Georgia Natural Gas Company Files Lawsuit Against Dynegy Marketing and Trade
Georgia Suit Seeks Full, Fair Accounting by Dynegy Subsidiary
Georgia Natural Gas Company today filed a complaint on behalf of SouthStar Energy Services LLC in Fulton County Superior Court to compel Dynegy Marketing and Trade to provide a full and fair accounting of its activities as asset manager for SouthStar Energy Services.
The lawsuit alleges that Dynegy Marketing and Trade (Dynegy), despite repeated requests by Georgia Natural Gas Company (GNGC), has failed to provide necessary documentation and records of purchase and sales transactions in its role as asset manager for SouthStar Energy Services, LLC (SouthStar).
SouthStar is a joint venture among subsidiaries of AGL Resources Inc. (Georgia Natural Gas Company), Dynegy, Inc., and Piedmont Natural Gas Company, Inc. SouthStar markets natural gas and related services to residential and small commercial customers in Georgia and to industrial customers in the Southeast. SouthStar markets natural gas to customers in Georgia under the trade name "Georgia Natural Gas."
"We regret that we must take this action, but Georgia Natural Gas Company was left with absolutely no other alternative," said Paula G. Rosput, president and chief executive officer of AGL Resources Inc.
"Given Dynegy's repeated refusals to provide requested information, the only way that we can obtain the necessary information is to force their hand in court," said Rosput. "It's an unfortunate, but necessary step."
The lawsuit also alleges that Dynegy, as SouthStar's agent, failed in its fiduciary responsibilities to provide regular accounting of key transactions involving SouthStar's assets. The lawsuit charges that Dynegy deprived SouthStar of substantial profits by providing false and misleading financial information, overstating the wholesale market price that Dynegy charged for its natural gas supply, and understating how much Dynegy earned on behalf of SouthStar as its asset manager. The suit alleges that, in so doing, Dynegy diverted these unreported profits to its own trading book.
The lawsuit also alleges that Dynegy has consistently misstated the value of the transactions it performed as SouthStar's agent. And, that after GNGC raised the issue with Dynegy earlier this year, Dynegy refused to provide information that would show how much money had been redirected from SouthStar to Dynegy.
"We launched our formal investigation when we determined asset management revenues at SouthStar appeared to be below what other gas marketers were experiencing in the volatile winter of 2000," said Rosput. "From the outset of this partnership, we fully relied on Dynegy's trading expertise to generate value for the business. It's dispiriting, to say the least, when one of North America's preeminent energy marketers seems incapable of providing even the most basic documentation of their trading activities."
The lawsuit also alleges that the requested accounting is necessary to finally determine the full amount SouthStar lost in profits that were redirected to Dynegy.
In addition to the request for information, the suit seeks both actual and punitive damages from Dynegy, as well as a court-ordered termination of its asset management agreement with SouthStar.
AGL Resources Inc. is a regional holding company for energy and infrastructure related businesses in the Southeast. The company is the second-largest natural gas-only distribution company in the United States and serves more than 1.8 million customers throughout Georgia; Chattanooga, Tennessee; and southeastern Virginia. AGL Resources also is engaged through subsidiaries and partnerships in other businesses, including telecommunications, retail energy marketing, wholesale energy services, and wholesale and retail propane sales. More information about the company is available on the Internet at http://www.aglresources.com/ .
SOURCE: AGL Resources Inc.
Contact: L. Stephen Cave, Director, Investor Relations of AGL Resources,