AGL CEO Takes Blame for Billing Fiasco, Warns of Exiting Sonat
Walter Higgins, CEO of AGL Resources Inc., stood and faced the
music recently at the annual shareholders meeting in Atlanta as
stock owners voiced their opinions concerning AGL Resources'
subsidiary Atlanta Gas Light's (AGL) over-billing controversy. The
company's earnings did nothing to ease shareholders' pain. AGL
Resources' revenues for this quarter were down $75.2 million from
1997 to $323.9 million. Operating margins fell from $145.1 million
in the year-ago quarter to $136.9 million for the quarter ended
Dec. 31. Weather and poor results stemming from the company's
partnership with Sonat caused the poor performance.
The Georgia Public Service Commission and AGL settled the
over-billing issue earlier this month, with AGL agreeing to alter
its billing methods and refund $14.5 million to customers. The
incident enraged many people, including one shareholder who
demanded Higgins' resignation.
"It happened on my watch, and it is an intolerable mistake.
There's no sidestepping that," Higgins said in an apology to the
Many at the meeting demonstrated loyalty to the CEO. "This won't
be the last hiccup," said Raymond Riddle, an AGL Resources board
member. "He's plowing new ground."
Higgins said his future is tied to the company's board of
directors. They could "fire me or take it out of my pay."
His salary is tied heavily to the company's performance, so it
might be cut anyway. AGL Resources said its consolidated net income
was $15.9 million, down $9.8 million from the same period of 1997.
The company said the primary factor was a loss incurred from a
joint gas marketing venture with Sonat Inc., which drained $4.1
million. For the same quarter in 1997, the venture netted $2.1
million in earnings. Higgins hinted changes could occur in the near
"We're very disappointed with the results of the natural gas
marketing venture with Sonat," Higgins said. "We are evaluating
whether to continue our investment in the [Sonat venture]. Our
[agreement] provides an option to exit the business on favorable
AGL Resources is a 35% partner in the joint venture. The company
is not disclosing how much it has invested in the partnership. It
did say it has the option, through 2000, to sell its interests in
the venture to Sonat for a "fair market price" or a predetermined
fixed price. AGL Resources said if this option is exercised, it
would not incur a loss on its original investment.
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