Virginia Natural Gas to Implement Weather Normalization Adjustment - Virginia Natural Gas Agrees to Two-Year Rate Freeze

September 30, 2002

Norfolk – Virginia Natural Gas (VNG) will use a weather normalization adjustment (WNA) to reduce the effect of weather on customer bills this winter. VNG filed the application for the WNA with the Virginia State Corporation Commission in April and received approval Sept. 27. The groundbreaking decision makes VNG the first company to receive approval for a WNA in Virginia. The company also committed not to file for a general rate increase for at least two years. This commitment extends the time since VNG’s last rate increase in 1996 to at least eight years.

“We are pleased with the SCC’s decision,” said Hank Linginfelter, VNG president. “After the experiences of the last two winters – record-breaking cold temperatures and high commodity prices in 2000 and warmer-than-normal weather in 2001 -- we felt a change from past practice was needed. Periods of extended cold weather followed by extended warm weather have been disruptive to gas customers and VNG.

“The adjustment will provide revenue stability enabling us to better plan and schedule system maintenance and improvements which contribute to operational quality and pipeline safety. Customers will receive those benefits plus the advantage of lower bills in colder weather. The Commissioners have recognized the value of a WNA program to the consumer and should be commended for this action.”

A weather normalization adjustment reduces customer bills when winter weather is colder-than-normal and surcharges bills when the weather is warmer-than-normal. A factor based on usage by customers and weather conditions during each billing cycle will be used to determine the credit or surcharge. Many other states have approved weather normalization plans.

“Our customers will begin receiving bills with the adjustment mid-November,” Linginfelter said. “VNG will work closely with the Commission’s staff to ensure that retail customers are familiar with the WNA program. We will include information with their bills to help them understand how the WNA process works and include detailed information on our Web site.”