Profile: AGL Resources Inc. (AGL.N)

AGL Resources Inc. (AGL Resources) is an energy services holding company whose principal business is the distribution of natural gas in six states: Florida, Georgia, Maryland, New Jersey, Tennessee and Virginia. The Company is involved in various related businesses, including retail natural gas marketing to end use customers primarily in Georgia; natural gas asset management and related logistics activities for its own utilities, as well as for non-affiliated companies; natural gas storage arbitrage and related activities, and the development and operation of high-deliverability underground natural gas storage assets. The Company also owns and operates a small telecommunications business that constructs and operates conduit and fiber infrastructure within select metropolitan areas. The Company manages its businesses through four segments: distribution operations, retail energy operations, wholesale services and energy investments, and a non-operating corporate segment.

Distribution Operations

The Company’s distribution operations include six natural gas local distribution utilities, which construct, manage and maintain intrastate natural gas pipelines and distribution facilities. These include Atlanta Gas Light in Georgia, Chattanooga Gas in Tennessee, Elizabethtown Gas in New Jersey, Elkton Gas in Maryland, Florida City Gas in Florida and Virginia Natural Gas in Virginia. Atlanta Gas Light's role includes, distributing natural gas for marketers; constructing, operating and maintaining the gas system infrastructure, including responding to customer service calls and leaks; reading meters and maintaining underlying customer premise information for marketers, and planning and contracting for capacity on interstate transportation and storage systems.

Retail Energy Operations

Retail energy operations segment consists of SouthStar, a joint venture owned 70% by its subsidiary, Georgia Natural Gas Company, and 30% by Piedmont Natural Gas (Piedmont). SouthStar markets natural gas and related services under the trade name Georgia Natural Gas to retail customers on an unregulated basis, principally in Georgia, as well as to commercial and industrial customers in Florida, Ohio, Tennessee, North Carolina, South Carolina and Alabama.

SouthStar generates operating margin primarily in three ways. The first is through the sale of natural gas to retail customers in the residential, commercial and industrial sectors, primarily in Georgia where SouthStar has a spread between wholesale and retail natural gas prices. The second way is through the collection of monthly service fees and customer late payment fees. The third way SouthStar generates margin is through its commercial operations of optimizing storage and transportation assets and managing commodity risk.

Wholesale Services

Wholesale services consists of Sequent Energy Management, L.P. (Sequent), the Company’s subsidiary involved in asset management, transportation, storage, producer and peaking services, and wholesale marketing. Sequent provides customers with natural gas from the producing regions and market hubs in United States and Canada. Sequent’s producer services business primarily focuses on aggregating natural gas supply from various small and medium-sized producers located throughout the natural gas production areas of the United States. Sequent provides producers with certain logistical and risk management services that offer them options to move their supply into the pipeline grid.

Energy Investments

Energy investments segment includes a number of businesses that are related and complementary to the Company’s primary business. These include natural gas storage business, which develops, acquires and operates high-deliverability salt-dome and storage assets in the Gulf Coast region of the United States. Jefferson Island, the Company’s wholly owned subsidiary operates a salt dome storage and hub facility in Louisiana, approximately eight miles from the Henry Hub. The storage facility is regulated by the Louisiana Department of Natural Resources (Louisiana DNR) and by the Federal Energy Regulatory Commission (FERC). Jefferson Island provides storage and hub services through its direct connection to the Henry Hub via the Sabine Pipeline and its interconnection with eight other pipelines in the area.

AGL Networks, the Company’s wholly owned subsidiary provides telecommunications conduit and dark fiber optic cable. AGL Networks leases and sells its fiber to a variety of customers in the Atlanta, Georgia and Phoenix, Arizona metropolitan areas, with a small presence in other cities in the United States. Its customers include local, regional and national telecommunications companies, Internet service providers, educational institutions and other commercial entities. AGL Networks provides underground conduit and dark fiber to its customers under leasing arrangements with terms that vary from 1 to 20 years. In addition, AGL Networks offers telecommunications construction services to customers.

Corporate

The Company’s corporate segment includes the Company’s non-operating business units, including AGL Services Company (AGSC) and AGL Capital Corporation (AGL Capital). AGL Capital provides for its ongoing financing needs through a commercial paper program, the issuance of various debt and hybrid securities, and other financing arrangements. The corporate segment also includes Pivotal Energy Development, which co-ordinates among the Company’s related operating segments, the development, construction or acquisition of assets in the southeastern, mid-Atlantic and northeastern regions.