AGL Acquires NiSource Retail Services Business, to Expand Services to Georgia

AGL Resources Inc. recently acquired certain assets from NiSource Inc.'s retail services business, which provides warranty protection solutions and energy efficiency leasing solutions for residential and small business customers, for about $120 million.

AGL Resources' acquisition of these assets, including approximately 500,000 existing customer plans, will expand its footprint to offer products such as appliance repair and line protection plans to customers in Indiana, Massachusetts, Ohio, Pennsylvania, and Kentucky.

During an earnings call, AGL executives said that after integrating the NiSource retail services business into its existing retail services business (which it acquired as part of the Nicor merger), it will start expanding retail service offerings to additional markets.

While this will include AGL Resources' regulated utilities on the east coast, the expansion of the retail services business will also include Georgia, where the retail natural gas customer relationship is held by the marketer (for AGL, SouthStar Energy Services), rather than the utility.

"This acquisition almost doubles the size of our retail services business and strengthens our competitive position in this space," said John W. Somerhalder II, chairman, president and chief executive officer of AGL Resources.

NiSource's retail services businesses acquired by AGL Resources include:

• Service programs in Indiana under the ESP brand;

• Service programs under the Columbia Retail Services and Service Protection Group brands in Ohio, Pennsylvania and Kentucky; and

• Service and appliance leasing programs in Massachusetts under the Guardian Care brand.

These brands will join AGL Resources' retail services companies that, together with the company's retail energy brands, comprise its retail operations segment. AGL Resources' retail operations segment will now market natural gas and related home services in more than 10 states.

AGL reported that its retail operations segment contributed EBIT of $37 million for the fourth quarter of 2012, an increase of $8 million compared to $29 million for the same period in 2011. The increase was primarily a result of the addition of Nicor's retail businesses and increased margins at SouthStar.

AGL reported that its retail energy segment average customer count for the 12 months ended December 31, 2012 was as follows, by state:

Georgia                      485,000
Illinois                     462,000
Ohio and Florida (1)          83,000
Indiana                       41,000
Other                         11,000
Total                      1,082,000

(1) A portion of the Ohio customers represents customer equivalents, which are computed by the actual delivered volumes divided by the expected average customer usage. On April 1, 2012, SouthStar's contract to serve approximately 50,000 customer equivalents ended.

SouthStar's market share for Georgia for the 12 months ended December 31, 2012 was 32%, maintaining its market-leading share.