RATEPAYER ADVOCATE SEEMA M. SINGH PRAISES NUI SETTLMENT
--MOVE WILL BRING RATEPAYER BENEFITS--

Ratepayer Advocate Seema M. Singh today praised a settlement that paves the way for a new ownership group to take control of the Elizabethtown Gas Company (“ETG”), a move that will bring stability and provide benefits for New Jersey ratepayers.

The Board of Public Utilities adopted the stipulation of the settlement at a meeting today.

The new owner, AGL Resources, Inc. (“AGLR”), a Georgia corporation, is an Atlanta-based utility holding company that currently serves approximately 1.8 million utility customers in three states. AGLR will be acquiring all of the stock of ETG’s parent company, NUI Utilities, Inc. (“NUI”), for $13.70 per share.

“We are pleased to have secured substantial benefits for New Jersey ratepayers as part of this settlement,” said Ms. Singh. “This deal will allow a new ownership group to stabilize the finances and operations of Elizabethtown Gas, a utility that is an important part of our state’s economy.

“The customers of ETG should know that the new owners, AGLR, negotiated a fair settlement in good faith, and I am confident that we will have a productive relationship with them here in New Jersey,” said Ms. Singh.

ETG serves approximately 265,000 customers in parts of Union, Middlesex, Sussex, Hunterdon, Morris, Warren and Mercer counties.

Five year rate freeze

The settlement secures several key benefits for New Jersey. The foremost benefit is stabilizing the ownership and financial health of a strategic economic resource for New Jersey. Ratepayers will benefit from a five-year rate freeze, a remarkable achievement in the current economy. In addition to the five-year rate freeze, ratepayers further benefit from an earnings-sharing mechanism in years four and five, in the event that ETG’s financial performance exceeds certain benchmarks.

Accelerated payments of refund and penalty

Between 2001 and 2003, NUI's non-utility ventures suffered losses of almost $100 million, while ETG remained profitable. ETG’s financial condition weakened due to the parent company's failure to protect the operational and financial interests of the gas utility from the risks associated with non-utility ventures. This occurred despite the New Jersey utility remained financially viable and produced the lion's share of profits at NUI. This situation became the focus of an audit by the BPU, and the findings of an independent auditor were released as part of the Board’s investigation into the matter.

The focused audit of NUI came to a close pursuant to a stipulation negotiated among the Ratepayer Advocate, the BPU and the company in the spring of 2004, which was adopted by the BPU in April of this year. NUI pledged to return $28 million to ratepayers and pay a penalty of $2 million. The stipulation had spread the credits to ratepayers out in five payments, starting with $7 million in September 2004, $6 million by September 2005, followed by $5 million by September 2006, 2007 and 2008. A penalty payment of $400,000 annually will be paid five successive Septembers starting in 2004 and are not paid for in any way by the customers of ETG. Unpaid balances of both the refund and the penalty were to accrue interest at 7.95 percent, the overall rate of return of the Company.

As part of the merger agreement, AGLR will now pay the outstanding balances of both the refund and the penalty within 60 days of the close of the transaction. Ratepayers still will not fund any portion of the refund or penalty payments.

The amount of each customer's credit will vary being dependent on their actual gas usage. Based on the $7 million of refund credits already distributed by ETG, the average residential customer can expect a refund of about $75 which will show as a credit on his or her gas bill.

Enhanced severance package

The Ratepayer Advocate negotiated an additional $9 million in severance payments to employees of ETG who are let go (other than for cause) during the 18 months following the close of the transaction. The enhanced severance payments will be made to both union and non-bargaining unit employees, but not to certain highly-compensated employees. The details of the severance payments are still to be determined, but will incorporate a sliding scale based on years of service and age. The severance plan, and the handling of payments, will be reported on a regular basis to the Ratepayer Advocate and the BPU. AGLR will also provide outplacement services and counseling to all severed employees, including workshops on resume-writing, interviewing, skill assessment, office space, as well as financial planning.

Service Quality and Reliability standards

The Ratepayer Advocate secured the agreement of the Company to maintain or improve all service quality and reliability standards. The Ratepayer Advocate and BPU staff will meet regularly with the Company to identify the service standards to be measured, establish benchmarks for reporting, and establish appropriate service quality and reliability levels. The Company will also file quarterly reports on customer complaints with the Ratepayer Advocate and the BPU, perform annual customer satisfaction surveys and report those results as well. The Company will also maintain its current locations for walk-in customer assistance.

Increased asset management payments

Ratepayers will also benefit from a restructured asset management arrangement that will deliver at least $4 million a year for three years (2005-2008) to the benefit of ETG’s customers from AGLR’s wholly owned subsidiary, Sequent Energy Management, L.P. Asset management refers to the utilization of utility infrastructure, such as natural gas pipeline capacity, storage, and long-term contracts, that is not part of the regulated utility’s rate base, for economic benefit.

New Jersey representation
As part of the settlement, at the Ratepayer Advocate’s urging, AGLR agreed to form a Board of Directors-level committee, or modify a current such committee, to ensure and certify that the Company’s corporate governance has had no adverse impact on ETG’s operations. Based on the negotiations, the Ratepayer Advocate expects that a New Jersey representative will be added to the AGLR Board of Directors as well.

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The Division of the Ratepayer Advocate is an independent state agency that represents the interests of utility consumers and serves as an active participant in every case where New Jersey utilities seek changes in their rates or services. The Ratepayer Advocate also gives consumers a voice in setting long-range energy, water, and telecommunications policy that will affect the delivery of utility services well into the future.

Additional information on this and other matters can be found at the Division of Ratepayer Advocate’s website at http://www.rpa.state.nj.us

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