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•	the occurrence of any event, change or other circumstances that could give rise to the termination of the Agreement and Plan of Merger (Merger Agreement) among WGL, AltaGas Ltd. (AltaGas) and Wrangler, Inc.

•	the inability of WGL or AltaGas to satisfy conditions to the closing of the merger;

•	the required regulatory approvals for the merger may not be received, may not be received in a timely manner, or may be received subject to imposed conditions or restrictions that cause a failure of a closing condition to the merger or that could have a detrimental impact on the combined company following completion of the merger;

•	the effect of the consummation of the merger on the ability of WGL to retain customers and retain and hire key personnel;

•	the effect of the consummation of the merger on the ability of WGL to maintain relationships with its suppliers;

•	potential litigation in connection with the merger;

•	the incurrence of significant costs for advisory services in connection with the merger;

•	the impact of the terms and conditions of the Merger Agreement on WGL’s interim operations and its ability to make significant changes to its business or pursue otherwise attractive business opportunities without the consent of AltaGas;

•	the level and rate at which we incur costs and expenses, and the extent to which we are allowed to recover from customers, through the regulatory process, such costs and expenses relating to constructing, operating and maintaining Washington Gas’ distribution system;

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•	the availability of natural gas and electricity supply, interstate pipeline transportation and storage capacity;

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the outcome of new and existing matters before courts, regulators, government agencies or arbitrators, including those relating to efforts to overturn the denial of a permit necessary for construction of the Constitution Pipeline, disputes relating to our purchase of natural gas under the Antero gas supply contracts, and the August 2016 explosion and fire at an apartment complex in Silver Spring, Maryland.

•	factors beyond our control that affect the ability of natural gas producers, pipeline gatherers and natural gas processors to deliver natural gas into interstate pipelines for delivery to the entrance points of Washington Gas’ distribution system;

•	security breaches of our information technology infrastructure, including cyber-attacks and cyber-terrorism;

•	leaks, mechanical problems, incidents or other operational issues in our natural gas distribution system, including the effectiveness of our efforts to mitigate the effects of receiving low-HHC natural gas;

•	factors affecting the timing of construction and the effective operation of pipelines in which we have invested;

•	changes and developments in economic, competitive, political and regulatory conditions;

•	unusual weather conditions and changes in natural gas consumption patterns;

•	changes in energy commodity market conditions, including the relative prices of alternative forms of energy such as electricity, fuel oil and propane;

•	changes in the value of derivative contracts and the availability of suitable derivative counterparties;

•	changes in our credit ratings, disruptions in credit market and equity capital market conditions or other factors that may affect our access to and cost of capital;

•	the creditworthiness of customers; suppliers and derivatives counterparties;

•	changes in laws and regulations, including tax, environmental, pipeline integrity and employment laws and regulations, including the competitiveness of WGL Energy Systems in securing future assets to continue its growth following the extension of federal laws relating to investment tax credits and bonus depreciation;

•	legislative, regulatory and judicial mandates or decisions affecting our business operations;

•	the timing and success of business and product development efforts and technological improvements;

•	the level of demand from government agencies and the private sector for commercial energy systems, and delays in federal government budget appropriations;

•	the pace of deregulation of energy markets and the availability of other competitive alternatives to our products and services;

•	changes in accounting principles;

•	our ability to manage the outsourcing of several business processes;

•	strikes or work stoppages by unionized employees;

•	acts of nature and catastrophic events, including terrorist acts and

•	decisions made by management and co-investors in non-controlled investees.

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•	the complexity of the site;

•	changes in environmental laws and regulations at the federal, state and local levels;

•	the number of regulatory agencies or other parties involved;

•	new technology that renders previous technology obsolete or experience with existing technology that proves ineffective;

•	the level of remediation required and

•	variation between the estimated and actual period of time required to respond to an environmentally-contaminated site.

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•	WGL—This section describes the financial condition and results of operations of WGL Holdings, Inc. and its subsidiaries on a consolidated basis. It includes discussions of our regulated operations, including Washington Gas and Hampshire Gas Company (Hampshire), and our non-utility operations.

•	Washington Gas—This section describes the financial condition and results of operations of Washington Gas, a subsidiary of WGL, which comprises the majority of the regulated utility segment.

•	regulated utility;

•	retail energy-marketing;

•	commercial energy systems; and

•	midstream energy services.

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•	Discount rate,

•	Expected long-term return on plan assets,

•	Rate of compensation increase,

•	Healthcare cost trend rate and

•	Projected increases to the Health Reimbursement Account (HRA) plan stipend.

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•	new base rates in Virginia and the District of Columbia;

•	higher utility net revenue related to growth of approximately 13,200 average active customer meters; and

•	higher unrealized mark-to-market valuations associated with our asset optimization program.

•	higher depreciation and amortization expense; and

•	higher operation and maintenance expenses.

•	higher utility net revenue related to growth of over 12,500 average active customer meters;

•	higher unrealized mark-to-market valuations associated with our asset optimization program and

•	higher rate recovery related to the accelerated pipeline replacement programs.

•	lower revenues attributed to warmer weather and unfavorable effects of changes in natural gas consumption patterns in the District of Columbia;

•	lower realized margins associated with our asset optimization program;

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•	a decrease in the recovery of carrying costs on lower average storage gas inventory balances;

•	higher depreciation due to the growth in our utility plant and

•	higher general taxes.

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(a)	Represents minimum payments for natural gas transportation, storage and peaking contracts for Washington Gas, WGL Energy Services and WGL Midstream.

(b)	Represents scheduled repayment of principal.

(c)	Represents the scheduled interest payments associated with long-term debt for WGL and Washington Gas.

(d)	Includes known and reasonably likely commitments to purchase fixed volumes of natural gas. Cost estimates are based on forward market prices as of September 30, 2017. Certain of our gas purchase agreements have optionality, which may cause increases in these commitments.

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(a)	Investment grade is primarily determined using publicly available credit ratings of the counterparty. If the counterparty has provided a guarantee by a higher-rated entity (e.g., its parent), it is determined based upon the rating of it guarantor. Included in “Investment grade” are counterparties with a minimum Standard & Poor’s or Moody’s Investor Service rating of BBB- or Baa3, respectively.

(b)	Includes the net of all open positions on energy-related derivatives subject to mark-to-market accounting requirements and the net receivable/payable for the realized transactions. Amounts due from counterparties are offset by liabilities payable to those counterparties to the extent that contractual netting arrangements are in place.

(c)	Represents cash deposits and letters of credit received from counterparties, not adjusted for probability of default.

(d)	Using a percentage of the net exposure.

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•	Price Risk Related to the Regulated Utility Segment

•	Price Risk Related to the Non-Utility Segments

•	Value-At-Risk

•	Weather Risk

•	Interest-Rate Risk

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•	the complexity of the site;

•	changes in environmental laws and regulations at the federal, state and local levels;

•	the number of regulatory agencies or other parties involved;

•	new technology that renders previous technology obsolete or experience with existing technology that proves ineffective;

•	the level of remediation required; and

•	variations between the estimated and actual period of time that must be dedicated to respond to an environmentally-contaminated site.

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Regulated Utility – The regulated utility segment is our core business. It consists of Washington Gas and Hampshire. Washington Gas provides regulated gas distribution services (including the sale and delivery of natural gas) to end use customers and natural gas transportation services to an unaffiliated natural gas distribution company in West Virginia under a FERC approved interstate transportation service operating agreement. Hampshire provides regulated interstate natural gas storage services to Washington Gas under a FERC approved interstate storage service tariff.

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•	Retail Energy-Marketing – The retail energy-marketing segment consists of WGL Energy Services, which sells natural gas and electricity directly to retail customers in competition with regulated utilities and unregulated gas and electricity marketers.

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Commercial Energy Systems – The commercial energy systems segment consists of WGL Energy Systems which provides clean and energy efficient solutions including commercial solar, energy efficiency and combined heat and power projects and other distributed generation solutions to government and commercial clients. In addition, this segment comprises the operations of WGSW, a holding company formed to invest in alternative energy assets.

•	Midstream Energy Services – The midstream energy services segment consists of WGL Midstream, which specializes in the investment, management, development and optimization of natural gas storage and transportation midstream infrastructure projects.

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•	WGL reported net income applicable to common stock of $192.6 million for FY 2017, compared to $167.6 million for FY 2016. Operating earnings* per share increased by $0.03 per share from $3.08 in FY 2016 to $3.11 in FY 2017, an increase of 1%.

•	WGL established a new stock intra-day trading high of $86.89 on August 2, 2017.

•	WGL increased its annual dividend by 9 cents, an increase of 4.6%, to $2.04 per share. This marks the 41st consecutive year that WGL has increased the dividend on its common stock.

•	Washington Gas added more than 12,400 new customer meters within its service territory, which we believe demonstrates WGL’s successful marketing and sales efforts.

•	WGL Energy Systems added 76 megawatts of owned solar generating capacity and generated 290,000 megawatt hours of clean electricity in fiscal 2017. The unit had a total generating capacity of 221 megawatts in service at the end of the fiscal year.

•	WGL Midstream increased its ownership interest in Mountain Valley Pipeline by acquiring all of Vega Energy's 3% interest in the joint venture. WGL Midstream now owns a 10% interest in Mountain Valley Pipeline.

•	The Central Penn and Mountain Valley pipelines are on schedule for their in-service dates, with each pipeline receiving key regulatory approvals in fiscal 2017.

•	Company employees and their families volunteered over 11,500 hours of their time to a variety of community service projects in the Washington, DC metropolitan area.

•	WGL released its first Corporate Sustainability Report, demonstrating an ongoing dedication to innovation in energy efficiency, community improvement and the implementation of sustainable business practices. The inaugural Corporate Sustainability Report used the Global Reporting Initiative GRI-4 framework.

•	WGL set aggressive new sustainability targets for 2025; that our fleet and facilities will be carbon neutral by that date and that we will further reduce methane emissions (measured from a 2008 baseline) for every unit of natural gas delivered to 38% (from the 2008

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•	attract and retain qualified executives

•	focus executives’ attention on specific strategic and operating objectives of WGL;

•	align executives’ interests with the long-term interests of WGL’s shareholders; and

•	align management’s interests with the customers of its regulated utility subsidiary (Washington Gas) by rewarding the provision of a safe and reliable gas delivery to customers at a reasonable cost, and align management’s interests with the customers of its non-utility entities and the communities in which we operate.

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•	their contributions to meeting established corporate and departmental goals;

•	managing resources within established departmental budgets; and

•	effectiveness in areas of leadership, planning and teamwork.

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•	Classification as an energy related company under the Standard Industrialization Classification codes;

•	Public equity ownership and headquarters in the United States;

•	Annual net revenues greater than $175 million;

•	At least 70% of assets related to U.S. natural gas distribution;

•	No significant exploration and production or electric generation assets;

•	No significant energy trading operations;

•	An investment grade credit rating by Standard & Poor’s and Moody’s; and

•	No announced merger plans.

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•	25% Dividend Coverage Shares

•	25% ROE Ratio Shares

•	50% ROE Ratio Units

•	tax-qualified employee benefit plans that are available to our employees, including the Washington Gas Light Company Savings Plan (which we refer to, together with the Washington Gas Light Company Capital Appreciation Plan/ Union Employees’ Savings Plan, as the “401(k) Plans”), and the Washington Gas Light Company Employees’ Pension Plan (the “Pension Plan”);

•	the defined benefit Washington Gas Light Company Supplemental Executive Retirement Plan (“DB SERP”);

•	the Washington Gas Light Company Defined Contribution Supplemental Executive Retirement Plan (“DC SERP”);

•	the Washington Gas Light Company Defined Contribution Restoration Plan (the “Defined Contribution Restoration Plan” or “DC Restoration Plan”); and

•	the Washington Gas Light Company Defined Benefit Restoration Plan (the “Defined Benefit Restoration Plan” or “DB Restoration Plan”).

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•	Base salary changes for FY 2017 were determined at the September 27, 2016 HR Committee meeting and the September 27, 2016 Board meeting;

•	Short and long-term incentive goals for FY 2017 were set at the September 27, 2016 HR Committee meeting and the September 27, 2016 Board meeting;

•	Performance share and performance unit grants were approved at the September 27, 2016 HR Committee meeting for grants effective on October 1, 2016 using the common stock price on September 30, 2016; and

•	STI payments for FY 2017 were approved at the HR Committee meeting held on November 14, 2017 and the Board meeting held on November 15, 2017.

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•	the CEO is required to hold 5x base salary in WGL common stock;

•	the President and Chief Operating Officer, Senior Vice President and Chief Financial Officer, and the Senior Vice President, General Counsel and Corporate Secretary are each required to hold 2x base salary in WGL common stock; and

•	all other executive officers are required to hold 1x base salary in WGL common stock.

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•	Our performance goals and objectives reflect a balanced mix of performance measures to avoid excessive weight on a certain goal or performance measure;

•	Our annual and long-term incentives provide a defined and capped range of payout opportunities;

•	Total direct compensation levels are heavily weighted towards long-term, equity-based incentive awards with vesting schedules that fully materialize over a number of years;

•	Equity incentive awards are granted annually so executives always have unvested awards that could decrease significantly in value if our business is not managed for the long term; and

•	We have implemented meaningful executive officer stock ownership requirements so that executive officer personal wealth is significantly tied to the long-term success of WGL.

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•	our relative TSR (as to one-half of performance shares and performance units)

•	our return on equity compared to the weighted average utility authorized ROE (as to one-half of performance units)

•	whether our earnings per share exceed dividends declared per share (as to one half of performance shares)

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•	the 401(k) Plan, a tax-qualified defined-contribution plan in which the Named Executive Officers participate on the same terms as our other participating employees;

•	the Pension Plan, a tax-qualified, non-contributory pension plan covering all active employees (including executive officers) and vested former employees of Washington Gas;

•	the DB SERP, a non-qualified defined-benefit retirement plan which provides the Named Executive Officers a benefit up to 60% of the individual’s final average compensation, as determined under that plan;

•	the DC SERP, a non-qualified defined-contribution retirement plan;

•	the Defined Benefit Restoration Plan, a non-qualified defined-benefit retirement plan; and

•	the Defined Contribution Restoration Plan, a non-qualified defined-contribution retirement plan.

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•	an acquisition by any person of 30% or more of the voting stock of WGL or Washington Gas;

•	a change in the majority of the Board of WGL;

•	a reorganization, merger, consolidation or sale of all or substantially all of the assets of WGL or Washington Gas; or

•	shareholder approval of a complete liquidation or dissolution of WGL.

•	salary replacement benefits equal to the sum of the executive’s annual base salary plus annual target incentive bonus multiplied by three for Messrs. McCallister, Chapman, and Ammann and Ms. Thornton; and multiplied by two for Ms. Gutermuth.

•	the sum of any unpaid base salary and vacation pay through the termination date and the product of the executive’s annual bonus and a fraction, the numerator of which is the number of days in the current fiscal year through the termination date, and the denominator of which is 365;

•	medical and dental replacement benefits for three years for Messrs. McCallister, Chapman, and Ammann and Ms. Thornton; and such benefits for two years for Ms. Gutermuth;

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an additional three years of benefit service under the DB SERP for Messrs. McCallister, Chapman and Ammann, provided, in no event shall such additional service, when added to the executive’s DB SERP benefit service, exceed the maximum of 30 years (Mses. Gutermuth and Thornton do not participate in the DB SERP; their benefits under the DC SERP, and for Ms. Gutermuth, the DB Restoration, are 100% vested upon a change in control); and

•	outplacement services of up to $25,000; provided that such services are incurred by the executive within 12 months of his or her termination.

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assignment to the participant, without his or her consent, of duties inconsistent in any material respect with the executive’s then current position or duties (including, for Messrs. McCallister, Chapman and Ammann and Ms. Thornton, not having their current position at the most senior resulting entity following the change in control), or any other action by the company which would cause him or her to violate ethical or professional obligations,

•	or which results in a significant diminution in such position or duties;

•	the participant, without his or her consent, being required to relocate to a principal place of employment that is both more than 35 miles from his or her existing principal place of employment, and farther from the participant’s current residence than his or her existing principal place of employment;

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the company materially reduces, without his or her consent, the participant’s base salary rate or target bonus opportunity, or materially reduces the aggregate value of other incentives and retirement opportunity, or fails to allow the participant to participate in all welfare benefit plans, incentive, savings and retirement plan, fringe benefit plans and vacation benefits applicable to other senior executives; or

•	the company fails to obtain a satisfactory agreement from any successor entity to assume and agree to perform the company’s obligations to the Named Executive Officer under the CIC Plan.

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•	To better match the accounting recognition of transactions with their economics;

•	To better align with regulatory view/recognition;

•	To eliminate the effects of:

i.	Significant out of period adjustments;

ii.	Other significant items that may obscure historical earnings comparisons and are not indicative of performance trends; and

iii.	For adjusted EBIT, other items which may obscure segment comparisons.

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(a)

Adjustments to eliminate unrealized mark-to-market gains (losses) for our energy-related derivatives for our regulated utility and retail energy-marketing operations as well as certain derivatives related to the optimization of transportation capacity for the midstream energy services segment. With the exception of certain transactions related to the optimization of system capacity assets as discussed in footnote (b) below, when these derivatives settle, the realized economic impact is reflected in our non-GAAP results, as we are only removing interim unrealized mark-to-market amounts.

(b)

Adjustments to shift the timing of storage optimization margins for the regulated utility segment from the periods recognized for GAAP purposes to the periods in which such margins are recognized for regulatory sharing purposes. In addition, lower-of-cost or market adjustments related to system and non-system storage optimization are eliminated for non-GAAP reporting because the margins will be recognized for regulatory purposes when the withdrawals are made at the unadjusted historical cost of storage inventory.

(c)

Eliminates the estimated financial effects of warm or cold weather in the District of Columbia, as measured consistent with our regulatory tariff. Washington Gas has regulatory weather protection mechanisms in Maryland and Virginia designed to neutralize the estimated financial effects of weather. Utilization of normal weather is an industry standard, and it is our practice to evaluate our rate-regulated revenues by utilizing normal weather and to provide estimates and guidance on the basis of normal weather.

(d)	To reclassify the amortization of deferred investment tax credits from income taxes to operating income for the commercial energy systems segment. These credits are a key component of the operating success of this segment and therefore are included within adjusted EBIT to help management and investors better assess the segment's performance.

(e)

For our midstream energy services segment, adjustments to reflect storage inventory at market or at a value based on the price used to value the physical forward sales contract that is economically hedging the storage inventory. Adjusting our storage optimization inventory in this fashion better aligns the settlement of both our physical and financial transactions and allows investors and management to better analyze the results of our non-utility asset optimization strategies. Additionally, this adjustment also includes the net effect of certain sharing mechanisms on the difference between the changes in our non-GAAP storage inventory valuations and the unrealized gains and losses on derivatives not subject to non-GAAP adjustments.

(f)	Adjustment to eliminate external costs associated with the Merger Agreement with AltaGas.

(g)	Guarantee on behalf of a third party associated with a solar investment.

(h)	Represents the net proceeds of an environmental insurance policy, net of regulatory sharing. The adjustment for the quarter ended September 30, 2016, includes $0.9 million related to prior periods of fiscal year 2016.

(i)	Activities and transactions that are not significant enough on a standalone basis to warrant treatment as an operating segment and that do not fit into one of our four operating segments.

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