Merrill Lynch

2006 Power & Gas Conference

New York

September 27, 2006

Forward-Looking Statements

Statements contained in this presentation that include company expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. It is important to note that the actual results of company earnings could differ materially from those projected in any forward-looking statements. For additional information refer to Southern Union Company’s Securities and Exchange Commission filings.

Southern Union Contact:

Jack Walsh, Director of Investor Relations

800-321-7423

Southern Union Company

Portfolio Asset Mix

Create Shareholder Value

Reposition Portfolio

üBuilding portfolio of franchise-quality assets

üRepositioning portfolio to higher returning businesses

–2003: Acquisition of Panhandle Energy/Sale of Texas distribution assets

–2004: Investment in Cross Country

–2006: Acquisition of Sid Richardson/Sale of PA & RI distribution assets

–2006: Exchange 50% interest in TW for additional 25% interest in FGT

üFocusing on growth around quality assets

SUG Actively Manages Portfolio to Optimize Value

Transaction Overview

üMulti-step transaction designed to increase ownership in FGT to 50% and eliminate ownership in Transwestern

üEnergy Transfer Partners (ETP) to purchase CCEH Class B interests from GE & others for $1B cash

üETP exchanges its Class B interests in CCEH for 100% of Transwestern Pipeline valued at $1.465 billion

üExpected to close 4Q 2006

Positions SUG for Future Growth

Transaction Rationale

üSUG improves risk profile

üFGT is a franchise quality asset strategically positioned for growth in the Florida market

üTranswestern has more strategic value to ETP

Increasing Interest in Franchise Asset

Financial Impacts

üExpected to be neutral to near term earnings

üCCEH responsible for $455MM of Transwestern Holding’s debt

üEnhances intrinsic value of assets

Long-Term Value Focus

Efficiently Manage Assets

üEfficiently manage existing assets

–Integrating Panhandle and Cross Country produced synergies of $25MM

–Pursuing rate cases at both LDCs

–Driving future savings and efficiencies with shared services

Assets Managed to Maximize Free Cash Flow

Fund Growth & Optimize Capitalization

üUtilize free cash flow to fund growth and optimize capitalization

–Reinvest in high returning growth projects

•Trunkline LNG

•Trunkline Field Zone Expansion

•SUGS projects

–Optimize debt level - maximize return to shareholders

•Conversion of $125MM equity units in August

Building Value through Reinvestment

Improve Visibility

üSteps to provide more transparency in our communications

–Changed fiscal year end from June to December

–Implemented $.40 per share cash dividend in 2006

–Redesigned shareholder communications

–Improved disclosures

Raising Profile through Clarity

Delivering Value

Consistent EPS Growth

Strong Cash Generator

Diversified Earnings Base

Strengthened Balance Sheet

2Q 2006 Segment Highlights ($000s)

•Includes SUG’s 50% of Transwestern’s total interest and depreciation of $23 million plus SUG’s 25% of Citrus’ total interest, taxes, and depreciation of $67 million.

•Includes $21.8 million of cash settlement from 2Q options plus $1.3 million non-cash loss related to the time value portion of the hedge.

2Q EBIT Reconciliation ($000s)

Asset Overview

Distribution Assets

•Headquartered in Kansas City, MO

•Regulated by the Missouri PSC

•Serves approximately 500,000 customers

•Serves 34 counties throughout MO

•Filed for $41.7 million rate increase

•Headquartered in Wilkes-Barre, PA

•Regulated by the Pennsylvania PUC

•Serves approximately 160,000 customers

•Serves 13 counties in northeastern and central PA

•Sold PA assets to UGI for $580 million

•Headquartered in Providence, RI

•Regulated by the RI PUC and the Massachusetts DT&E

•Serves approximately 250,000 customers in RI

•Serves approximately 50,000 customers in MA

•Sold RI assets to National Grid for $575 million including assumed debt of $77 million

Transportation & Storage Business

Key Characteristics

•FERC regulated

•Diverse access to supply

•Strong and growing customer base

•Significant organic growth opportunities

•Consolidated operations

One of the Nation’s Largest Interstate Pipeline Companies

Trunkline LNG Company

•North America’s largest operating facility

•Fully contracted with high credit quality counterparty-

BG Group - until 2028

•1.8 Bcf/d baseload sendout

•9.0 Bcf storage

•Ambient air vaporization and NGL extraction to be in service by 2008

Trunkline LNG is a Leading Player in LNG Sector

Strong Organic Growth

Gathering & Processing Business

•Southern Union Gas Services acquired by Southern Union on March 1, 2006

•Major provider of gas gathering and processing services in the Permian basin

•Unregulated, high growth business

System Detail

Differentiating Factors

Attractive Contract Risk

•   Percent of Proceeds Contracts

–   45% by volume

–   80 - 85% by margin

–   Spreads price risk to both producer and pipeline

–   Fixed recovery and fuel % in contract

–   Allows pipeline and producer to hedge their interests

–   Allows pipeline to benefit from operational flexibility

–   Creates pipeline option to optimize revenue when processing is economic

–   Contract contains recovery of treating, compression and gathering services

•   Fee Based/Conditioning Fee Contracts

–   55% by volume

–   15 - 20% by margin

–   Contracts contain fixed fees for service

–   Depending on gas quality, contracts may contain upside for processing and no downside risk below base fee

–   Creates exposure to diverse producer base with no downside commodity risk

Operational Reliability

•Operating Risks reduced by…

–Diversified inter-connected assets

–Strong reliable operations

•High run rate

•Low FF&U (fuel, flared and unaccountable)

•Low operating costs

•Gas rejection

•Blending

Manageable Commodity Exposure

•SUGS’ system flexibility allows it to hedge equity BTU volumes using various instruments

•Current hedging done through put options so that SUGS maintains upside while mitigating downside

SUGS Growth Projects

•Deep Atoka Gas Development - Loving, Winkler and Ward Counties, Texas

–~200MMcf/d currently producing

–Expect to double that by 2008 with 16 to 18 rigs

–5 to 30MM/d per well

•Eunice Area Expansion Projects - Lea County, New Mexico

–70 MMcf/d expansion

–Expect to connect additional volumes from major active producers in 2006 and 2007

–High margin, rich, sour, low pressure gas

•Spraberry Trend Expansion - Reagan County, Texas

–20 mile extension of system into Spraberry trend

–Over 15 MMcf/d of 6.6 GPM gas

–Infill drilling continues at a steady pace

•West Texas Barnett Shale - Culberson, Reeves, Pecos & Jeff Davis Counties, TX

–Over 2 MM acres have been leased in past 2 years in area with little infrastructure for gas or NGL’s

–Approximately 40 evaluation wells have been drilled, are drilling or are permitted

–Chesapeake recently acquired 135,000 acres and active exploratory program with established commercial production in the area from Hallwood and Four Sevens (Alpine)

–Additional players include, EOG, Encana, Petro-Hunt, Burlington, Quicksilver and Southwestern Energy

Questions