Inadequate Rate Relief May Result in Service Deterioration
Company Has Not Had A Rate Increase Since 2000

Bridgeport, CT, June 28, 2005 - Public hearings began today before the Connecticut Department of Public Utility Control (DPUC) on the application of The Southern Connecticut Gas Company (SCG) for a rate increase. SCG is seeking rate relief to restore its financial stability, end the deterioration of cash flow and collect prudently incurred costs that are not reflected in rates. In fact, SCG was recently downgraded by Standard and Poors.

Insufficient cash flow and the inability to recover costs necessary to provide service to customers will affect day-to-day operations. Without recovery of the Company’s actual cost as requested in this case, Southern will be forced to offset its significant revenue shortfall through additional cost reduction measures such as substantial workforce reductions, specifically hundreds of jobs, cutbacks in customer service programs, and reductions in infrastructure investment.

“Southern is committed to finding workable solutions and would welcome an opportunity to engage in discussions with all parties to achieve a mutually acceptable, comprehensive resolution to the many complex issues in the case,” said Robert M. Allessio, President and Chief Executive Officer.