NGI The Weekly Gas Market Report / NGI All News Access

AGL CEO Takes Blame for Billing Fiasco, Warns of Exiting Sonat

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 shareholders.

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 future.

"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 terms."

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.

John Norris

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus