november 2003 investor meetings new york, ny. 1 investors conference november 2003 investor meetings...
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November 2003Investor Meetings
New York, NY
November 2003Investor Meetings
New York, NY
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Investors ConferenceInvestors ConferenceNovember 2003 Investor MeetingsNovember 2003 Investor Meetings
Cautionary Statement Regarding Forward-Looking Statements
This presentation contains forward-looking statements. AGL Resources wishes to caution readers that the assumptions, which form the basis for the forward-looking statements, include many factors that are beyond AGL Resources’ ability to control or estimate precisely. Those factors include, but are not limited to, the following: changes in industrial, commercial, and residential growth in the service territories of AGL Resources Inc. and its subsidiaries; changes in price and demand for natural gas and related products; impact of changes in state and federal legislation and regulation, including various state public service commissions and the Federal Energy Regulatory Commission orders, on the gas and electric industries and on AGL Resources, including the impact of Atlanta Gas Light Company's performance based rate plan; effects and uncertainties of deregulation and competition, particularly in markets where prices and providers historically have been regulated, unknown risks related to nonregulated businesses, and unknown issues such as the stability of certificated marketers; impact of Georgia’s Natural Gas Consumers' Relief Act of 2002; concentration of credit risk in certificated marketers and wholesale services’ counterparties; excess network capacity and demand/growth for dark fiber in metro network areas of AGL Networks’ customers; AGL Networks’ introduction and market acceptance of new technologies and products, as well as the adoption of new networking standards; ability of AGL Networks to produce sufficient capital to fund its business; ability to negotiate new contracts with telecommunications providers for the provision of AGL Networks’ dark-fiber services; industry consolidation; performance of equity and bond markets and the impact on pension fund costs; impact of acquisitions and divestitures; changes in accounting policies and practices issued periodically by accounting standard-setting bodies; direct or indirect effects on AGL Resources’ business, financial condition or liquidity resulting from a change in the company’s credit ratings or the credit ratings of its competitors or counterparties; interest rate fluctuations, financial market conditions, and general economic conditions; uncertainties about environmental issues and the related impact of such issues; impact of changes in weather upon the temperature-sensitive portions of the business; and other risks described in our documents on file with the Securities and Exchange Commission.
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The ATG Value Proposition
Annual Total Return
8-10+%
Annual Total Return
8-10+%
Organic Development/Acquisition 2-3%
Organic Development/Acquisition 2-3%Base Business Growth
2-3%
Dividend Yield4-5%
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2003 Goals
Strengthen the company financially
Grow around existing assets
Execute flawlessly in every business segment
Demonstrate a compelling proposition for all our stakeholders
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2003 ScorecardFinancial Strength$137 million equity offering
$225 million debt offering
Improved cash generation
Increased dividend 4%
Interest rate swaps
Ratings affirmed and one upgrade
Asset DevelopmentDisplacing pipelines as an
opportunity
Formalized project development efforts (Pivotal)
Macon peaking pipeline
VNG propane pipeline and expansion
Flawless ExecutionAchieved strong YTD earnings
results
Received favorable regulatory decisions related to asset management
Increased ownership of SouthStar
Refocused dark-fiber business
Compelling PropositionZenith of regulatory and
governmental relations
Community giving
Increased institutional owner base
Record share price
Employee satisfaction
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Investors ConferenceInvestors ConferenceNovember 2003 Investor MeetingsNovember 2003 Investor Meetings
High-Quality, Predictable Utility Operations With Regulatory Stability
Service Areas
ChattanoogaChattanooga
AtlantaAtlanta
NorfolkNorfolk
• Performance-based ratemaking (PBR)• Maintains straight-fixed variable rates (SFV)• Regulatory certainty through 2005• Authorized return levels very favorable
• Weather normalization (2-year program)• Price stability for customers• Favorable regulatory climate
Georgia – 1.6 million customers
Virginia – 250,000 customers
Tennessee – 60,000 customers
• WNA adjustment offsets weather impact • Level revenue stream throughout year
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Per
cen
t o
f R
etu
rn
16%
14%
12%
10%
8%
6%
4%AGLC CGC VNG
Authorized (1) Actual Authorized Actual Authorized Actual (2)
(1) The authorized ROE is 11.00%. The top of the earnings band is 12.00%. The company also can include 1/2 of VNG synergies in calculating the return prior to sharing – bringing authorized ROE to approximately 12.6%..
(2) Based on actual weather.
AGL Resources Utility OperationsReturn on Equity 12 Months Ended June 30, 2003
12.00
11.00 11.0610.90
10.96
9.51 10.75
Regulatory Compact Provides Proper Incentives
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Unique Features to Note
ATLANTA GAS LIGHT COMPANYEnvironmental Recovery Cost Rider
$37
$16
$4$2
$0 $0 $1
$22
$38$40
$23$23
$22 $22$22$24$23
$17
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
2002 2003 2004 2005 2006 2007 2008 2009 2010
in M
illio
ns
Net Expenditures Revenues and Third Party Recoveries
• Environmental recovery rider turns cash-flow positive in 2005Environmental recovery rider turns cash-flow positive in 2005
• Pipeline replacement program provides return on, and of, capitalPipeline replacement program provides return on, and of, capital
• Environmental recovery rider turns cash-flow positive in 2005Environmental recovery rider turns cash-flow positive in 2005
• Pipeline replacement program provides return on, and of, capitalPipeline replacement program provides return on, and of, capital
ATLANTA GAS LIGHT COMPANY
$43
$49 $50$48 $50
$94$91
$95$92 $92
$2 $4
$13
$21
$28
$39
$51
$62
$73
$20
$6
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
in M
illi
ons
Total Capital Cash RecoveryNotes: Data based on collection year.
*Investment of $480 million to be recovered through base rates at end of program
Pipeline Replacement Program Rider
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Henry Hub
TX
GA
IL
LA
MD
TN
VA
HoustonHouston
Company Owned
LNG Plants
Propane Storage
Other
LNG Terminals
Accessible Storage
AtlantaAtlanta
Three business lines: producer services; transportation asset management; storage arbitrage
Asset management sharing arrangements approved in all states
Emerging commerce in peaking services and other origination business
ChattanoogaChattanooga
NorfolkNorfolk
Elba Island
Cove Point
HenryHenryHubHub
Sequent Provides Incremental ValueFrom Existing Asset Base
Lake Charles
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GNG 38.1%
Mktr C14.9%
Others 8.5%
Mktr A 24.0%
Mktr B 14.5%
SouthStar’s Net Income
CY 2002 $41 millionCY 2001 $17 million
SouthStar’s Net Income
CY 2002 $41 millionCY 2001 $17 million
SouthStar Is Now A Stable, Annuity-Quality Business
ATG owns 70% but earnings distributed disproportionately
38% market share Stable, maturing business 60% of earnings from fixed
charges Focus on maintaining market
share; improving customer service; and continuing to implement rigorous controls around credit quality
Project DevelopmentActivities
Project DevelopmentActivities
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Pivotal Energy Development
Support goal to grow around existing assets
Develop or acquire projects that supplement current assets to:
– Reduce the cost of service to ratepayers
– Create multi-level return opportunities
Value through synergies between existing assets and new projects
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Declining Regional Load Factor
Southeast Pipeline Capacity Utilization
-
5,000
10,000
15,000
20,000
25,000
1990 2000
Capacity (MMcfd)
Average Throughput(MMcfd)
74% Load Factor
65% Load Factor
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Declining Load Factor in Georgia
AGLC Load Factor
16.6%
16.3%
15.9%
15.6%
15.3%
14.6%
14.8%
15.0%
15.2%
15.4%
15.6%
15.8%
16.0%
16.2%
16.4%
16.6%
16.8%
2000 2001 2002 2003 2004
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MACONLNG
ATLANTA HUBATLANTA HUBELBA ISLAND
LNG IMPORT TERMINAL
VNG PROPANE PEAKING
SALT DOMESTORAGE
EAST TENNESSEEINTERCONNECT
JOINT USE
PIPELINE
APPALACHIANPRODUCTION
OPPORTUNITY VIRGINIA HUBVIRGINIA HUB
Regional Opportunities
DIRECT TO ATLANTA PIPELINEDIRECT TO ATLANTA PIPELINE
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Investors ConferenceInvestors ConferenceNovember 2003 Investor MeetingsNovember 2003 Investor Meetings
Near-Term Development Plans
Macon Peaking Pipeline
– Peaking needs continue to grow in Atlanta despite declining load factor
– Currently LNG facility is limited to 50% capability by constrained take-away capacity
VNG Propane-Air Facility Expansion
– Additional peaking capacity needed at VNG
– Modest propane injection has been used to manage peak needs
– Improves duration and reliability of propane injection peaking
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Investors ConferenceInvestors ConferenceNovember 2003 Investor MeetingsNovember 2003 Investor Meetings
Lake CharlesLake Charles
Elba IslandElba Island
Cove PointCove Point
EverettEverett
Storage with liquefaction (57)
Storage without liquefaction (39)
Source: EIA, Office of Oil and Gas, September 2002
U.S. Liquefied Natural Gas Facilities
AGL Resources LNG Facilities Capacity
Location Storage
(bcf) Liquefaction
(Mcfd) Vaporization
(Mcfd) 1 Riverdale 2.5 10,000 400,000 2 Cherokee 2.0 10,000 400,000 3 Macon* 1.5 10,000 150,000 4 Chattanooga 1.2 8,000 90,000 Propane Air-VNG (North) 0.2 14,400 Propane Air – VNG (South) 0.2 28,800 Propane Air – Valdosta 0.07 3,600 *Pipeline system currently can only accommodate a delivery of 70,000 Mcf/day.
4
3
2
1
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Investors ConferenceInvestors ConferenceNovember 2003 Investor MeetingsNovember 2003 Investor Meetings
What Makes ATG Different?
Location … Location … Location
Management is all over the details
Always searching for opportunities to create value
No surprises
Only promise what we know we can deliver
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We Keep Our Promises
$1.33$1.36
$1.51 $1.54
$1.75
$1.84$1.94
$1.91-$1.96
$1.20
$1.40
$1.60
$1.80
$2.00
2000 2001 2002 2003E
CY EPS
Consensus Estimate Actual
2000 – 2002 CAGR = 16%
Revised guidance upward following 3Q earnings
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Investors ConferenceInvestors ConferenceNovember 2003 Investor MeetingsNovember 2003 Investor Meetings
Upcoming Events
ATG Analyst/Investor Conference – November 17-19 in Savannah, Georgia
4th Quarter/Year-End 2003 Earnings Released – January 29, 2004
Contact:
Steve CaveDirector, Investor Relations(404) 584-3801E-mail: [email protected]