SouthStar Energy EBIT Lower on Reduced Margins, Churn

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November 3, 2010

AGL Resources' retail energy operations segment, consisting primarily of SouthStar Energy Services, reported a third quarter 2010 EBIT loss of $9 million, compared with a loss of $2 million in the third quarter of 2009.

Third quarter 2010 operating margin of $10 million for the retail energy unit was down $4 million from the year-ago total of $14 million.  The previously reported increase in lower-margin fixed price contracts served by SouthStar in Georgia, as well as continued customer churn, accounted for $1 million of the decrease, while lower margins in Ohio and Florida accounted for another $1 million of the decrease.  

SouthStar's average Georgia customer count for the three months ending September 30, 2010 was down at 487,000, versus 503,000 for the three months ended June 30, 2010, and 496,000 a year ago.

SouthStar's market share in Georgia was flat at 33%.

SouthStar's average customer count (including customer equivalents) in Ohio and Florida for the three months ending September 30, 2010 decreased to 66,000, versus 71,000 for the three months ended June 30, 2010, and 106,000 a year ago.

SouthStar's total average customer count was 553,000 for the three months ending September 30, 2010, versus 574,000 for the three months ending June 30, 2010, and 602,000 a year ago.

Firm volumes for SouthStar in Georgia for the quarter ending September 30, 2010 were flat versus the year-ago quarter at 3 Bcf.  Quarterly volumes for Ohio and Florida were also flat at 1 Bcf.

The retail energy segment saw operating expenses increase in the third quarter of 2010 to $19 million, from $16 million a year ago, due to higher legal and other operating costs, partly offset by lower depreciation expense.

Operating revenues from external parties at the retail energy segment were $101 million, versus $100 million in the year-ago quarter.

   
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