1126956--12/3/2007--LACLEDE_GROUP

related topics

{gas, price, oil}

{capital, credit, financial}

{loss, insurance, financial}

{operation, natural, condition}

{product, market, service}

{condition, economic, financial}

{debt, indebtedness, cash}

{cost, regulation, environmental}

{cost, contract, operation}

RISKS AND UNCERTAINTIES THAT RELATE TO THE BUSINESS AND FINANCIAL RESULTS OF LACLEDE GROUP AND ITS SUBSIDIARIES As a holding company, Laclede Group depends on its operating subsidiaries to meet its financial obligations. A downgrade in Laclede Group s credit rating could negatively affect its ability to access capital. Risk of unexpected losses may adversely affect the Group s financial position and results of operations. RISKS THAT RELATE TO THE REGULATED GAS DISTRIBUTION SEGMENT Risks related to the regulation of the Utility business could impact rates it is able to charge, costs and profitability. Laclede Gas liquidity and, in certain circumstances, its results of operations could be adversely affected by the cost of purchasing natural gas during periods in which natural gas prices are rising significantly. Hedging procedures may not fully protect Laclede Gas sales and results of operations from volatility, and the use of derivative contracts in the normal course of business could result in financial losses. Laclede Gas is dependent on bank lines of credit and continued access to capital markets to successfully execute its operating strategies. A downgrade in the Utility s credit rating could negatively affect its ability to access capital. Transporting and storing natural gas involves numerous risks that may result in accidents and other operating risks and costs. Increases in the wholesale costs of purchased natural gas supplies may adversely impact the Utility s competitive position compared with alternative energy sources. Significantly warmer-than-normal weather conditions, the effects of global warming and climate change, and other factors that influence customer usage may affect the Utility s sale of heating energy and adversely impact its financial position and results of operations. Regional supply/demand fluctuations and changes in national pipeline infrastructure may adversely affect Laclede Gas ability to profit from off-system sales and capacity release. RISKS THAT RELATE TO THE NON-REGULATED GAS MARKETING SEGMENT Risks of increased competition, regional fluctuations in natural gas commodity prices, and new national pipeline infrastructure projects may adversely impact LER s future profitability. Risks of reduced access to credit and/or capital markets may prevent LER from executing operating strategies. Risk management policies and the use of cash flow hedging may not fully protect LER s sales and results of operations from volatility and may result in financial losses. RISKS THAT RELATE TO THE NON-REGULATED SERVICES SEGMENT Competition and the ability to retain customers may impact SM P s sales and profitability.

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1126956--12/3/2007--LACLEDE_GROUP_INC