Lehman Brothers

2008 CEO Energy/Power Conference

New York

September 4, 2008

Forward-Looking Statements

Agenda

• Southern Union Company Overview
• Creating Shareholder Value
• Segment Information & Growth Drivers
• 2008 Financial Outlook
• Conclusion
• Appendix

Southern Union Company Overview

Southern Union Transformation

High Quality Assets

Business Segments

Transportation & Storage

• Vast pipeline network with access to diverse supply sources and growing markets
• Approximately 15,000 miles of interstate pipelines with transportation capacity of 7.8 Bcf/d
• North America’s largest liquefied natural gas (LNG) import terminal with peak send out of 2.1 Bcf/d and storage of 9 Bcf
• Interests in approximately 100 Bcf of storage

Gathering & Processing

• Extensive system in the prolific Permian Basin
• Approximately 4,800 miles of pipelines
• Five processing plants (four active) with a capacity of 470 MMcf/d
• Eight treating plants (five active) with a capacity of 765 MMcf/d

Distribution & Other

• Distribution serves approximately 550,000 customers in Missouri and Massachusetts
• PEI Power owns interests in and operates 70 MW of “green energy” focused generating assets which supply electricity into the PJM Grid

Creating Shareholder Value

Value Creation

Value creation will come from:

–   Organic growth projects

Strategic initiatives

Prudent financial management

Organic Growth Projects

Vast pipeline network with access to multiple supply sources and diverse markets will help fuel organic growth

Analyze trends in the natural gas industry to identify opportunities

Recent open seasons:

FGT Phase VIII expansion

FGT Pascagoula lateral to serve GulfLNG Energy, LLC import terminal

Longville – Henry Hub expansion on Trunkline Gas

Southern Union Gas Services is well positioned to capture potential opportunities resulting from the development of the West Texas Barnett Shale and strong drilling throughout its system

Strategic Initiatives

Evaluate and pursue market opportunities

–   Strategic acquisitions

–   Partnership or joint venture opportunities

Continue to evaluate market conditions for creating an MLP for gathering and processing assets

Prudent Financial Management

Preservation of investment grade ratings is important for:

–   Lower financing costs/eliminates collateral requirements

–   Improves rate making and regulatory relationships

Free cash flow may be used for:

–   Organic growth projects

–   Share repurchases

–   Increased dividends

–   Debt repayment

Actively manage operating expenses

Transportation & Storage

Transportation & Storage Assets

T&S Growth Drivers

Trunkline Field Zone Expansion

Trunkline LNG: Infrastructure Enhancement Project

FGT Phase VIII Expansion

FGT Phase VIII Expansion Timeline

FGT Pascagoula Lateral

Gathering & Processing

Map of Operations

SUGS Overview

Located in prolific, long-lived Permian Basin

Approximately 4,800 miles of gas and liquids pipelines covering 16 counties in West Texas/Southeast New Mexico

Two fully-integrated midstream systems connected via high-pressure pipeline network

– North System: Jal and Keystone

– South System: Coyanosa, Mi Vida, Tippett and Grey Ranch

– Integration: 24-inch high-pressure pipeline

Four active cryogenic plants and five active treating plants

Attractive downstream markets

– Residue: California, Mid-Con, Texas

– NGLs: Mont Belvieu

Attractive contract mix – 96% + POP / Fee-based

North System

Consists of the Jal and Keystone Systems

 –   Large diameter predominately low pressure pipelines

 –   Wellhead volume of 250,000 MMBtu/d of 5.0 GPM sour gas

  –   220 MMcf/d cryogenic plant capacity

   –   23,000 bbls/d NGL production

   –   40 tons/d sulfur plant capacity

   –   Recent compression and high pressure pipeline upgrades

   –   Completion of sour gas 16-inch transfer line in June 2007

South System

Consists of the Mi Vida, Coyanosa and Tippett Systems

– High pressure integrated sweet and sour gas gathering system

– Wellhead volume 330,000 MMBtu/d

– 190 MMcf/d cryogenic processing capacity

– Plant inlet of 175 MMcf/d of 3.5 GPM gas producing 11,200 bbls/d of NGLs

– 370 MMcf/d treating capacity with 115 MMcf/d current throughput

Grey Ranch System

– High CO2 gathering and treating system

– Earn fixed fee for removing CO2 volumes

– 87 MMcf/d current throughput

– Expect significant volume growth

High Pressure Transfer System

Diversified, Active Producer Portfolio

Gas Supply – Contract Risk Mitigation

Substantially eliminated true keep whole exposure

Changed gas pricing mechanism – First of Month to Gas Daily

– Matches daily priced gas to daily priced NGL’s

– Mitigates risk from daily volume swings

Producer indemnifications negotiated on many capital intensive projects

Key Assumptions for 2008

• Positive processing spread environment allows conversion of equity into mostly natural gas liquids
• Equity volumes average 40,000 to 45,000 MMBtu/d (converted from NGL gallons to BTUs)
• Normalized FF&U levels
• Incorporates current hedging program

Hedged Positions

• SUGS expects equity volumes for 2008 to be approximately 40,000 to 45,000 MMBtu/d of NGLs
• Through a combination of swaps and put options on natural gas and NGL processing spreads, SUGS has a net effective price on 30,000 MMBtu/d of $15.02 for the balance of 2008
• SUGS entered into an additional processing spread swap(1) on 10,000 MMBtu/d at $7.10 for 2008
• For 2009, SUGS has a net effective price on 20,000 MMBtu/d at $16.40
• For 2009, SUGS entered into an additional processing spread swap(1)  on 10,000 MMBtu/d at $8.37

(1) The processing spread swaps must be added to the physical natural gas price to arrive at the net price for the physical product.

G&P Growth Drivers

Growth Drivers

• Aggressively pursue new business
• Operating & maintenance expense management
• Invest capital throughout the system to ensure efficiency
• Exploit competitive advantages

SUGS Growth Projects

Deep Atoka Gas Development – Loving, Winkler and Ward Counties, Texas

§   Production peaked in 2007 at approximately 350MM/d

§   Anadarko and Chesapeake continue active drilling program

§   Initial per well delivery rates up to 40MMcf/d per well

Eunice Area Expansion Projects – Lea County, New Mexico

§   Treating expansion project with acid gas injection well to be complete in 2008

§   Expect to connect additional growth volumes from Apache, Range, Bass and other active producers in 2008 and 2009

§   High margin, rich, sour, low pressure gas

Grey Ranch Treating Expansion – Pecos County, Texas

•   Expand capacity from 90 MMcf/d to 180 MMcf/d

•   Partner drilling program adding significant volumes of 70% CO2 gas supporting expansion

•   Estimated completion by year end 2008

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

§   Over 2 MM acres have been leased in the area with little infrastructure for gas or NGLs

§   Over 80 evaluation wells have been drilled, are drilling or are permitted in the trend

§   Chesapeake is the largest player in the area and has “Cracked the Code” on completing these wells

§   Recent completions approaching 5MM/d per well

Distribution & Other

Missouri Gas Energy

Missouri Gas Energy is a local distribution company serving central and western Missouri

•   Provides natural gas to over 500,000 customers

•   Nearly 13,000 miles of main and service lines

•   MGE received a $27.2MM annual revenue increase in 2007

–   MGE received a straight fixed-variable rate design for its residential customer class that mitigates weather and conservation impact on margin

–   New rates were effective April 3, 2007

New England Gas Company

New England Gas Company is a local distribution

company serving North Attleboro and Fall River, MA

•  Provides natural gas to 50,000 customers

•  Nearly 2,000 miles of main and service lines

•  NEGCO received a $4.6MM annual revenue increase in 2007

–   Settlement includes mechanisms to recover gas-cost related uncollectible expense, pension costs and other postretirement benefit costs

–   New rates phased in over eight-month period beginning August 1, 2007

•   NEGCO recently filed a rate increase request for $5.6 million.  New rates are expected to be in place by 2/1/2009.

2008 Outlook

Guidance and EBITDA Outlook

2008 earnings guidance

–   SUG’s earnings guidance range is $1.80 to $1.90 per share

–   Guidance range is driven by:

ü   Commodity price impact on unhedged gathering & processing volumes and operating efficiency

ü   Operating and maintenance expense containment

ü   Timing and amount of capital spending program

Expect significant EBITDA growth beginning in 2Q 2009 from Trunkline Infrastructure Enhancement Project; $60MM to $65MM on an annualized basis

Pro forma EBITDA Guidance ($000,000s)

2008 Capital Expenditure Guidance ($000,000s)

2008 EBITDA by Segment

• EBITDA from regulated assets accounts for approximately 80% of total providing stability to earnings and cash flows
• EBITDA from SUGS is only 20% of total
• SUGS actively manages its commodity exposure through hedging instruments

Conclusion

Summary

Compelling vision and clear strategic plan going forward

–   Strategic transformation and value creation achieved

–   Organic growth projects with clear visibility towards earnings growth and value creation

–   Balance preservation of investment grade credit ratings and return of capital to shareholders

Appendix

Company Facts

Reg. G Reconciliation