commitments, the capital-intensive nature of the Company's business, regulatory issues, including the need for adequate and timely rate relief to recover increased capital and operating costs resulting from customer growth and to sustain dividend levels, the weather, increasing competition brought on by deregulation initiatives at the federal and state regulatory levels, the potential loss of large volume industrial customers due to "bypass" or the shift by such customers to special competitive contracts at lower per unit margins, exposure to environmental cleanup requirements, and economic conditions, particularly in the Company's service area.