Virginia Gas Company and Roanoke Gas Company Announce Modified Pipeline Service Agreement

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For Immediate Release

Virginia Gas Company and Roanoke Gas Company Announce Modified Pipeline Service Agreement

ROANOKE, VIRGINIA, May. 30 -/E-Wire/-- RGC Resources, Inc. (Nasdaq: RGCO), parent company of Roanoke Gas Company, and NUI Corporation (NYSE: NUI), parent

company of Virginia Gas Company, today announced the modification of their agreement

whereby NUI would not construct a planned natural gas pipeline from Saltville, Va. to

Roanoke, Va. due to higher than projected construction costs. NUI, which acquired

Virginia Gas Company in March 2001, will complete construction of the pipeline only to

Radford, Va., approximately 45 miles south of Roanoke.

Instead, Roanoke Gas Company and NUI Corporation have worked together to increase

capacity to meet the short-term needs of Roanoke Gas customers through an alternative

option. Virginia Gas will connect into a pipeline owned and operated by East Tennessee

Natural Gas Company, a subsidiary of Duke Energy, which travels from Radford to Salem,

providing Roanoke Gas an incremental capacity of 4,000 decatherms per day. The planned

Virginia Gas pipeline was to provide an additional 17,500 decatherms per day to

Roanoke Gas Company, including a planned extension to Franklin County and Rocky

"Continued project assessment has shown us that due to economic and construction

cost reasons, it is no longer viable to complete the project as planned,' said Mark

Abramovic, NUI Senior Vice President and Chief Operating Officer. "We are pleased

that we were able to jointly develop an alternative solution to meet the immediate

natural gas needs of Roanoke Gas.'

Actual construction costs of the pipeline from Saltville to Pulaski were much higher

than anticipated and construction bids for the remaining length of the pipeline were

nearly double the estimated projections made by Virginia Gas in 1998, stated

Roanoke Gas CEO John Williamson estimates the increased capacity will enable the company to meet the growth needs of the Roanoke Valley for three to four years. The

company will be evaluating alternatives to provide additional capacity and supply for

the Roanoke Valley, including additional NUI proposals.

"We appreciate the work NUI has done to help ensure that our immediate needs are

met,' said Williamson. "However, this situation is disappointing to us and to the

residents of Franklin County, who remain without access to natural gas.'

NUI Corporation, based in Bedminster, NJ operates natural gas utilities serving approximately 380,000 customers in seven states along the eastern seaboard. NUI also

operates businesses involved in natural gas storage, pipeline and exploration;

wholesale energy trading and portfolio management; retail energy sales; energy and

environmental project development; energy consulting; sales outsourcing;

telecommunications' and geospatial and customer information systems and services.

RGC Resources, Inc. provides energy and diversified products and services to customers in Virginia and West Virginia through its operating subsidiaries including

Roanoke Gas Company, Bluefield Gas Company, Diversified Energy (dba as Highland

Propane Company and Highland Energy) and RGC Ventures, Inc. (dba Highland Heating and

Cooling, GIS Resources, and Applications Resources). The company is listed on the

NASDAQ stock market, trading symbol RGCO.

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