RATINGS RATIONALE

"The ratings upgrade reflects Moody's view that AGALP has delivered successfully on its operational and financial targets, resulting in a credit profile which is appropriate for a Baa2 rating", says Mary Anne Low, a Moody's Analyst.

"The establishment of a track record and evidence of the successful integration of the company - which is supported by management's conservative financial policy -- are key elements that underpin the rating upgrade", adds Low.

Moody's expect that AGALP will maintain a robust operational and financial performance as outlined by its management. Over the next three years, Moody's estimates AGALP to generate financial metrics that position it appropriately within the rating, including FFO/Interest of around 2.5x, FFO/Debt of 11-12% and Debt/Regulated Asset Base (RAB) of 60-70%.

"The ratings upgrade incorporates Moody's expectation that the company will remain committed to the prudent capital management and financial metrics for the Baa2 rating," says Low, adding "and this expectation is built into the rating." AGALP's parent company, ATCO Ltd ("ATCO", unrated") is supporting the company by not declaring dividend distributions over the next few years. In addition, ATCO has provided a subordinated shareholder loan of AUD410 million which provides a cushion for AGALP's senior debt. Moody's has given full equity credit for the shareholder loan, given its deeply subordinated structure, as well as the strategic intention of ATCO towards AGALP. Moody's also expect ATCO will remain committed towards preserving a prudent capital structure for AGALP, as well as financial metrics that are appropriate for the Baa2 rating.

The Baa2 ratings could experience an upward trend if there is consistent improvement in its operating profile, which could result in improvement in its financial profile. This may be evidenced by the maintenance of FFO/Interest of at least 2.7x-2.8x and FFO/Debt of around 12%-15% range, all on a sustained basis. Continued profit retention will also be supportive of the rating.

The ratings could be lowered if there is a deterioration of AGALP's financial profile, which could arise from a weaker operating environment or an aggressive capital management or distribution policy. Financial metrics that Moody's would look for include FFO/Interest falling to below 1.8x, FFO/Debt below 8% and Debt/Regulated Asset Base exceeding 90%, on a consistent basis. The rating could also experience downward pressure if there is a weakening in AGALP's strategic position within ATCO's overall group, thereby potentially impacting on Moody's treatment of the subordinated sharehlder loan.

The principal methodology used in rating AGALP was the Regulated Electric and Gas Networks Industry Methodology published in August 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

AGALP is the holding entity which wholly owns ATCO Gas Australia Pty Ltd ("ATCO Gas"), the owner of regulated gas distribution networks in Western Australia. The company is ultimately owned by ATCO, which exhibits investment grade rating features. ATCO's primary business segments include the utilities, energy, structures and logistics and technologies sectors. It is listed on the Toronto Stock Exchange. As at 30 September 2012, ATCO had total assets of CAD13.7 billion and shareholder equity of CAD4.8 billion.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

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Mary Anne Low Analyst Corporate Finance Group Moody's Investors Service Pty. Ltd. Level 10 1 O'Connell Street Sydney NSW 2000 Australia JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 Terry Fanous Associate Managing Director Corporate Finance Group JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 Releasing Office: Moody's Investors Service Pty. Ltd. Level 10 1 O'Connell Street Sydney NSW 2000 Australia JOURNALISTS: (612) 9270-8102 SUBSCRIBERS: (612) 9270-8100 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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