Forging a New Legacy

When we think back over the past nine years, we are thankful in so many ways for the privilege of leading this company—the inspiration we’ve drawn from an energized WGL team, the growth we’ve been able to realize and the promising future we anticipate.

Perhaps our greatest satisfaction comes from the decision our board of directors made at the very beginning of our tenure allowing us to envision a future for WGL that stepped outside the traditional utility model and, in essence, forged a new legacy for our company. It was this important step that made possible all that WGL has become today.

We set out to point WGL toward an energy future that would not only serve our business in the present, but one that would endure to the benefit of future generations. We were empowered to ask—and answer—a profound question: Where do we think the world needs to be in 30 years, 50 years, and well into the future?

Our mission was to forge a new legacy, a future built on WGL’s distinguished 160-plus-year history, but at the same time establish an ambitious, reinvigorated mission, one that would both benefit our shareholders and also create a better future for our planet, our communities, the customers we serve now and those we will serve for many decades to come.

Executing on a Vision

For us, that meant asking where the world of energy is headed over the long term, and how do we help drive the future by what we do. It was clear the world was moving toward cleaner energy, with natural gas a key part of that picture. That energy future also embraced wind, solar, energy efficiency, natural gas-powered fuel cells and even more from the world’s best engineering minds. So how would we get involved?

In the past nine years, we have addressed these questions to realize the vision of a company intent on participating in that new energy future while further growing those portions of our enterprise that have served us for the past 169 years. To wit:

  • We have continued to operate a safe, reliable, growing and state-of-the-art regulated natural gas utility. Washington Gas, our largest business unit, is an indispensable part of the comprehensive energy solution we offer to our customers.
  • We have grown our gas infrastructure effort through our WGL Midstream business. Here we’ve extended a major presence in natural gas storage and transportation into a growing infrastructure business—our investments in pipeline systems are now projected to total nearly $1 billion in the near future.
  • Finally, through WGL Energy, we have built a robust and profitable presence in alternative energy, offering our customers solar solutions, remotely generated wind and other options. Through a distributed generation model, we can provide a combination of natural gas and alternative energy solutions.

WGL has a proud history as a pillar of the Washington, D.C., area. As we have transformed our company, we have maintained our commitment to the communities we serve and strengthened our role as a corporate citizen within those communities.

As we forge our new legacy and embark upon our next journey into the future, that commitment will live on for the benefit of us all.

We’ve continued to deliver solid financial returns to our shareholders, year in and year out. In Fiscal Year 2017, we reported record GAAP consolidated net income of $192.6 million, or $3.74 per share, versus FY 2016 GAAP results of $167.6 million, or $3.31 per share, and non-GAAP consolidated operating earnings of $160.2 million, or $3.11 per share, versus FY 2016 non-GAAP results of $155.6 million, or $3.08 per share. These results can be attributed to:

  • the addition of more than 12,400 meters during the year;
  • timely returns on our investments to replace segments of aging infrastructure in all three of Washington Gas’ jurisdictions;
  • pipeline infrastructure investments; and
  • higher earnings from alternative energy investments.

Overall, we extended our track record of increasing dividends for 41 consecutive years and paying dividends for 166 years.

Our mission was to forge a new legacy, a future built on WGL’s distinguished 160-plus-year history, but at the same time establish an ambitious, reinvigorated mission, one that would both benefit our shareholders and also create a better future for our planet, our communities, the customers we serve now and those we will serve for many decades to come.

Looking Forward—A Promising New Legacy

In January of 2017 the boards of directors of WGL Holdings and AltaGas Ltd., of Calgary, each unanimously approved a definitive agreement for WGL to be acquired by AltaGas, a North American infrastructure company, in an all-cash transaction valued at approximately $6.4 billion, pending regulatory approval.

The concept of creating a bigger, better company with the combined resources of WGL and AltaGas is exactly in sync with all that we have been doing leading up to this. As part of a larger company with more resources, we will be able to provide energy solutions we currently don’t offer and to grow parts of our business that are complementary to those of AltaGas. Importantly, we will also be able to continue running existing businesses, including providing safe and reliable natural gas to our service area and growing Washington Gas as we do today.

As we said at the beginning of this letter, all this would not have been possible without the highly dedicated and focused WGL employees that it has been our privilege to lead, professionals who have worked tirelessly to realize the vision of a more diverse, environmentally conscious and modern energy company. This dedication has been particularly true in the past year, with every one of our employees remaining focused, and with many of our people essentially doing two jobs, fulfilling their regular duties while also attending to the myriad details of a large, complex merger.

We want to thank these colleagues, and also our customers, shareholders and communities, for their support. We have built something great, something lasting, a legacy—one that promises only to get better.

Sincerely yours,

Terry D. McCallister
Chairman and Chief Executive Officer
Adrian P. Chapman
President and Chief Operating Officer