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WGL Holdings, Inc. Reports Fiscal Year 2012 Financial Results; Issues Fiscal Year 2013 Guidance

“We are pleased to announce record non-GAAP earnings per share at WGL Holdings in 2012,” said Terry D. McCallister, Chairman and Chief Executive Officer of WGL Holdings. “Non-GAAP earnings increased 21% for our regulated utility segment. In addition, we saw another year of record results for our retail business and an increase in the contribution from our commercial energy systems segment. These results were realized in spite of record warm temperatures this past winter and an unusually hot summer, and they demonstrate our ability to deliver consistent results in the face of an uncertain economy and unusual weather patterns. We believe we are well positioned to continue to grow earnings.”

Fiscal Year and Fourth Quarter Results by Business Segment

Regulated Utility

For the quarter ended September 30, 2012, our regulated utility segment reported a seasonal net loss of ($1.2) million, or ($0.02) per share, compared to a net loss of ($38.4) million, or ($0.75) per share, reported for the fourth quarter of the prior fiscal year. After adjustments, the non-GAAP operating loss for the regulated utility segment was ($12.6) million, or ($0.24) per share, for the quarter ended September 30, 2012, compared to a non-GAAP operating loss of ($24.2) million, or ($0.47) per share, for the same quarter of the prior fiscal year. This three month comparison of non-GAAP operating earnings reflect: (i) higher revenues from the implementation of new rates in Virginia and Maryland; (ii) higher margins associated with our asset optimization program including the favorable impact of the commission decision in Maryland validating the benefits of our program in the asset optimization case; (iii) lower interest expense and (iv) a lower effective tax rate. Partially offsetting these favorable variances was higher depreciation expense due to the growth in our investment in utility plant.

For the fiscal year ended September 30, 2012, our regulated utility segment reported net income of $109.7 million, or $2.13 per share, an increase of $40.5 million, or $0.78 per share, over net income of $69.2 million, or $1.35 per share, for the prior fiscal year. After adjustments, non-GAAP operating earnings for the regulated utility segment were $104.4 million, or $2.02 per share, for the fiscal year ended September 30, 2012, an increase of $18.2 million, or $0.34 per share, over non-GAAP operating earnings of $86.2 million, or $1.68 per share, for the prior fiscal year. The year-over-year improvement in non-GAAP earnings for the fiscal year ended September 30, 2012 reflects: (i) higher revenues from the implementation of new rates in Virginia and Maryland; (ii) an increase in average active customer meters of more than 8,900 over the same twelve month period of the prior fiscal year; (iii) higher margins associated with our asset optimization program; (iv) lower interest expense and (v) a lower effective tax rate. Partially offsetting these favorable variances were higher operations and maintenance expenses and higher depreciation expense due to the growth in our investment in utility plant.

Retail Energy-Marketing

For the quarter ended September 30, 2012, the retail energy-marketing segment reported net income of $14.4 million, or $0.28 per share, an increase of $8.4 million, or $0.16 per share, over net income of $6.0 million, or $0.12 per share, reported for the same quarter of the prior fiscal year. Non-GAAP operating earnings for the retail energy-marketing segment were $8.9 million, or $0.17 per share, for the quarter ended September 30, 2012, compared to non-GAAP operating earnings of $11.8 million, or $0.23 per share, for the same quarter of the prior fiscal year. For the fiscal year ended September 30, 2012, the retail energy-marketing segment reported net income of $39.3 million, or $0.76 per share, compared to net income of $49.0 million, or $0.95 per share, reported for the prior fiscal year. Non-GAAP operating earnings for the retail energy-marketing segment were $36.2 million, or $0.70 per share, for the fiscal year ended September 30, 2012, an increase of $1.9 million, or $0.03 per share, over non-GAAP operating earnings of $34.3 million, or $0.67 per share, for the prior fiscal year.

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