AGL Resources Inc. said it expects operating earnings for itsfourth quarter of fiscal 1999 to be lower than analysts’ estimates,although the company expects a modest profit from operations forthe quarter. Current estimates have the company earning $0.17/shareduring the quarter ending Sept. 30 compared to $0.12/share lastquarter.
AGL cited the continued accelerated pace of customer migrationto gas marketers for gas sales service as the main cause for thelower fourth quarter operating earnings. The customer migration wasexpected to take up to two years but in fact was completed in lessthan 12 months.
The unexpected, accelerated pace has created a disparity betweenthe rate at which the utility has been able to eliminate costs andthe rate at which it needs to eliminate costs to offset revenuethat was lost as customers migrated to marketers. The regulatoryframework governing the transition to competition assumes thatAtlanta Gas Light Co.’s costs associated with providing customerservice decrease each time a customer switches to a marketer andthat those costs are eliminated at the time the switch is made.Based on those assumptions, each time a customer migrated to amarketer the regulatory framework reduced the amount of revenueAtlanta Gas Light was entitled to collect. The utility, however,has not been able to immediately eliminate a significant portion ofthe costs associated with customer service and, in fact, customerdemand for certain services from the utility increased rather thandecreased during the transition period, the company said.
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