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                                                                   EXHIBIT 10.53

                            INDEMNIFICATION AGREEMENT


         This Indemnification Agreement is made and entered into on this 15th
day of January 1999 by Piedmont Propane Company ("Indemnifying Party") in favor
of AGL Resources Inc. ("AGLR"). AGLR's affiliate, Atlanta Gas Light Services,
Inc., and the Indemnifying Party's affiliate, Piedmont Energy Company (the
"Affiliate"), are parties to that certain Limited Liability Company Agreement of
SouthStar Energy Services LLC dated July 1, 1998 ("LLC Agreement") as members of
SouthStar Energy Services LLC ("SouthStar"). Pursuant to that certain Guaranty
Agreement (the "Guaranty"), effective November 1, 1998, between AGLR and Atlanta
Gas Light Company, AGLR has agreed to guaranty SouthStar's obligations to
Atlanta Gas Light Company. AGLR's agreement with SouthStar to provide the
Guaranty to Atlanta Gas Light Company was subject to the condition that certain
affiliates of each member of SouthStar would indemnify AGLR against any losses
AGLR incurs as a result of AGLR providing financial support for SouthStar under
the Guaranty in accordance with the applicable SouthStar member's Allocable
Share of Net Profits and Losses, as set forth in the LLC Agreement. This
Indemnification Agreement sets forth the terms and conditions of that
indemnification.

         In consideration of the benefit the Indemnifying Party and its
affiliates derive from AGLR providing financial support to SouthStar pursuant to
the Guaranty and the benefit to AGLR of the Indemnifying Party indemnifying
AGLR, the parties agree as follows:

1.     The Indemnifying Party shall indemnify, defend and hold AGLR harmless
       against any losses, costs, fees, liabilities or other expenses AGLR
       incurs as a result of AGLR's providing financial support for SouthStar
       under the Guaranty ("Indemnified Expenses"). The Indemnifying Party shall
       be liable for indemnifying AGLR hereunder for an amount equal to the
       product of the Affiliate's Allocable Share (as set forth in the LLC
       Agreement or any successor agreement) and the Indemnified Expenses.
       Notwithstanding any statement herein to the contrary, the Indemnifying
       Party shall not be liable to AGLR to the extent that the Indemnified
       Expenses resulted from AGLR's gross negligence or willful misconduct.

2.     AGLR shall invoice the Indemnifying Party (at the address set forth in
       numbered paragraph 9 below) no later than ten days prior to the end of
       each calendar month for the Indemnifying Party's share of the Indemnified
       Expenses due from the previous calendar month or any portion thereof. The
       Indemnifying Party shall pay AGLR the amount of such invoice (via wire
       transfer to the account specified on the invoice) no later than the last
       day of


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       the calendar month during which AGLR sent the Indemnifying Party an
       invoice.


       If the Indemnifying Party fails to pay all of the amount of any invoice
       when that amount becomes due, the Indemnifying Party shall pay AGLR a
       late charge on the unpaid balance that shall accrue daily on each
       calendar day from the due date at an annual rate equal to two percentage
       points above the then-effective monthly prime commercial lending rate per
       annum announced by NationsBank, N.A. from time to time multiplied by the
       unpaid balance; provided, that for any period that such rate exceeds any
       applicable maximum rate permitted by law, the rate shall equal the
       applicable maximum rate.

3.     This Indemnification Agreement shall inure to the benefit of each party,
       its successors, assigns and creditors, and can be modified only by a
       written instrument signed by the Indemnifying Party and AGLR. No
       Indemnifying Party shall have the right to assign this Indemnification
       Agreement or its obligations hereunder to any person or entity without
       the prior written consent of AGLR, which shall not be unreasonably
       withheld.

4.     This Indemnification Agreement shall be governed by, and construed in
       accordance with the internal laws (but not the laws concerning conflicts
       of laws) of the state of Georgia.

5.     The Indemnifying Party represents and warrants to AGLR that it is
       authorized to indemnify AGLR under the terms of this Indemnification
       Agreement, that it has all of the rights and powers necessary to do so,
       and that the individual signing below is authorized to bind the
       Indemnifying Party to its obligations under this Indemnification
       Agreement.

6.     The Indemnifying Party hereby agrees to provide AGLR with copies of
       Indemnifying Party's annual financial statements (consisting of at least
       a balance sheet and statements of income and cash flows) within 90 days
       following the end of the fiscal year to which such financial statements
       relate. If such financial statements have been reviewed or audited, the
       statements provided pursuant to the immediately preceding sentence shall
       be the reviewed or audited statements, as the case may be.

7.     The Indemnifying Party hereby agrees to notify AGLR within 45 days
       following the close of each of the first three quarters of each of
       Indemnifying Party's fiscal years if at the end of such quarter,
       Indemnifying Party's stockholders' equity, determined in accordance with
       generally accepted accounting principles consistently applied, shall be
       less than $30 million.

8.     On the date of each delivery of financial statements pursuant numbered
       paragraph 6 above, Indemnifying Party represents and warrants to AGLR
       that the balance sheet delivered by Indemnifying Party on such date
       reflects


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       all obligations, contingent or otherwise, which in accordance with
       generally accepted accounting principles should be classified upon
       Indemnifying Party's balance sheet as liabilities or disclosed in
       footnotes thereto.

9.     Notices hereunder must be given in writing (which may be a facsimile
       transmission) to be effective and shall be effective upon receipt by AGLR
       or the Indemnifying Party at the address set forth below or at such other
       address as AGLR or the Indemnifying Party may notify the other:


                  If to AGLR:

                                    AGL Resources Inc.
                                    P. O. Box 4569
                                    Atlanta, Georgia 30302-4569
                                    Attention:  Chief Financial Officer
                                    Facsimile No.:  (404) 584-3419

                  If to Indemnifying Party:

                                    Piedmont Propane Company
                                    1915 Rexford Road
                                    Charlotte, NC 28211
                                    Attention:  Treasurer
                                    Facsimile No.:  (704)365-8515

10.    THE INDEMNIFYING PARTY HEREBY INTENTIONALLY AND VOLUNTARILY WAIVES ANY
       DEFENSE TO PAYMENT UNDER THIS INDEMNIFICATION AGREEMENT THAT IS BASED
       UPON OR ARISES OUT OF AGLR'S DIRECT OR INDIRECT OWNERSHIP OF AN EQUITY
       INTEREST IN SOUTHSTAR AND/OR ATLANTA GAS LIGHT COMPANY.

AGREED TO AND ENTERED INTO the date first written above by:

AGL Resources Inc.                          Piedmont Propane Company


By:      /s/ Paul R. Shlanta                By:     /s/ David J. Dzuricky
    ------------------------------              --------------------------------
Title:   Senior Vice President              Title:  Vice President
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