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Laclede Gas Seeks Approval for New Service and Conservation Options and Recovery of Increased Distribution Costs

December 04, 2006

ST. LOUIS, MO, December 1, 2006 – Today Laclede Gas Company (the Company), a subsidiary of The Laclede Group (NYSE:LG), filed with the Missouri Public Service Commission (MPSC) a comprehensive request to provide new service choices to its customers, encourage further conservation efforts, and increase its rates to reflect increased costs the Company incurs to operate and maintain its 16,000-mile distribution and storage system through which it distributes natural gas to its 631,000 customers.

Today’s proposal will have no impact on customers this winter as the Commission will conduct a review of the filing that, by regulation, may take up to 11 months.

In a departure from the past, the filing proposes a comprehensive regulatory “compact” to govern Laclede Gas’ future service commitment to its customers. The proposed compact includes a pilot program in which customers could lock in a fixed gas commodity cost on their monthly bill based on prevailing market prices. It also offers an innovative program that would provide customers an opportunity to earn a rebate by conserving natural gas use during the peak winter heating months of December, January and February.

Under the compact, Laclede’s base rates could not be increased again for three years. Additionally, to the extent that Laclede would achieve any earnings in excess of its authorized return as a result of its efforts to make utility service more efficient and sell gas in markets outside of the Company’s traditional service territory, the compact would require that up to 90 percent of such earnings be shared with customers depending on the level of earnings achieved.

“By giving customers additional and innovative service options, helping them to conserve on their use of natural gas, and allowing them to share in the Company’s successful efforts to reduce costs and achieve sales revenues from customers located off our system, the compact offers a more balanced and forward-looking approach to providing reliable natural gas services to our customers both now and in the future,” said Douglas H. Yaeger, Chairman, President and Chief Executive Officer of Laclede Gas Company.

“While the need to recover the costs to operate and maintain our system is critical, we also recognize that many of our more vulnerable customers need help in coping with their energy costs. To that end, the compact continues programs that are specifically designed to help such customers reduce their usage and bills,” continued Yaeger.

If approved, the proposed new rates would result in an increase in gas bills for a typical residential heating customer of about $6.50 per month. The new rates would apply throughout the Laclede Gas system, including its Missouri Natural operating division.

The proposed new rates would provide additional annual base revenues to offset the Company’s increased costs of providing natural gas service to its customers of approximately $45 million, which includes $1.8 million which is already being paid by customers through the current Infrastructure System Replacement Surcharge (ISRS). The Company would also include approximately $9.8 million in costs in the PGA that are currently included in base rates.

Missouri law calls for the establishment of rates that reflect the utility’s cost of providing safe, reliable service to its customers while providing a reasonable rate of return to the Company’s investors.

Laclede Gas is Missouri’s largest natural gas distribution company, serving customers in St. Louis and surrounding counties in Eastern Missouri.


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