1. Innovative Methods to Extend Service to New Natural Gas Customers NASUCA 2015 – Philadelphia, PA David C. Weaver Vice President, Regulatory Affairs

2. Energy America’s Natural Gas Utilities Deliver

3. AGL Resources

4. Innovative methods to extend natural gas service Why is this topic important? Sound state policy to extend service to underserved and unserved regions Natural gas supply is abundant Long term prices are low and stable Customer Choice drives the decision to convert to natural gas –Lower cost: Heating oil and propane conversions –Environmentally beneficial Direct use of gas more efficient than electricity generated from natural gas

5. Innovative methods to extend natural gas service Where are the customers? Customers seeking conversion from propane or heating oil New growth corridors Long line main extensions to developing areas Near main extensions Former natural gas customers Customers in the “donut hole” Located just beyond normal line extension distance

6. Innovative methods to extend natural gas service Public Policy topics Business case for adding customers Every business wants to growth – utilities are no different Customer growth allows inflationary/people costs to be addressed without more frequent rate cases Each utility has a traditional line extension formula to meet new customer demand CIAC is not simply an economic decision, it’s a cash availability issue

7. Examples of Recent Initiatives

8. Innovative methods to extend natural gas service Florida Area Expansion Program (AEP) New Customers served from main extension ratably pay CIAC over 10 years Company can reset lower rates every 3 years to reflect customer growth Surcharged tied to the premise during 10 year payback period

9. Innovative methods to extend natural gas service Georgia Universal Service Fund (1997) Funded by Asset Management proceeds and interruptible revenues STRIDE Integrated Customer Growth Program (i-CGP)(2010) Strategic Growth Corridors Supplemental Line Extension Funded thru pre-approved surcharge on all firm customers

10. Innovative methods to extend natural gas service Mississippi Two state LDC’s have deployed supplemental growth riders to extend mains for industrial projects Investments capped at $5mm/year above normal run rate capital deployment. Utility earns additional 3% above authorized ROE Customers repay investment via rider over 10 years that is trued up and reallocated each year

11. Innovative methods to extend natural gas service Pennsylvania Leatherstocking Gas Regional community build-out fee capped @$3/Mcf for 10 years as a means to get shale gas to more cities. UGI “GET Gas” program $15 mm/year to install mains and services to extend service to unserved regions Surcharge over 10 year payback period Columbia Gas, Peoples Gas, and Equitable Programs add between $35 and $100 month to customer bills to finance CIAC

12. Innovative methods to extend natural gas service Connecticut Three LDCs have plan to connect 280,0oo customers over 10 years Rates calculated over a 25 year payback Near mains: 10% rate premium Remote locations: 30% rate premium For regional extension, 60% of prospective customers must commit upfront Rate cap at 5% annual increase, or 15% increase over 10 year program

13. Kyle Rogers Vice President, State Affairs American Gas Association 202) 744-5371 krogers@aga.org David C. Weaver Vice President, Regulatory Affairs AGL Resources (404) 584-3173 dweaver@aglresources.com Thank you!

14. Follow up questions: Kyle RogersDavid C. Weaver State AffairsVP, Reg Affairs American Gas AssociationAGL Resources (202) 744-5371(404) 584-3173 krogers@aga.orgkrogers@aga.org dweaver@aglresources.comdweaver@aglresources.com