Agl Resources Inc.
Nicor Inc. (Nicor), incorporated in 1976, is a holding company. Its principal
subsidiaries are Northern Illinois Gas Company (doing business as Nicor Gas Company
(Nicor Gas)), one of the nation’s largest distributors of natural gas, and Tropical
Shipping, a leading transporter of containerized freight in the Bahamas and the
Caribbean region. Gas distribution is Nicor’s primary business, typically representing
about 85 percent of consolidated operating income and about 90 percent of consolidated
assets. Nicor also owns several energy-related ventures, including Nicor Services
and Nicor Solutions, providing energy-related products and services for retail
markets, and Nicor Enerchange, a wholesale natural gas marketing company.
Nicor Gas purchases natural gas supplies in the open market by contracting
directly with producers and marketers. Pipeline transportation and purchased
storage services are regulated by the Federal Energy Regulatory Commission (FERC).
When contracted services are temporarily not needed, Nicor Gas may release the
services in the secondary market under FERC-mandated capacity release provisions,
with proceeds reducing the company’s cost of gas charged to customers.
Nicor Gas maintains a diversified portfolio of natural gas supply contracts.
Supply contracts are diversified by supplier, producing region, quantity and
available transportation. Contract pricing is generally tied to published price
indices so as to approximate current market prices, although at times the company
may fix the price of a portion of its supply portfolio. These supply contracts
also generally provide for the payment of fixed demand charges to ensure the
availability of supplies on any given day and are typically negotiated annually.
Nicor Gas is directly connected to eight interstate pipelines, providing access
to most of the major natural gas producing regions in North America. The company’s
primary transportation contracts are with Natural Gas Pipeline Company of America
(NGPL), Northern Natural Gas Company (NNG), Tennessee Gas Pipeline Company (TGPL),
Midwestern Gas Transmission Company (MGT) and ANR Pipeline (ANR). In 2003, new
transportation contracts with NGPL, TGPL and MGT became effective, with terms
generally into 2006.
Nicor Gas is the largest natural gas distributor in Illinois. Substantially
all single-family homes in Nicor Gas’ service territory are heated with natural
gas. In the commercial and industrial markets, the company’s natural gas services
compete with other forms of energy, such as electricity, coal, propane and oil,
based on such factors as price, service, reliability and environmental impact.
Other significant factors that impact demand for natural gas include weather
and economic conditions.