Chattanooga Gas Company Files New Rate Plan.

Business Editors

CHATTANOOGA, Tenn.--(BUSINESS WIRE)--Jan. 27, 2004

Chattanooga Gas Company (CGC) has asked the Tennessee Regulatory Authority (TRA) to adjust its rates beginning this March to cover CGC's rising costs of providing natural gas to its customers. It has been nine years since CGC increased its rates to customers.

Once the rate change goes into effect, the typical residential customer will likely pay an additional $3.20 per month. The total rate increase requested is approximately $4.5 million. However, a reduction in gas costs of over $1 million dollars will be put into effect in the spring of 2004; this change will reduce the amounts charged for gas on customers' bills.

CGC's new proposed rate plan will provide relief to low-income elderly customers and align customer rates to more accurately reflect CGC's costs of maintaining its natural gas pipeline system. It will also enable the company to replace 100 miles of aging pipe, consistent with CGC's goal of continually modernizing the gas infrastructure that has served customers for almost a century.

"CGC has managed its operational costs very prudently," said Steve Lindsey, Vice President - Operations. "But after nine years we are forced to increase our rates by a modest amount to keep up with rising costs associated with maintaining the safety and integrity of our system."

Lindsey cited other pressures that have lead to CGC's decision to request a rate adjustment, including growing employee benefits costs and "bad debt" or uncollectible customer bills.

"The Chattanooga area's slow economic growth over the last few years has meant CGC did not enjoy the revenue growth we needed in order to stay even with increasing costs," he said. "New federal mandates on pipeline safety and operations, in addition to rising benefits costs for our employees, have left us with no choice but to request a small rate increase."

The cost increases are not related to the price of natural gas. CGC delivers natural gas to its customers at cost, without taking any mark-up on the commodity. Recognizing that the recent surges in the cost of natural gas pose a hardship for low-income, elderly customers, CGC proposed a credit of $7.50 per month for eligible customers under a new program called the "Chattanooga Assisted Rate for Energy Service (CARES)". To qualify, customers must be 65 or older and eligible for Temporary Assistance to Needy Families, Supplemental Security Income, Food Stamps or Medicaid as provided under TennCare. If CGC's CARES proposal is approved, then anyone 65 or older with an income that does not exceed 125 percent of the federal poverty income guidelines will be eligible.

CGC also asked the TRA to approve a cost tracking mechanism for additional expenditures to permit the replacement of a 100-mile segment of its over 1400-mile pipeline system. Some of the pipeline is almost 100 years old and needs to be replaced. Construction is expected to begin during 2004.

About Chattanooga Gas Company

Chattanooga Gas Company provides retail natural gas sales and transportation services to approximately 60,000 customers in Hamilton and Bradley counties in southeast Tennessee. The CGC service area includes the communities of Chattanooga, Cleveland, Red Bank, East Ridge, Lookout Mountain and Signal Mountain. The CGC natural gas pipeline system delivers approximately 20 billion cubic feet of gas per year. For more information, please see www.chattanoogagas.com.

About AGL Resources 

AGL Resources Inc. is an Atlanta-based energy services holding company, and was named 2003 Gas Company of the Year by Platts Global Energy Awards. Its utility subsidiaries - Atlanta Gas Light Company, Virginia Natural Gas and Chattanooga Gas Company - serve more than 1.8 million customers in three states. Houston-based subsidiary Sequent Energy Management provides natural gas asset management services, including the wholesale marketing and transportation of natural gas. As a member of 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. For more information, visit www.aglresources.com.