Washington, DC-based WGL Holdings, Inc. said last week that its Washington Gas Light Co. subsidiary has received a payment of $14.8 million from a weather insurance policy purchased to reduce the impact of warm weather on financial results. The utility, which serves more than 930,000 customers throughout Washington, DC, said it generates the majority of its revenues and profits from the delivery of gas during the winter heating season and is the beneficiary under the policy.

The occasion marks the first time Washington Gas has ever received a payment under the policy. “The policy is working the way we intended by reducing shareholders’ exposure to lost earnings from warmer than normal winter weather,” said James H. DeGraffenreidt, Jr., CEO. “The payment helped cushion the impact from one of the warmest winters in our company’s history.”

The company explained that weather during fiscal year 2002 was 13% warmer than normal. During fiscal year 2002, the insurance benefit helped offset about 30% of the estimated financial impact of the past winter’s unusually warm weather that significantly reduced demand for the delivery of natural gas.

Washington Gas said the before-tax annual premium cost for the policy for the year ended Sept. 30, 2002 was $4.25 million or $0.05 per average common share. The payment received from the policy, which has a 5-year term that began in October 2000, contributed approximately $0.18 to earnings per average common share in fiscal year 2002.

Washington Gas said it recorded the cost and the benefit of the insurance policy in its income statement for the fiscal year that ended Sept. 30. The company explained that the annual premium cost is not charged to the company’s customers and therefore, the benefits of the policy are retained by its shareholders.

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