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Executives

Steve Cave - Director, IR and Corporate Development

John W. Somerhalder II - Chairman, President and CEO

Andrew W. Evans - EVP and CFO

Douglas N. Schantz - President and Sequent Energy Management

Hank Linginfelter - EVP and Utility Operations

Kevin P. Madden - EVP, External Affairs

Analysts

Carl Kirst - BMO Capital Markets

Gordon Howald - Calyon Securities

Barry Klein - Citigroup

Ted Durbin - Goldman Sachs

Jim Harmon - Barclays Capital

AGL Resources, Inc (ATG) Q3 FY08 Earnings Call October 30, 2008 8:30 AM ET

Operator

Good day ladies and gentlemen, and welcome to the Third Quarter AGL Resources Earnings Conference Call. My name is Natalya and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. [Operator Instructions]. As a reminder this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's conference, Mr. Steve Cave, Managing Director of Investment Relations. Please proceed, sir.

Steve Cave - Director, Investor Relations and Corporate Development

All right, thank you, and good morning everyone. Thanks for joining us today to review our third quarter 2008 earnings results. The speakers on the call today will be John Somerhalder, our Chairman, President and CEO and Drew Evans, our Executive Vice President and CFO. We have several other members of our management team here with us today to answer your questions following the prepared remarks. As you know we issued our earnings release and filed 10-Q this morning. If you don't have a copy of those already, you can find copies on our website.

Before we move on to the prepared remarks, let me just remind you that our discussion today may contain forward-looking statements and that our actual results could differ materially from those projected in the forward-looking statements. The various factors that could cause such a material difference are included in our press release and our 10-Q filing and are more fully described in our most recent 10-K filing. We also use some non-GAAP measures such as EBIT, earnings before interest and taxes, and operating margin in describing our business and a reconciliation of those measures to the GAAP financials is available on our website and in our earnings release, SEC filings.

In addition to the non-GAAP measures in our earnings release we provided consolidated earnings results that exclude the impacts of hedge gains, losses in our wholesale services segment and also excluding the required inventory valuation adjustments for our wholesale services and retail energy segment. These are as you know also non-GAAP results that we believe will provide more transparency around the business and enable better comparisons between reporting periods. We provide a reconciliation of those to the financials on our website.

We'll begin today's call with some prepared remarks and then we'll open the lines to take your questions and with that let me turn it over to John.

John W. Somerhalder II - Chairman, President and Chief Executive Officer

Thanks Steve. Good morning everyone and thank you for joining us today. I am going to spend a few minutes talking about results for the quarter and the year-to-date as well as our guidance for the remainder of the year, then give you an update on a couple of other items. Our EPS results for the third quarter were $0.85 compared to $0.17 during the third quarter of last year. As you know we reported a loss of the second quarter of this year as result of the rising prices during the quarter that resulted in accounting losses and hedges we had in place for Sequent.

By the time of our second quarter earnings call in late July we already have started to see significant price declines and we noted on the call that if prices continue to move downward we would expect to recover, in the third quarter, substantially all of these hedge losses. That is exactly what happened and as a result our earnings are significantly higher than the third quarter of last year.

The other factor affecting third quarter earnings is that in a declining price environment we are required to value our natural gas inventory at the lower of a weighted average cost for the prevailing market price. This is below our cost of market or LOCOM inventory valuation adjustment. In the third quarter the LOCOM adjustment was $34 million for Sequent and $80 million for SouthStar.

Keep in mind that the negative impact of earnings in the current period caused by LOCOM will be offset when the gas is withdrawn and delivered in future periods. However a significant portion up to about $0.10 per share of the SouthStar LOCOM adjustment will not be realized until the first quarter of 2009. As a result, while we expect our earnings results from an economic standpoint to be within the guidance range we provided previously and that was between $2.75 to $2.85 per share. We do expect that this LOCOM adjustment will cause our reported GAAP earnings for the year to be lower by about $0.10 per share.

Adjusting for the impacts of hedged gains in LOCOM, our earnings for the third quarter and that's on this adjusted basis were $0.28 per share compared with $0.09 per share for the third quarter of last year. On that same basis, earnings year-to-date were $1.87 per share which is $0.10 higher than the $1.77 per share for the first quarter or for the first three quarters of last year.

We clearly have had some accounting impacts from natural gas price movements. But we feel very good about fundamentals of our business and from an economic standpoint, our businesses in total had performed about where we expected, despite the challenging economic conditions. As you know, our utility business continues to be impacted by the general economic conditions and a slow housing market.

Year-to-date our growth has been virtually flat in that business as compared to last year. We also have seen some additional bad debt expense particularly in New Jersey and some in Virginia which is a function of a higher prices earlier in the year and the downturn in the economy. We have been able to offset some of those negative impacts with aggressive O&M expense reductions but we expect that with the continuation of the challenging economic conditions and that is our current expectation. We expect that we'll continue to see relatively flat results throughout 2009 in that business.

Turning to our capital projects; I will start with Hampton Roads Crossing project, HRX project in Virginia. Construction is on schedule and within budget for HRX. And we just recently completed one of the most interesting and difficult aspects of the project that's a 7000 plus for directional drill under the Elizabeth River. We had purchased much of the steel and another materials needed for the project and as a result our exposure to any rise in commodity prices is now limited on this project.

We continue to make significant progress on Golden Triangle Storage at the project and around Vermont, Texas. Construction of GTS continues to be on schedule and our costs are within the range we previously discussed with you. We have some minor, we did have some minor damages from the hurricanes in September, but nothing had caused any material delay or cost increases.

And with the progress we have made to date on the cavern well, the brine disposal wells in the surface facilities including the leech plant, we expect to move to a very important phase of the project and that is leech of cavern number one as early as in the middle of December.

Earlier this year we discussed the potential new salt-dome storage project located in the Gulf Coast region. At the time we were too early in the development project to share many details about the project. I can now tell you that this project is on the salt-dome in Louisiana and we have named it Triple Diamond Storage. We secured the potential site and have advanced that project to the point of doing the initial size of re-testing of the dome and all indications so far are positive about the geology of the site and similar to the Golden Triangle location, it had some significant competitive advantages and that it conserve a number of major Gulf Coast pipelines, pipelines like Tennessee type better transport and including Golden Pass in Gulf South and that's still a fairly small a header systems only about 30 mile gather system.

However, in light of the current economic conditions we do not plan to move forward on this project this time. We still believe in the strong fundamentals of the storage business and plan to take the necessary steps to preserve the options we have to develop this project in the future.

As we allocate and prioritize our capital in this current economic environment we will place the highest priority on regulated projects in our distribution operations business where projects with a more regulated quality of earnings or projects that support or provide services to some of our own utilities. A good example is our Magnolia pipeline project which will provide transportation of reclassified LNG from Elba Island to Atlanta Gas Light in the making in Atlanta areas.

We have received Georgia PSC and court approvals and have ordered major equipment and that is primarily compression in the third quarter and are moving forward with this $48 million project. In summary, even though we have decided to not move forward with our Triple Diamond Storage dollar project. We plan to preserve the options to develop this project at a later date. More importantly, we have made significant progress on three of our growth projects during the third quarter; on Hampton Roads Crossing, Golden Triangle Storage and Magnolia.

With that I will turn it to Drew for financial discussion.

Andrew W. Evans - Executive Vice President and Chief Financial Officer

Thanks John. Good morning everyone and thanks for joining us. As we point out in our disclosures and as John discussed clearly the hedge gains at Sequent had a dramatic positive effect on earnings in the quarter offset somewhat by the LOCOM adjustments for Sequent and SouthStar as prices continue to decline in the quarter. It's really the inverse of what we saw in the second quarter where the rise in natural gas prices resulted in significant hedge losses that resulted in our reporting of loss for that quarter.

So I'll start with wholesale since it has the most moving parts. If you look at the table in the presentation and on page 28 of the 10-Q you will see the reconciling items. You can see that the gains on storage and transportation hedges combined were $117 million for the third quarter of 2008 compared to $11 million during the same quarter last year, where natural gas prices during the quarter were decreasing but not with at the rate that we saw this year.

You will also see the $34 million LOCOM adjustment that resulted from valuing our national gas inventory and storage at market prices which were lower than the average weighted price we paid to buy the gas. In the third quarter of 2007, that adjustment was only $1 million, so there is a $33 million differential year-over-year. If you think about our standard operation of segment these movements can be highly anticipated, we inject gas into the ground in the summer and locking a margin by selling a forward contract. GAAP or Generally Accepted Accounting Principles require us to mark the forward contract both up and down as prices fall and rise.

On the inventory side our price decreased below the weighted average cost of our inventory requires us to write down the inventory to its current market value. Once written down the inventory cannot be adjusted back up if prices subsequently increase.

In most instances a decrease in price will increase the value before the forward sale and be substantially offset by decrease in the value of the inventory. In opposite occurrence increasing prices will cause us to report a loss on the forward contract. In no case, as the underlying profitability of the position changed, its just at the full value of the storage transaction is not completely realized until the gas in storage is delivered.

The commercial activity line which is generally the way you can gauge economic value created and recognized during a particular period shows good improvement over last year up $16 million. This reflects a combination of hotter than normal weather in July and some additional opportunities during and immediately following the hurricanes in September.

The inventory rollout schedule on page 24 of the 10-Q gives you our best current view of when we expect to realize the future economic value of Sequent storage portfolio. As you can see we expect 7 million of storage margin in the fourth quarter of 2008 and about 5 million for the first quarter of 2009. That assumes no major changes to the injection withdrawal plans which is primarily a function of regional price movements. Just cutting through all the noise though, the important take away is that Sequent is up, is tracking about where we expect it to be for the year.

Turning to the retail energy segment, SouthStar as you know the third quarter is not typically a big earnings driver for that business at least from an operating standpoint. The real drivers this quarter were the low comp adjustments that John talked about which was $18 million, which is $14 million just net of minority interest and as he said a significant portion of that will not be recovered until 2009.

SouthStar had lower operating expenses for the quarter as a result of lower outside services and marketing expenses. We continue to monitor bad debt expense closely but the trends have continued to track consistent with historical trends and therefore we have not seen anything that is out of line with our expectations.

We've already discussed the big drivers in distribution ops and the fact that we've seen lower customer growth and a little bit higher bad debt expense. As a result operating margin for the quarter was down $2 million. Our bad debt expense was about 3 million higher than during the same quarter last year and that was primarily concentrated in the New Jersey and Virginia utilities.

That said, our Distribution Operations business will generate more than $800 million worth of operating margin in any given year. The increase in bad debt is quite small relative to this number. This is reflective of the business that is much less sensitive to credit losses than most due principally to the market design in Georgia. Our share holders continue to benefit from regulatory and market diversification across our jurisdictions.

Before we go to Q&A, I will take just one further mix, one further observation about credit and capital deployment. Our size gives us an advantage in sourcing capital. We maintain sizable buffers, built significant liquid inventories and have excellent diversification across our bank group. We had no exposure to Lehmann or Merrill, the former by design in any business unit. We have not seen material consolidation in our bank group with the exception of Wachovia and Wells Fargo.

In early summer we anticipated growing our credit capacity to maintain capital buffers in a high gas price environment. We are able to execute that expansion without any problem in the midst of a current credit crisis. We have not need to alter our credit facility as its maturities is three years out. Prospectively we are seeing declines in natural gas prices, this spurts well for customers and we are likely [inaudible] to deliver the majority of our gas out of the inventory. We normally see short term borrowing pulled zero by the end of the winter heating season.

On the capital side as John discussed we'll continue to be prudent about its deployment. We'll focus first on a regulated enterprises on our utility customers. We believe our focus on regulated investments most of assets which serve our customer base is more highly valued by investors. We'll preserve our options around development or sale of assets as preferences of our shareholders and capital markets evolved.

I think that covers the highlights so with that let's go to questions.

Question And Answer

Operator

[Operator Instructions]. Your first question comes from the line of Carl Kirst with BMO Capital.

Carl Kirst - BMO Capital Markets

Hi, good morning everybody.

John W. Somerhalder II - Chairman, President and Chief Executive Officer

HeyCarl.

Carl Kirst - BMO Capital Markets

A few questions. Let me just start, John, so you made the comments early on the LEC side everything is going to sort of accommodating the ways with flat results through 2009. Two sort of clarifications on that, first Drew, as we're looking at the bad debt expense year-over-year, is that something that effectively as we get to the end of this year 2009 over 2008, we're going to stop seeing some of that increase i.e., I guess, the percentage of revenues if you will, whether its 1% or 1.5% I forget. That's kind of flattened out. Can you help me out there and two I also know it's in the results, there was a mention that pension expense was down and certainly there is general expectation that we're going to be seeing pension cost rise just given the state of the market?

John W. Somerhalder II - Chairman, President and Chief Executive Officer

Hi, Carl, I will take the question on bad debt first. I think two factors are impacting bad debt and as Drew talked about it's not as large because we don't have the exposure here in Georgia and SouthStar has done a very good job from their standpoint on managing the issue here around their customers in Georgia. But there really had be two factors that have been influenced that. One is the rising gas costs and the second is just the economy turning down. And so, we do anticipate the bad debt through next year especially with our expectation in the economy staying in the same condition its in now will be higher that has historically been.

However, in those jurisdictions we're also heading the rate cases in those next couple of years. So, we'll have the ability to take that into account when we file those rate cases and we deal with those issues. So, we do see the trend higher on bad debt particularly from the economy stand point. We may get a little relief from the standpoint of gas prices coming down.

And then I will turn it over to Drew to talk about the pension.

Andrew W. Evans - Executive Vice President and Chief Financial Officer

And also on bad debt I think that we turn away from shareholders for a second focus a bit more on customers. We've been very aggressive through our call centers, when people are having difficulty paying bills to focused them on federal dollars likely dollars to make sure that they have some capacity to pay in the winter heating season that's our first priority, first and foremost.

John W. Somerhalder II - Chairman, President and Chief Executive Officer

And that is a good point, I think as you probably know, like these dollars have been significantly increased. Outstanding doubles from, I think 2.6 to $5.1 billion. So, that will be a help to our customers and that's important.

Andrew W. Evans - Executive Vice President and Chief Financial Officer

And then on pension, what you saw is not a change in any of our principle actuarial assumptions; it was a true up it's a normal function of recalculations in the September time period. I think everybody is going to have some difficulty around the accounting for pension. We're going to make sure that we are compliant with Arisa and IRS... yes, limitations around the pension and make sure that we funded appropriately next year but everybody is going to have a little bit of difficulty I would imagine around their assumptions and funding status.

Carl Kirst - BMO Capital Markets

Good kind of moving it as we sort of go from the only seeing this environment to Sequent in this environment and obviously we got a very fluid situation right now. With Lehman and I guess it will might be still around here but UBS obviously getting over there, obviously big financial guys are kind of retrenching. Particularly in October, I don't know if Doug or anyone want just to comment on... is this an opportunity for you guys or is this something where you are going to fighting a down draft like everyone else?

Douglas N. Schantz - President and Sequent Energy Management

Carl this is Doug and clearly it's an opportunity for us and we're on top of it as we speak. So a lot of moving pieces in the marketplace, a lot of our competition doing various things, as you've seen in the press and we're staying very close to our customers, very close to our markets.

Andrew W. Evans - Executive Vice President and Chief Financial Officer

And the biggest issue for us there Carl probably capital deployment and we monitor really pretty closely and with gas prices coming down it really free this up quite a bit there.

Carl Kirst - BMO Capital Markets

So is it Doug you are hiring them? I'll give my resume.

Douglas N. Schantz - President and Sequent Energy Management

Give him any idea. We're really in good shape as far as staff and I think appropriately sized to grow our business and as you see our volumes are well up year-on-year and we'll to pursue these opportunities.

Carl Kirst - BMO Capital Markets

Okay. And then just finally if I could last question well it is really more of a clarification. John you'd mentioned that the Golden Triangle sort of continues with roughly the same cost range noticed in sort of the Q there were sort of the same language from last quarter, I think it was sort of a number referenced $265 million but that is going to be up 10% to 20%. Obviously there is going to be a little bit of a change in the environment over last three months, whether it's lower gas price implication for pad gas hopefully, we hope steel coming off here. Do you see that as potential but that plus 10% to 20% percent cost uplift, inflation uplift might actually be coming down or is that too premature at this point.

John W. Somerhalder II - Chairman, President and Chief Executive Officer

No. it's not premature for us to give you a better idea, whether the cost are coming in, but we've had both positive and negative as example. The hurricanes did not materially impact our cost but they did add a little bit of cost. We did have a slight delay in some of the things we were doing which added a small amount of cost. We locked in some line pipe and casing and even though we got it at a price consistent with the estimate of 10% to 20% higher, that we didn't get any benefit from that.

We do see though as you said pad gas, the cost could come off. So I would say it's possible we could move down in that range of 10% to 20% although we could move down in that range but we don't see ourselves coming outside of that range at this point. We still, the estimate today is very consistent with where it was a quarter ago.

Carl Kirst - BMO Capital Markets

Okay. Appreciate the color, guys. Thank you.

Operator

Your next question comes from the line of Gordon Howald with Calyon Securities.

Gordon Howald - Calyon Securities

Good morning guys.

Unidentified Company Representative

Good morning.

Gordon Howald - Calyon Securities

Regarding, I guess Carl touched on this, regarding the existing storage projects, what is the pad gas requirements, when are they required and with gas prices is down is there any benefit that you will receive to hedging those gas... pad gas storage requirements at this point?

John W. Somerhalder II - Chairman, President and Chief Executive Officer

I'mtrying to make sure I don't quote a bad number on this but in total if the bulk we're having you are talking about 20% of the cost or so of the project is... it might may be off a little bit is tied up in pad gas but we don't need that pad gas in closer to your... until closer to the end service. For cavern one, we are still several years away and for cavern two its even a year or so later than that. And what we have seen so far is even though the front part of the curve has come down we haven't seen as much movement out in this time period, but the answer is yes we will look at potentially hedging this when we get closer to that time period. At this point we don't see a big benefit of doing that, but we would be closer to meeting a gas to fill the caverns and to put the pad gas and we will definitely look at that.

Gordon Howald - Calyon Securities

Got you. And if I could, just one other question, you noted that you scaled back on one of your expansion projects and are going to focus on regulated projects at least for the foreseeable future, big picture John, what do you see with energy related capital projects industry wide, just given credit turmoil given the economic problems that we're in, situations like that... I mean how do you see capital spending, for the near term for in the energy space overall?

John W. Somerhalder II - Chairman, President and Chief Executive Officer

We've, as an example, we still strongly believe in the fundamentals of storage in the medium to long term and what we have seen at least what we've seen directly in what a number of people that do consulting work for us have told us is that a number of people developing storage projects are slowing down or delaying projects. So what we are doing is not inconsistent for similar reasons which I think that was well for value of the storage we are building, in the long term.

We have also looked at a list of capital projects that MLPs have on their backlog. There are significant projects that absolutely need to get build but that is much harder to build them in this environment, I mean I think everyone saw the announcement on board walk and the fact that their parents going to step forward and make sure that gets done but there will be some others that will be challenged.

So we really do believe and even talking to you some of the big pipeline, they had great projects and its much more difficult as you all notice to fund those now. So we are worried that some of the needed infrastructure will now get build in over the next couple of years.

Gordon Howald - Calyon Securities

That's your note the in the conference and the front Chairman was there and noted that all the reason need to remain high so hopefully that won't be as bad as it seems like it will be.

John W. Somerhalder II - Chairman, President and Chief Executive Officer

I'll always hear, good to hear that from you.

Gordon Howald - Calyon Securities

Absolutely, thanks.

Gordon Howald - Calyon Securities

Thanks George.

Operator

Your next question comes from the line of Faisel Khan with Citi.

Barry Klein - Citigroup

This is actually Barry Klien, how is it going guys?

John W. Somerhalder II - Chairman, President and Chief Executive Officer

Hi, Barry how are you doing?

Barry Klein - Citigroup

Couple of quick ones, Most of questions were asked ready, Magnolia, most of the cost have been spent already but how much spending would you say is left approximately?

John W. Somerhalder II - Chairman, President and Chief Executive Officer

Well on Magnolia, most of the cost are locked in because essentially what we are doing is using existing pipe its already in the ground.

Barry Klein - Citigroup

Okay.

John W. Somerhalder II - Chairman, President and Chief Executive Officer

So it's the cost we are locking we really haven't spend those dollars there we have ordered the major piece of new equipment and that's compression, that's actually I believe only in a range of 10% of that project cost and for $4 million. So we really haven't had to make dollars go on yet but the costs are locked in we don't expect much movement on that because it's mostly existing pipe in the ground.

Barry Klein - Citigroup

Got you. And with regard to the credit and capital, how much I haven't got a chance to look through the 10-Q, I apologize if it's in there. How much is available on your revolver?

Andrew W. Evans - Executive Vice President and Chief Financial Officer

At the end of the quarter we had $770 million with the short term debt outstanding. You think about storage builds, we build pretty significantly through November. And so, our peak probably hit us on the 25th of November which is I guess next months still. And then, with we deplete pretty rapidly toward the end of February and March. But that short term debt is back stocked by our revolver and the total capacity that we have under those things is $1.28 billion and so our utilization is $768 million of it.

Barry Klein - Citigroup

Got you. And then have you seen any falling in the commercial paper market? Or is it still pretty locked up from your perspective and from I guess other companies perspectives, from what you say?

Andrew W. Evans - Executive Vice President and Chief Financial Officer

It's certainly not an A2P2, which is the world that we live in. A1P1 was jump started a little bit by the thorough reserve on Monday. And we just haven't seen them trickling down that in to A2P2. It will utilize our bank facilities where the cost of that is more cost effective for the business in total. Commercial paper in A2P2, what we really saw was a shrinking of duration. You just simply can't place for more than overnight or for a couple of days and the pricing is still a little bit broad for us.

Barry Klein - Citigroup

Okay, thanks a lot.

Operator

Your next question comes from the line of Ted Durbin with Goldman Sachs.

Ted Durbin - Goldman Sachs

Hi, guys, I guess the first one is just and I had a quick follow up on the what's the difference in the borrowing cost between the commercial paper in the bank loan?

Andrew W. Evans - Executive Vice President and Chief Financial Officer

Our primary bank facility is LIBOR plus 27 in commercial papers been trading overnight close to the 5% and 6%.

Ted Durbin - Goldman Sachs

Okay, that's fine. In terms of the distribution, what sort of the opportunity to bring down the O&M to offset some of the customer growth or the weakness in customer growth you are seen maybe you can give us little more detail there?

Douglas N. Schantz - President and Sequent Energy Management

I will start out and Hank Linginfelter is here as well. But we have done that this year. But it's very difficult when we went from an environment where we had move the growth up to over 1%. It is very difficult offset that entire amount. So, all we can do is offset a part of that. I think what's more important is that we're now heading towards rate cases over the next several years.

First, ETG, then Atlanta Gas Light, then Chattanooga, then Virginia Natural Gas. Those rate increases were well go into affect, really through 2010 and 2011. So, what we're really looking toward is looking at the investment we've made in our distribution operations and those rate cases, rather than only cost cutting. We'll continue to still be good cost towards. We are really looking for that combination to move its back to a very strong growth trajectory. And Hank if you would like to?

Hank Linginfelter - Executive Vice President and Utility Operations

Absolutely, we are trying to position the utilities for return of growth after, probably after not next year. But, we've identified and acted on several initiates this year to cut costs inside the utilities and those have been very affective in offsetting some of the other challenges this year. We also continue to take advantage of our deployment technologies such as the automated meter reading which now are fully automated in Virginia and New Jersey and we're headed that way in Florida and Tennessee.

And I will look at Georgia as well automated meter reading for the remainder of that a system is not automated. Our mobility system which is how we dispatch our crews and workforce in the field that all those things we continue to see some mass opportunities for improvements in the underlying cost to running the business and we'll execute on those. But to John's point glance we are headed into rate cases there is very little major cost cutting let for us to do we think but makes a good case for treatment in the regulatory environment going forward.

Ted Durbin - Goldman Sachs

Okay, thanks. And if I could just one more question on the Jefferson Island expansion, where do we stand with that and may be what are next milestones we should be thinking about?

John W. Somerhalder II - Chairman, President and Chief Executive Officer

On the gist litigation, we are in the process now of going through the depositions. We feel very good and we've told you all along we feel very good about our case and we feel very good about the progress we've made to date. Our plan now is to continue on with the litigation, we have not really actively talked to the state especially through this time period where they've... with hurricanes and other things. We really haven't talked to the state about the settlement at this point. We think there may be a time for that but right now we plan to move on the litigation and Kevin can give you a little bit of detail around the timing and other issues here.

Kevin P. Madden - Executive Vice President, External Affairs

We are proposing some key officials, at third week of November and persons from some of our management and are calling in December week. We expect to have a trial date in the first quarter of next year.

Ted Durbin - Goldman Sachs

Okay. Thanks a lot guys.

John W. Somerhalder II - Chairman, President and Chief Executive Officer

Thanks [indiscernible].

Operator

Your next question comes from the line of Phils Gray [ph] with Delaney Asset Management [ph].

Unidentified Analyst

Good morning. Could you close any financing plans for this the reminder of this year and next year?

Andrew W. Evans - Executive Vice President and Chief Financial Officer

We don't have any for the balance of this year. I think we've taken care of capital structure so we'll just continue on our primary facilities back stuff for commercial paper and it doesn't set to expire until another three years. We don't have any material maturities in our bond portfolio till 2011.

Unidentified Analyst

Thank you.

Operator

Your next question is a follow up question from the line of Carl Kirst with BMO Capital.

Carl Kirst - BMO Capital Markets

Just... John kind of going back to golden [ph] sort to theme of focusing on the industry and big picture. The LDC Group has been marked by somewhat bifurcated performance here? You guys are trading down at 10 times PE you're not certainly the only one. Have you look around here there has been some speculation perhaps the down draft in the equity markets might re-stimulate some consolidation kind of throughout the industry much, much less the energy E&P. And then, I'm wondering if you think that extended down to the LDC. Not necessarily in the cash 20% uplift sort of but just almost on kind of a merger of equal stock-for-stock kind of deal. I'm just curious from an industry standpoint what you're thinking just given the broad market clarifications for last few weeks?

John W. Somerhalder II - Chairman, President and Chief Executive Officer

I think our position remains very much the same as it was before. We do believe the consolidation makes sense in this industry for a number of reasons. But particularly in this environment where we still have increasing cost, cost pressures were same. Our larger customer base and a larger utility gives you benefits, economies of scale and those type of issues. So, we do believe that there will be opportunism moving forward. But there is nothing current that is changed that I can talk about. We do think there will be opportunities and we'll continue to actively purse them, but they have to be the right opportunities.

Carl Kirst - BMO Capital Markets

Sure. And perhaps I'm just thinking of it more from almost kind of a industry chatter to use to use a phrase. I'm just wondering if you are getting $0.08 from others there is more people are it's loss on ATG sort of position specific. And I'm just curious if you kind of garnered whether other management teams are kind of seeing it in that same light, or perhaps its too early still to tell?

John W. Somerhalder II - Chairman, President and Chief Executive Officer

What I have heard so far and directly saying from other people in the industry and like that functions like American Gas Association functions. Everyone is focused on stabilizing their business in this environment. And the talk has not yet turned to go back to consolidation.

Carl Kirst - BMO Capital Markets

Okay. Well, I appreciate the color. Thanks guys.

Operator

And your final question comes from the line of Jim Harmon with Barclay's Capital.

Jim Harmon - Barclays Capital

Good morning.

John W. Somerhalder II - Chairman, President and Chief Executive Officer

Good morning, Jim.

Andrew W. Evans - Executive Vice President and Chief Financial Officer

Hi, Jim.

Jim Harmon - Barclays Capital

Assuming you did had a green light on Jefferson Island with this peer project that you did, to proceeding with or this going to holding tank as well in the current environment?

John W. Somerhalder II - Chairman, President and Chief Executive Officer

You asked a good question. We do, as I said we do believe in the fundamentals of storage. And our Jefferson Island expansion is a very good project with that location close to the Henry Hub. That would be a very high storage priority. So, we would attempt to find a way to move forward with that project. But clearly, we have to evaluate the exact conditions of that time. So, yes, it would be a very high priority. But I can't commit to you whether we could do that immediately or whether we might prioritize it some distance into the future.

Jim Harmon - Barclays Capital

Okay, thank you.

Operator

And I'm sure at this moment you have no further questions, sir.

Steve Cave - Director, Investor Relations and Corporate Development

Okay. Well, thank you very much for joining us today. And as always give us a call for any follow-up questions. Have a good day.

Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day. .

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Source: AGL Resources Inc. Q3 2008 Earnings Conference Call Transcript
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