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Washington Gas Delays LNG Storage Plans

Long-standing plans to site a $159 million liquefied natural gas (LNG) storage plant to help meet gas peak loads have hit another bump, driving back the projected start date for the Washington Gas Light Co. distribution utility's proposed facility to the winter of 2013-14, said incoming CEO Terry McCallister.

He spoke during Washington Gas Light parent company WGL Holdings Inc.'s third quarter earnings conference call last Thursday. When announced three years ago, the LNG storage project in Maryland was slated for operation in 2008.

WGL reported improved earnings overall for the quarter and the first nine months of its 2009 fiscal year, which ends Sept. 30. For the quarter it had profits of $1.8 million, or 4 cents/share, compared with a net loss of $492,000, or a negative 1 cent/share, for the same period in the last fiscal year. The regulated utility operations, however, reported another loss, albeit smaller, quarter-over-quarter ($2.4 million loss, or negative 5 cents/share, this quarter, compared to a loss of $8.1 million, or a negative 16 cents/share, for the same period in fiscal 2008).

The nonutility retail energy marketing and design-build energy systems business both were profitable in the past quarter. Typically, the WGL utility results vary widely on a seasonal basis.

As part of what McCallister called the advancement of the company's strategic focus, Washington Gas proposed to build the LNG peaking plant in Chillum, MD, to better handle customer growth and maintain pressure requirements for the utility distribution system serving the greater Washington, DC, metropolitan area. The latest targets, pushed back from original plans, called for the plant to be operable by the winter of 2012-2013.

But McCallister said the "length of time required to resolve regulatory and court challenges has delayed the initial construction phase of the project," pushing back the in-service date to 2013-2014.

As a result the combination utility will now extend the use of "short-term capacity resources" currently in place.

"It remains the least costly alternative for natural gas supplies to serve customers during peak winter demand periods," McCallister said. "We have repeatedly explained that the next reasonable alternative to our proposed LNG facility involves extensive pipeline construction and interstate supply and capacity commitments that far exceed the cost to customers from our recommended approach."

McCallister will replace the retiring James DeGraffenreidt as CEO on Oct.

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