Wgl Holdings (AMEX:WGL)
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WGL Holdings, Inc. Subsidiary Updates Estimated Costs of System
Rehabilitation Program in Prince George's County, Maryland
WASHINGTON, April 27 /PRNewswire-FirstCall/ -- Washington Gas Light Company
(the company), a wholly-owned subsidiary of WGL Holdings, Inc. (NYSE: WGL),
today updated its estimated costs to rehabilitate a portion of its distribution
system in Prince George's County, Maryland, which has experienced a higher than
usual number of outdoor, underground natural gas leaks.
On April 1, 2005, Washington Gas announced that it will take action to address
a significant increase in the number of natural gas leaks in a portion of its
distribution system in Prince George's County, Maryland, that resulted from the
deterioration of seals located within mechanical couplings that connect
sections of distribution mains and service lines. Specifically, Washington Gas
expects to address all leaks in the affected area within approximately six
months of their being identified, and expects to rehabilitate or replace all
other coupled service lines and distribution mains in the affected Prince
George's County area by December 2007 even if no leaks are detected.
The costs of this work are expected to be recorded as capital expenditures and
are currently estimated to be $87 million. This compares with Washington Gas's
originally estimated cost of $75 million, two-thirds of which was initially
identified as maintenance expense. The current cost estimate reflects an
increase in the number of services expected to be replaced, and an expectation
that main replacements will be a larger portion of the total project cost
versus encapsulating couplings on mains.
The $87 million estimate does not include any potential costs associated with
paving, which could amount to as much as $50 million. The substantial nature
of the paving cost estimate is attributable in part to the fact that in 2002,
Prince George's County expanded paving requirements and increased related fees.
Since that time, Washington Gas has discussed with County officials the
County's new paving and permitting requirements, and plans to continue those
discussions as this important construction project moves forward.
Washington Gas will request that the Public Service Commission of Maryland
(PSC) ratify Washington Gas's decision to account for the encapsulation costs
of couplings on mains, currently estimated to be $13 million, as capital
expenditures. The company has asked the PSC to review its accounting decision
by June 15. Washington Gas is also carefully considering the effect of these
expenditures on its ability to earn its allowed returns in Maryland and is
evaluating the most appropriate regulatory options to ensure full and timely
recovery of, and return on, the amounts expended.
The amounts described above related to the matters in Prince George's County
represent estimates that could differ materially from the final amount of costs
that are actually incurred.
Note: This news release and other statements by the company include
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to the outlook for earnings,
revenues and other future financial business performance or strategies and
expectations. Forward-looking statements are typically identified by words such
as, but not limited to, "estimates," "expects," "anticipates," "intends,"
"believes," "plans," and similar expressions, or future or conditional verbs
such as "will," "should," "would," and "could." Although the company believes
such forward-looking statements are based on reasonable assumptions, it cannot
give assurance that every objective will be achieved. Forward-looking
statements speak only as of today, and the company assumes no duty to update
them.
As previously disclosed in the company's filings with the Securities and
Exchange Commission, the following factors, among others, could cause actual
results to differ materially from forward-looking statements or historical
performance: the level and rate at which costs and expenses are incurred in
connection with constructing, operating and maintaining the company's natural
gas distribution system; variations in weather conditions from normal levels;
changes in economic, competitive, political and regulatory conditions and
developments; changes in capital and energy commodity market conditions;
changes in credit ratings of debt securities of WGL Holdings, Inc. or
Washington Gas Light Company that may affect access to capital or the cost of
debt; changes in credit market conditions and creditworthiness of customers and
suppliers; changes in relevant laws and regulations, including tax,
environmental and employment laws and regulations; legislative, regulatory and
judicial mandates or decisions affecting business operations or the timing of
recovery of costs and expenses; the timing and success of business and product
development efforts and technological improvements; the pace of deregulation
efforts and the availability of other competitive alternatives; terrorist
activities; and other uncertainties. The outcome of negotiations and
discussions the company may hold with other parties from time to time regarding
utility and energy-related investments and strategic transactions that are both
recurring and non-recurring may also affect future performance. For a further
discussion of the risks and uncertainties, see the company's most recent annual
report on Form 10-K and other reports filed with the Securities and Exchange
Commission.
DATASOURCE: WGL Holdings, Inc.
CONTACT: News Media - Tim Sargeant, +1-202-624-6043, Office, or
+1-202-825-7051, Private, or Financial Community - Melissa E. Adams,
+1-202-624-6410, Office, all for WGL Holdings, Inc.
Web site: http://www.washingtongas.com/