Fitch: No Change to Atlanta Gas Light Ratings After Rate Case Settlement

Business Wire, June 15, 2005

NEW YORK -- Fitch Ratings anticipates no change to the outstanding credit ratings of Atlanta Gas Light Co. (AGLC) and its parent company AGL Resources, Inc. (AGLR) following resolution of AGLC's 2004-2005 rate case with the Georgia Public Service Commission (GPSC). Fitch currently rates AGLC's outstanding $208 million medium term notes 'A' and AGLR's outstanding $975 million senior notes (issued by AGL Capital Corp.) 'A-' and $225 million trust-preferred securities (issued by AGL Capital Trust) 'BBB '. The Rating Outlook for both AGLR and AGLC remains Stable.

On June 10, 2005, AGLC announced that it had reached a settlement agreement with the GPSC concerning a general rate case originally filed by AGLC in October 2004. The settlement vacates any earlier order issued by the GPSC on April 29, 2005. Key provisions of the revised rate structure include: a five-year rate freeze on customer base rates; the recognition of reduced revenues totaling $25 million over the next five years; and an authorized return on equity of 10.9%. In addition, AGLC received authorization to continue recovering capital costs related to its ongoing pipeline replacement program (PRP) through December 2013. Fitch notes that the settlement agreement results in the discontinuation of AGLC's performance-based rate design, which in the past had enabled the company to share productivity/efficiency gains above its authorized ROE band with customers.

Fitch understands that the settlement agreement will reduce consolidated AGLR operating income by $10.5 million on an annualized basis. This reduction will be offset on a cash basis over the next five years by lower PRP capital expenditures of approximately $40 million annually. Although key credit ratios could experience some modest erosion, projected levels remain within parameters for AGLR's current rating category. Specifically, based on the projected financial impact of the rate settlement disclosed by AGLR, Fitch anticipates that cash flow coverage of interest will continue to exceed 4.0 times (x) with debt leverage, as measured by total adjusted debt to EBITDA remaining below 3.5x. Furthermore, the terms of the settlement include a five-year moratorium on future rate filings by either AGLC or the GPSC thus resulting in near-term regulatory certainty.

Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies, and relevant policies and procedures are also available from this site, at all times. This document will remain on the public site for seven days.