Transcript every day - AGL Resources

SouthStar Energy Services
Andrew W. Evans
Vice President-Finance and Treasurer
How Did We Get Here?
REGULATORY TIMELINE
The Natural Gas Consumer's Relief Act
(HB 1568) becomes effective
Infinite Energy becomes Provider of
Last Resort (POLR)
GPSC votes to allow no natural gas
service disconnections until April 1,
2001 / Moratorium
Natural Gas Competition and
Deregulation is Effective
Southern Company Gas becomes
certificated gas marketer
Random Assignment occurs; AGLC
exits the merchant function
GPSC finalizes relief package
for low -income seniors
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Nov-03
Sep-03
Jul-03
May-03
Mar-03
Jan-03
Nov-02
Sep-02
Jul-02
May-02
Mar-02
Jan-02
Nov-01
Sep-01
Jul-01
May-01
Mar-01
Jan-01
Nov-00
Sep-00
Jul-00
May-00
Mar-00
Jan-00
Nov-99
Sep-99
Jul-99
May-99
Mar-99
Jan-99
Nov-98
Sep-98
Jul-98
May-98
Mar-98
Jan-98
Nov-97
Sep-97
Jul-97
May-97
SCANA Energy chosen to become
Regulated Provider
What A Difference A Year Makes
• Increased ownership to 70% (Dynegy buyout)
• Improved credit quality of customer base
• Stabilized market share
• Continue customer service and credit quality improvements
• Progress toward resolution of disproportionate sharing issue
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SouthStar Has Become A Solid
Annuity-Quality Earnings Contributor
SouthStar EBT*
$60.0
$45-55
$55.0
$41.5
$50.0
In millions
$45.0
$40.0
$35.0
$30.0
$25.0
$16.8
$20.0
$15.0
$10.0
2001A
2002A
*Denotes earnings for 100% of the partnership.
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2003F
Largest Retail Marketer in Georgia
Mktr C
13%
Mktr B
14%
Others
9%
GNG 37%
(538,000
customers)
Mktr A
27%
• SouthStar markets natural gas in Georgia under the
trade name Georgia Natural Gas (GNG)
• SouthStar consistently has 10% lead over secondlargest marketer
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(Market Share %)
Stabilized Market Share
50
45
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SouthStar’s market share is fairly
constant at around 37%
40
35
30
6
Retail Pricing in Georgia
$/therm
GNG Historical Price vs. Georgia Marketer Average
1.100
1.000
0.900
0.800
0.700
0.600
Avg. Retail Price
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GNG Price
O
ct
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3
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0.500
An Average Customer Bill in Georgia
November 2003 Marketer Pricing*
$100
$90
$80
$70
$60
$50
$40
$30
$20
$10
$0
ACN Energy
Infinite
Energy
Energy
America
Southern
Co. Gas
Shell Energy
*Total Monthly Bill for Typical Customer.
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Scana
Energy
GasKey
Georgia Walton EMC Cow etaNatural Gas
Fayette EMC
Significantly Reduced Bad Debt
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Ju
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Bad Debt as % of Revenue
M
Ja
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%
25
24
23
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
Focus on Aggressive
Collections and Credit Scoring
$ millions
Historical Monthly Accounts Receivable
$70
$60
$50
$40
$30
$20
$10
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-0
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p03
$0
31-60 Days
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61-90 Days
10
91+ Days
Majority of Margin Now Results
From Fixed Charges
Firm Gross Margin (2001-2003)
Fixed
80.0
Variable
70.0
60.0
50.0
(%)
40.0
30.0
20.0
10.0
0.0
2001
2002
2003E
[1] Fixed Gross Margin is composed of Commercial Interstate Transportation, Customer Service Charges, Service
Connection Charges and Late Fees.
[2] Variable Gross Margin is composed of Commodity Margin (net of hedging and Fixed Interstate costs) and Early
Termination Charges.
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Recent Marketing Activities
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What To Expect in 2004
• Resolve disproportionate sharing issue
• Drive lower cost structure and effective hedging programs
• Increase share of high-value customers
– Higher usage
– Higher load factor
– Higher credit quality
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