With the winter heating season totaling 14% warmer than normalso far, gas utilities will be hard pressed to prevent seriousearnings declines. As a result, Nicor ran out and bought a weatherinsurance policy for fiscal year 2000 that is designed to provideprotection from the financial impact of unusually warm weather.

The policy, which became effective Jan. 1, will protect thecompany’s earnings and cash flow when weather for the year is morethan 6.5% warmer than normal. Nicor Gas customers, meanwhile, wouldcontinue to benefit from the lower gas prices and reduced usagethat generally result when weather is warmer than normal.

“Record-setting warm weather negatively affected Nicor’searnings in recent years,” said Tom Fisher, Nicor CEO. “At a costof approximately 1% of annual net earnings, this weather insurancepolicy will protect the company’s earnings from the impact ofweather that is significantly warmer than normal. At the same time,it will allow Nicor to fully participate in the upside potentialassociated with colder than normal weather.”

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