The ratings for Southern Natural Gas Co. (SNG), an affiliate of El Paso Corp., are based on the strength of the consolidated entity. The underlying credit quality of SNG reflects a stable customer base, firm contracts, and fully contracted volumes. These strengths are slightly offset by the risks associated with shorter pipeline contracts, a changing pipeline customer profile, and the potential for heightened industrywide safety compliance. SNG is well positioned in the southern tier of the U.S., where gas demand is surging because of multiple gas-fired, independent power projects. The company has allocated capital in recent years for expansion projects and is now poised for increased volumes and cash flow in Georgia, Alabama, and Tennessee. Also, ample storage capacity, 29
