News Release

Natural Gas Lawsuit Settled

November 21, 2006

Huntsville Utilities and ProLiance Energy LLC announced today that they had reached a settlement of the lawsuit between them which involved disputes over a gas supply contract between the parties.

A federal court jury rendered a verdict in favor of the utility in February of 2005, and at the time of the settlement the case was pending appeal before the U.S. Court of Appeals for the Eleventh Circuit in Atlanta.

ProLiance agreed to pay Huntsville Utilities $21.6 million in the settlement.

The Huntsville City Council approved the settlement agreement Tuesday night at the Council's regular meeting.

William C. Pippin, president of Huntsville Utilities, said, "We contended throughout the proceedings that the jury's verdict in our favor was supported by the evidence and the law, and we are pleased that the matter could be resolved without further legal process."

Utility officials also announced that $10 million of the settlement would be returned to HU natural gas customers in the form of a refund.

"We have just reached the settlement amount and the process for the refund has not been formalized", stated utility spokesman Bill Yell. "We expect refunds to be from $75 to $120 for residential customers", Yell stated.

The refund amounts will be based upon the actual gas usage by customers from February 2001 to March 2002. March 2002 was when gas supply situation was discovered.

All HU residential, commercial and industrial natural gas customers that were customers during the February 2001 to March 2002 timeframe will receive refunds.

Utility officials expect to complete the refund process during the first quarter of 2007.

Additional amounts from the settlement will be used to restore operating funds for the gas system, to complete delayed capital projects and to cover legal costs.