First quarter 2009 results reflect improved earnings contributions from each of the company’s three largest operating segments – distribution operations, retail energy operations and wholesale services.

“We are off to a good start and are on track to meet our goals for 2009,” said John W. Somerhalder II, AGL Resources chairman, president and chief executive officer. “We also continue to make very good progress on two key areas of focus for us this year – remaining on track to complete our major capital projects and executing on our regulatory strategy to recover prudently incurred investments made in our utility business.”

First Quarter 2009 Results By Business Segment

Distribution Operations

The distribution operations segment contributed EBIT (earnings before interest and taxes) of $130 million, compared to $123 million in the first quarter of 2008. The raise over the earlier year’s quarter was mainly driven by higher charges to marketers in Georgia for the storage of natural gas inventory and raised pipeline replacement revenues at Atlanta Gas Light, equalized slightly by decreased customer growth and usage. During the first quarter of 2009, customer growth declined 0.1% as compared to the year-ago quarter, reflecting a net decline of about 3,000 customers.

Operating expenses of $124 million for first quarter 2009 were $2 million lower than during the same period previous year. The decline was driven mainly by lower outside services and marketing expenses, which counterbalanced increased bad debt and depreciation expenses.

Retail Energy Operations

The retail energy operations segment, comprises of SouthStar Energy Services (SouthStar), contributed EBIT of $63 million for the first quarter of 2009, compared to $62 million in the year-ago quarter.

Operating margin raised $2 million, with a $14 million improvement due to increased opportunities driven by more favorable market conditions and decreasing commodity prices as well as higher customer usage, offset by a $12 million decrease in operating margin, resulting from a 3% decline in average customer count and an raise in the number of customers switching to less profitable retail pricing plans, reflecting the increased competitiveness of the retail pricing market for natural gas in Georgia. Operating margins also were higher due to raised contributions from SouthStar’s growth markets (Ohio and Florida) of $3 million, and to a $3 million charge related to a consent agreement with the Georgia Public Service Commission in 2008 that was not incurred in 2009. These increases were considerably equalized by a lower-of-cost-or-market natural gas inventory assessment adjustment in the amount of $6 million as prices declined during the quarter.

Operating expenses were up $1 million, mainly due to higher incentive compensation costs.

Wholesale Services

The wholesale services segment, consisting mainly of Sequent Energy Management, contributed $38 million in EBIT in first quarter 2009, compared to $1 million reported for the first quarter of 2008.

A $44 million raise in operating margin as compared to previous year was driven mainly by a $47 million raise in reported hedge gains on the instruments used to hedge transportation capacity and natural gas inventory in storage and a $5 million rise in commercial activity. The increases were partly counterbalanced by an $8 million lower-of-cost-or-market inventory assessment adjustment during the quarter.

Operating expenses were up $7 million as compared to the prior-year period, mainly due to higher incentive compensation expenses associated with the higher earnings results.

Energy Investments

The energy investments segment contributed EBIT of $2 million for the first quarter of 2009, compared to EBIT of $5 million during the prior-year period. Operating margin was down $1 million year-over-year, mainly reflecting lower revenues from Jefferson Island and AGL Resources Networks. Operating expenses were up $2 million, reflecting higher Jefferson Island legal expenses as well as higher property tax and depreciation expenses for the Golden Triangle Storage project.

Interest Expense And Income Taxes:

Interest expense for the first quarter of 2009 was $25 million, down $5 million from the first quarter of 2008. The decline in interest expense resulted from a decline in short-term interest rates, partly counterbalanced by higher average debt outstanding.

Income taxes for the first quarter of 2009 were $72 million, up $18 million compared to the year-ago quarter, reflecting higher consolidated earnings for the quarter relative to the prior year.