WGL Holdings, Inc.

101 Constitution Ave., N.W.

Washington, D.C. 20080

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

      The annual meeting of shareholders of WGL Holdings, Inc. will be held at the National Press Club, 529 14th St., N.W.; Washington, D.C. 20045 on Wednesday, March 1, 2006, at 10:00 a.m. for the following purposes, as more fully set forth in the annexed proxy statement:

      All holders of record of the common stock of WGL Holdings, Inc. at the close of business on January 10, 2006, the record date fixed by the board of directors, will be entitled to vote on each matter submitted to a vote of shareholders at the meeting. Each holder of common stock is entitled to one vote for each share of that stock standing in the name of the holder on the records of WGL Holdings, Inc. at the close of business on January 10, 2006.

January 25, 2006

IMPORTANT NOTICE

ADMISSION PROCEDURES

      Admission to this year’s meeting will be limited to persons who (a) are listed on WGL Holdings, Inc.’s records as shareholders as of January 10, 2006 (the “record date”), or (b) bring a statement to the meeting showing their beneficial ownership of WGL Holdings, Inc. common stock through a broker, a bank or other institution as of the record date.

Proxy Statement

January 25, 2006

Proxy Statement

WGL Holdings, Inc.

January 25, 2006

Table of Contents

PROXY STATEMENT

WGL HOLDINGS, INC.

101 Constitution Ave., N.W.

Washington, D.C. 20080

January 25, 2006

INFORMATION REGARDING THE ANNUAL MEETING

      This proxy statement is furnished in connection with a solicitation of proxies by the board of directors of WGL Holdings, Inc. (“WGL Holdings,” the “Company,” “we,” or “us“ ) to be used at our annual meeting of shareholders to be held on Wednesday, March 1, 2006 and at any adjournment thereof. The annual meeting will be held at the National Press Club, 529 14th St., N.W.; Washington, D.C. 20045. This proxy statement and the accompanying proxy are being first mailed or otherwise provided to our shareholders on or about January 25, 2006.

Proxy Voting Procedures

      If the enclosed proxy card is executed and returned, it will be voted in the manner directed, but if not otherwise marked, proxies will be voted “FOR” proposals (1) and (2) and “AGAINST” proposals (3) and (4). The proxy may be revoked at any time by written notice delivered to the Corporate Secretary of WGL Holdings, by execution of a later proxy card, to the extent that it has not been voted, or by voting in person at the annual meeting.

      If you are a shareholder of record or you own shares through one of our 401(k) plans described immediately below, you may also vote by Internet or by telephone. Instructions for internet and telephone voting are attached to your proxy card. The deadline for voting by Internet or telephone is 5:00 p.m., Eastern time, Tuesday, February 28, 2006.

      If you participate in either the Washington Gas Light Company Savings or Capital Appreciation Plan (401(k) plans) and you own WGL Holdings common stock in one of those plans, your proxy card will serve as a voting instruction to the 401(k) plan trustee. If you are also a shareholder of record outside of the 401(k) plans, your proxy card will vote both your record shares and your 401(k) plan shares, as long as your registration information is identical in both accounts. For example, if your registered stock account is in your single name and also lists the same address as your 401(k) account, you should receive one proxy card for both the 401(k) plan shares and for the shares held by our transfer agent. However, if your shares held by the transfer agent are in joint names, or at a different address, you will receive separate proxy statements and proxy cards for each account.

      At the annual meeting, each holder of WGL Holdings common stock will be entitled to one vote for each share of common stock standing in the name of the holder on the records of WGL Holdings at the close of business on January 10, 2006. Outstanding voting securities as of January 10, 2006, consisted of 48,762,228 shares of common stock. The matters to be voted upon at the annual meeting are described in this proxy statement.

      As provided in the Company’s bylaws, a majority of the shares entitled to vote at the annual meeting, present in person or represented by proxy, will constitute a quorum for the meeting.

      At this meeting:

Adjournments

      We currently expect to take votes and close the polls on all proposals on the scheduled date of the annual meeting. However, we may:

      If any of the above occurs, we could propose one or more adjournments of the annual meeting. For any adjournment to be approved, the votes cast in favor of it must represent a majority of the total number of votes cast by the shareholders present at the meeting in person or by proxy.

      Proxies that we have solicited will be voted in favor of any adjournment that we propose but will not be considered a direction to vote for any adjournment proposed by anyone else. If any adjournment is properly proposed at the meeting on behalf of anyone else, the persons named as proxies, acting in that capacity, will have discretion to vote on the adjournment in accordance with their best judgment.

PROPOSAL 1

ELECTION OF DIRECTORS

      At the annual meeting, eight directors are to be elected to hold office for the ensuing year.

      It is the intention of the persons named in the enclosed proxy card to vote such proxy for the election of the nominees named below, all of whom are now serving as directors, unless such authority is withheld. WGL Holdings does not contemplate that any of such nominees will become unavailable for any reason, but if that should occur before the meeting, proxies received for that nominee will be voted for another nominee, or other nominees, to be selected by the board of directors in their discretion.

      The board of directors recommends a vote “FOR” the election of each of the following nominees:

The Board of Directors and Committees of the Board

      The following information relates to board and board committee meetings during the fiscal year ended September 30, 2005.

      The board of directors has established four standing committees:

      The Executive Committee members are: James H. DeGraffenreidt, Jr. (Chairman), Michael D. Barnes, Melvyn J. Estrin, and Karen Hastie Williams. There are four alternate members: George P. Clancy, Jr., James W. Dyke, Jr., James F. Lafond and Debra L. Lee. This committee may exercise all of the authority of the board of directors when the board is not in session. This committee did not meet during fiscal year 2005.

      The Audit Committee members are: Karen Hastie Williams (Chair), Melvyn J. Estrin, George P. Clancy, Jr. and James F. Lafond. Members of the audit committee are independent under the rules of the Securities and Exchange Commission and the New York Stock Exchange. The Company’s board of directors has determined that Messrs. Clancy, Estrin and Lafond meet the qualifications of an “audit committee financial expert,” as that term is defined by rules of the Securities and Exchange Commission.* As provided in its charter, functions of the audit committee include the appointment, compensation and oversight of the Company’s independent public accountants, reviewing with management and the independent public accountants the financial statements, the accompanying report of the independent accountants and reviewing the system of internal controls and the adequacy of the internal audit program. Reference is made to the Audit Committee Report, which appears later in this proxy statement, and the Audit Committee Charter, which is attached as Appendix A to this proxy statement, for a further description of the responsibilities of this committee. This committee held 7 meetings during fiscal year 2005.

      The Governance Committee members are: Michael D. Barnes (Chairman), James W. Dyke, Jr., and Karen Hastie Williams. Members of the Governance Committee are independent under the rules of the New York Stock Exchange. As provided in its charter, functions of the governance committee include consideration of criteria for selection of candidates for election to the board of directors and committees of the board and adoption of policies and principles concerning board service and corporate governance. This committee also considers criteria for oversight and evaluation of the board and management and the adoption of a code of conduct. The governance committee will consider nominees recommended by shareholders; those recommendations should be sent to the Chair of the governance committee, care of the Corporate Secretary of WGL Holdings, Inc; 101 Constitution Ave., N.W.; Washington, D.C. 20080. This committee held 2 meetings during fiscal year 2005.

      The Human Resources Committee members are: Melvyn J. Estrin, (Chairman), George P. Clancy, Jr., and Debra L. Lee. Members of the Human Resources Committee are independent under the rules of the New York Stock Exchange. As provided in its charter, primary functions of this committee include setting corporate goals and objectives relevant to compensation of the Chief Executive Officer (the “CEO”), evaluating the CEO’s performance and setting the CEO’s compensation based on this evaluation. This committee also recommends compensation levels, sets performance targets and evaluates the performance of the Company’s other officers and determines any incentive and equity-based compensation to be awarded to those officers. This committee also considers succession planning for leadership positions in the Company. There were 3 meetings of this committee during fiscal year 2005.

      The board of directors of the Company held 7 meetings during fiscal year 2005.

*In accordance with rules of the Securities and Exchange Commission, persons determined to be audit committee financial experts will not be deemed an expert for any purpose, including, without limitation for purposes of Section 11 of the Securities Act of 1933, as a result of being so designated. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations or liabilities that are greater than those imposed on such person as a member of the audit committee and the board of directors in the absence of such designation or identification.

Corporate Governance Practices

      The Company’s board of directors has determined that all of the Company’s directors, except the Chairman and Chief Executive Officer, are independent within the meaning of the rules of the New York Stock Exchange. In determining independence, the board of directors considered the specific criteria for independence under the New York Stock Exchange rules and also the facts and circumstances of any other relationships of individual directors with the Company.

      The board and board committees regularly meet in executive sessions without the presence of any management representatives. The presiding director in those executive sessions is the Chair of the Governance Committee. If the executive session includes or is devoted to a report of a board committee, the chair of that committee presides in that portion of the executive session.

      The Audit, Governance and Human Resources committees have each adopted a charter for their respective committees. These charters may be viewed on the Company’s website, www.wglholdings.com, and copies may be obtained by request to the Secretary of the Company. Those requests should be sent to: Corporate Secretary; WGL Holdings, Inc.; 101 Constitution Ave., N.W.; Washington, D.C. 20080.

      The board has adopted Corporate Governance Guidelines and a Code of Conduct. These documents may be viewed on the Company’s website, www.wglholdings.com, and copies may be obtained by request to the Secretary of the Company. Those requests should be sent to: Corporate Secretary; WGL Holdings, Inc.; 101 Constitution Ave., N.W.; Washington, D.C. 20080.

      The board of directors has a policy under which directors who are not employees of the Company and its subsidiaries may not stand for re-election after reaching the age of 72. Also under this policy, directors who are employees of the Company must retire from the board upon their retirement from the Company. This policy can be changed at any time by action of the board of directors.

      The Company expects all board members to attend the annual meeting of shareholders, but from time to time, other commitments may prevent all directors from attending each meeting. All directors attended the most recent annual meeting of shareholders, which was held on February 23, 2005.

Shareholder Communications with Directors

      Shareholders may send communications to board members by either sending a communication to the board and/or a particular board member care of the Corporate Secretary of the Company at 101 Constitution Ave., N.W.; Washington, D.C. 20080, or by using the toll-free number established for that purpose, which is 1-800-249-5360.

Governance Committee Processes

      The Governance Committee will consider board nominees recommended by shareholders. Those recommendations should be sent to the Chair of the Governance Committee, care of the Corporate Secretary of WGL Holdings, Inc.; 101 Constitution Ave., N.W.; Washington D.C. 20080. As provided in its Charter, the Governance Committee will follow procedures which the committee deems reasonable and appropriate in the identification of candidates for election to the Board and evaluating the background and qualifications of those candidates. Those processes include consideration of nominees suggested by an outside search firm, by incumbent board members and by shareholders. The committee will seek candidates having experience and abilities relevant to serving as a director of the Company and who represent the best interests of shareholders as a whole and not any specific interest group or constituency. The Governance Committee will evaluate the qualifications of candidates recommended by shareholders using the

same criteria as used for other board candidates. The committee from time to time engages the service of a professional search firm to identify and to evaluate potential nominees.

Non-Employee Director Compensation

      The following is a summary of the compensation paid to outside directors of the Company. Outside directors of the Company also serve as directors of the Company’s utility subsidiary, Washington Gas Light Company, and accordingly the compensation arrangements are coordinated as described below:

      Directors may defer all or part of their cash compensation received for board service under terms of a Deferred Compensation Plan for Outside Directors. Interest is earned on deferred amounts, compounded quarterly, at a rate equal to the weekly average yield to maturity for 10-year U.S. Government fixed interest rate securities issued at the time of the deferral, with a minimum rate of 8% per year. Certain provisions of this plan are likely to be modified to meet new requirements for nonqualified deferred compensation plans under Section 409A of the American Jobs Creation Act of 2004 for amounts deferred in years after December 31, 2004. The nature of these changes required under this new law are not known as of the date of preparation of this proxy statement.

      A retirement plan for outside directors of Washington Gas Light Company adopted in 1995 was terminated by the board effective January 1, 1998, subject to vesting of benefits earned by the directors as of that date.

Security Ownership of Management and Certain Beneficial Owners

      The following table sets forth the information as of January 10, 2006, regarding outstanding common stock of WGL Holdings beneficially owned by each director, each nominee for election as a director, the executive officers named in the summary compensation table in this proxy statement, and all directors, nominees and executive officers as a group. Each of the individuals

listed, as well as all directors and executive officers as a group, beneficially owned less than 1% of the Company’s outstanding common stock.

     The following table sets forth information regarding any person who is known to the Company to be the beneficial owner of more than five percent of the Company’s common stock. This information is as of September 30, 2005, which was the date of the most recent publicly available information at the time of preparation of this proxy statement.

Section 16(a) Beneficial Ownership Reporting Compliance

      Section 16(a) of the Securities Exchange Act of 1934 as amended, requires our officers and directors to file reports of securities ownership and changes in such ownership with the Securities and Exchange Commission. Based on our records and information, in fiscal year 2005, the directors and executive officers of the Company met all applicable reporting requirements under Section 16(a).

Executive Compensation

      The table that follows presents information about compensation for the Chief Executive Officer and the four other most highly compensated executive officers of the Company and/or its subsidiaries. It includes all compensation awarded to, earned by or paid to the named executive officers for each of the last three fiscal years.

      During each fiscal year shown below, each of the below-named individuals was also an executive officer of Washington Gas Light Company. The compensation shown in the following summary compensation table was paid to the individual by Washington Gas Light Company during or for each fiscal year.

Summary Compensation Table

      Our executive officers participate in a qualified, trusteed, noncontributory pension plan covering all active employees and vested former employees of Washington Gas Light Company. Executive officers also participate in a Supplemental Executive Retirement Plan (“SERP”). Upon normal retirement (age 65), each eligible participant is entitled under the supplemental executive retirement plan to an annual benefit that is based on both years of benefit service (up to a maximum of 30 years) and the average of the participant’s highest rates of annual basic compensation, including any short-term incentive awards paid or deferred under the Executive Incentive Compensation Plan and the Company’s 1999 Incentive Compensation Plan, as amended and restated (the “1999 Incentive Compensation Plan”) or any successor plan, on December 31 of the three years out of the final five years of the participant’s service as a participant.*

*Certain provisions of the SERP will likely have to be modified to meet new requirements for nonqualified deferred compensation plans under Section 409A of the American Jobs Creation Act of 2004. This federal law was enacted on October 22, 2004, and became effective for benefits under the SERP in years after December 31, 2004. The structure of the SERP and its benefits as required to be modified under this new law are not known as of the date of the preparation of this proxy statement.

      The following table shows the estimated annual single life benefits payable under the pension plan and Supplemental Executive Retirement Plan upon normal retirement (age 65) to executive officers in various salary and years-of-service classifications:

Estimated Retirement Benefits

      The five executive officers named above in the summary compensation table have the following number of years of benefit service: Mr. DeGraffenreidt, 30 years; Mr. McCallister, 10 years; Mr. Kline, 30 years; Ms. Burke, 20 years and Mr. Bonner, 8 years.

Equity Compensation Plan Information

      The following table presents information regarding compensation plans under which common stock may be issued to employees and non-employees as compensation. The Company currently has two such plans: the Directors’ Stock Compensation Plan and the 1999 Incentive Compensation Plan. This information is as of September 30, 2005. Material features of these plans are described elsewhere in this proxy statement.

      Total shares shown on the following table include 65,783 shares available for future issuance under the Directors’ Stock Compensation Plan, and 525,174 shares available for future issuance under the 1999 Incentive Compensation Plan. Performance shares that may be issued under the 1999 Incentive Compensation Plan are calculated under a formula that enables a determination of the minimum and maximum number of performance shares that may be issued. This formula is further described below in this Proxy Statement under the caption “Long-Term Incentive Plans — Performance Share Awards.”

Employment Agreements

      Washington Gas Light Company has employment agreements with each of the executive officers named in the summary compensation table in this proxy statement (the “named executive officers”). The agreements with these officers will be effective during the period of one year prior to, and two years following, a change of control of WGL Holdings or Washington Gas

Light Company. A change of control is generally defined in these agreements as any of the following:*

      From the change of control to its second anniversary, the executive’s position, duties and responsibilities must be commensurate with the most significant of those held, exercised and assigned at the time during the 120-day period immediately preceding the change of control. The executive agrees to devote reasonable attention and time necessary to the respective company’s business affairs.

      During the one year prior and two years following a change of control the executive is entitled to base salary, annual incentives, savings and retirement plans, welfare benefit plans, expenses, fringe benefits, office and vacation, consistent with those in place prior to the change of control or available after the change of control if more beneficial.

      Base salary is defined as an amount equal to twelve times the highest monthly base salary paid or payable during the 12-month period immediately preceding the change of control. The annual incentive is an amount at least equal to that available to peer executives of Washington Gas Light Company and its affiliates.

      With respect to all the named executive officers except Mr. Bonner, if the executive is terminated during the effective period for reasons other than cause, or if the executive resigns for good reason, the executive is entitled to severance pay equal to three times the sum of the executive’s annual base salary plus the highest of the executive’s annual incentive actually earned for the last three full fiscal years. Also the executive is entitled to an extension of other employment benefits for three years. Mr. Bonner is entitled to the same benefit, except that the severance payment is two times the sum of the executive’s annual base salary, plus the highest of the executive’s annual incentive actually earned for the last three full fiscal years. The extension of other employment benefits for Mr. Bonner is for two years. Payments under these agreements may be increased for any excise taxes payable under the Internal Revenue Code.

      “Good reason” is defined differently in these agreements based on the position the named executive officer holds. The term includes one or more of the following provisions:

*Certain provisions of these employment agreements may be modified to meet requirements of the American Jobs Creation Act of 2004, which is discussed above with respect to the SERP. The structure of these agreements as required to be modified under this new law are not known as of the date of the preparation of this proxy statement.

      Following is a summary of the contract provisions indicated above that are contained in each named executive officer’s employment agreement:

Option Grants

      The following table provides information regarding the number and terms of stock options granted to the named executive officers during the fiscal year ended September 30, 2005. The Company utilized the Black-Scholes option pricing model to develop the theoretical values set forth under the “Grant Date Present Value” column. An executive realizes value from a stock option only to the extent that the price of our common stock on the exercise date exceeds the price of the stock on the grant date. Consequently, there is no assurance that the value realized by an executive will be at or near the value estimated below. Those amounts should not be used to predict future stock performance.

Option Grants in the Last Fiscal Year

(Fiscal Year ended September 30, 2005)

     The following underlying assumptions were used in developing the grant valuations:

     The following table shows information regarding the unexercised options held by the named executive officers at September 30, 2005, the last day of the fiscal year.

Aggregated Option Exercises in Last Fiscal Year and

Option Values at September 30, 2005

Long-Term Incentive Plans — Performance Share Awards

      The following table provides information regarding the number and terms of performance shares awarded to the named executive officers during the fiscal year ended September 30, 2005 under the 1999 Incentive Compensation Plan. The targeted awards were based on an economic value of between 48.0% and 81.0% of the executive’s base salary as of October 1, 2004. The awards that ultimately may be earned vary based on the total shareholder return of WGL Holdings relative to a peer group. Median performance relative to the peer group earns awards at the targeted level. The maximum that can be earned is 200 percent of the targeted level of shares. The minimum that the executives can earn is zero shares. The performance period is three years.

Performance Shares Awarded in the Last Fiscal Year

(Fiscal Year ended September 30, 2005)

HUMAN RESOURCES COMMITTEE REPORT

      The Human Resources Committee of the board of directors has responsibility for setting the level of compensation of the Chief Executive Officer and recommending levels of executive compensation of other officers for consideration by the Company’s board of directors. The objective of the executive compensation program is to provide remuneration which fairly reflects corporate performance and achievements and responsibilities of each officer. Executive compensation is also intended to provide rewards and incentives for achievement of long-term growth in shareholder value and to attract and retain experienced corporate executives.

      In determining appropriate levels of compensation for the officers, the committee reviews the value of the total compensation package provided by the Company. This total compensation includes base salary, long-term incentive, target short-term incentive and other benefits. Company officers receive benefits under the Washington Gas Light Company pension plan and the Supplemental Executive Retirement Plan. A description of those retirement plans and the estimated benefits payable under those plans are shown in the “Estimated Retirement Benefits” table that appears following the Summary Compensation table in this proxy statement.

Elements of Executive Compensation

      The committee’s philosophy is that total compensation for each of the Company’s officers should be competitive with executives with similar experience and responsibility. This compensation should also reflect the individual performance of each officer as well as corporate performance.

      To accomplish these objectives, each officer’s compensation is composed of base salary and elements of short-term and long-term incentive compensation. Short-term incentive compensation is “at risk,” in that payment of any of this compensation depends upon performance of the individual officer and performance of the Company. Long-term incentive compensation is also “at risk” in that it relates directly to the performance of the Company’s common stock.

      Since the Company’s primary business is that of a public utility, total compensation opportunities at target levels are set at the size-adjusted median of the utilities market. General industry data is also reviewed, but to date has not affected the determination of market levels.

      Companies forming the utilities market are, to the extent possible, gas and electric and gas utilities that are similar to the Company’s utility business. This is not the same group of companies used in the performance graph shown in this proxy statement. The groups are

different to the extent that the indices shown on the performance graph are published industry indices which include companies having much more diversified operations than the Company.

      The committee has retained an independent executive compensation consultant to review the Company’s executive compensation practices and policies. The independent advisor conducts an annual study of the Company’s executive compensation practices and policies to determine their reasonableness and competitiveness in the relevant market. The committee meets with the independent advisor during the year to review all elements of the Company’s executive compensation plans.

      The following is a description of the elements of each officer’s compensation:

      Base Salary: The committee intends base salary levels of officers to be set at a level approximately equal to utility market levels for officers of similar experience and responsibility. This approach was taken to place base salaries at overall market rates, and to leave the opportunity for each officer to achieve or exceed total target compensation through incentive pay. This continuing practice is designed to encourage higher levels of performance by the officers. It is seen by the committee as a way to align the interests of the officers of WGL Holdings, Inc. and Washington Gas Light Company more closely with the interests of the shareholders.

      To determine competitive base and total compensation levels, management obtains data on executive compensation paid by other utility and non-utility companies. Based on that information and in consideration of each officer’s responsibility and performance, the Chairman and Chief Executive Officer of the Company makes specific recommendations for salary adjustments for all officers except himself. The committee reviews these recommendations in consultation with the independent advisor retained by the committee. Based on this consultation and the data on industry compensation levels, the committee, acting pursuant to its charter and New York Stock Exchange rules, determines and approves the compensation for the Chairman and Chief Executive Officer and makes a final recommendation to the full board of directors as to all other officers.

      Short-Term Incentive Compensation: Short-term incentive pay opportunities are intended to encourage and to recognize high levels of performance by officers of the Company and its subsidiaries.

      For fiscal year 2005, short-term incentive compensation related to corporate performance could have been made under the 1999 Incentive Compensation Plan if WGL Holdings’ rate of return on common stock equity exceeded a threshold amount predetermined by the board of directors. For fiscal year 2005, that threshold was a 9% rate of return on common equity. Since WGL Holdings earned a rate of return on common equity in excess of that threshold, incentive awards for fiscal year 2005 corporate performance were authorized under the 1999 Incentive Compensation Plan.

      The 1999 Incentive Compensation Plan was approved by shareholders at the 1999 Washington Gas Light Company Annual Meeting of Shareholders and was adopted by the Company upon formation of the holding company system on November 1, 2000. The 1999 Incentive Compensation Plan was amended and restated by approval of the shareholders at the annual meeting of shareholders on March 5, 2003.

      The committee determines individual awards under the 1999 Incentive Compensation Plan annually. If the rate of return on common equity threshold and any other criteria are met for payments under the 1999 Incentive Compensation Plan, the Chairman and Chief Executive Officer may make recommendations to the committee for awards for each officer except himself. These recommendations recognize that shareholders in a regulated utility achieve their investing goals when the customers are well served through efficient operations. Accordingly, these

incentive recommendations include evaluation of the following factors, among others, applicable to the corporation and each of the officers:

      For the corporation:

      For the officers:

      The committee considers the amount and basis for these recommendations in consultation with its independent advisor.

      Payouts under the 1999 Incentive Compensation Plan can be higher or lower than target depending on both corporate and individual performance. Payouts may range from 0% to 172.5% of target.

      Long-Term Incentive Compensation Under the 1999 Incentive Compensation Plan:

      Long-Term Incentive Compensation is provided in the form of equity grants under the 1999 Incentive Compensation Plan. The 1999 Incentive Compensation Plan is intended to provide key personnel of the Company and its subsidiaries with additional incentives by increasing their interests in the Company and its success. The 1999 Incentive Compensation Plan promotes achievement of long-term growth of the Company by assisting in the recruiting and retention of key employees, including the officers. Under the 1999 Incentive Compensation Plan, there may be awards of stock options, restricted stock, stock appreciation rights, performance shares, bonus stock, other awards based on the value of the Company’s common stock, dividend units, and cash incentives. As noted previously, short-term incentives may also be granted under the 1999 Incentive Compensation Plan. The committee is the Administrator of the 1999 Incentive Compensation Plan and has the authority to grant awards under it.

      Each year the Committee reviews the appropriate form of long-term incentive compensation in consultation with the Committee’s independent consultant. Based on this review, for FY 2005 and also for FY 2006, the Committee decided to allocate 40% in value of long-term incentive to stock options and 60% in value to performance shares. As noted above, since the utility business is still the Company’s primary business, the level of the overall compensation package, which includes these grants, was set to approximate the size-adjusted median of the utility market. The exercise price of stock options is the fair market value of the common stock on the date of grant. The stock options vest on the third anniversary of the grant and expire on the tenth anniversary of the grant. For fiscal year 2005 awards, performance shares vest on the 36-month anniversary of the date of grant and are earned only if the Company achieves specified total shareholder return levels as compared to a peer group of companies.

      The Company granted a total of 375,560 stock options and 115,794 shares of performance stock to 23 employees during FY 2005. This constitutes approximately 1% of the Company’s

outstanding shares as of September 30, 2005, the last day of FY 2005. Options outstanding on September 30, 2005 totaled 1,293,831 shares, or approximately 2.7% of shares outstanding as of that date. Effective October 1, 2005, the Committee granted an additional 357,742 stock options and 108,251 performance shares to 25 employees. Approximately 45.4% of the stock options and performance shares granted on October 1, 2005 were granted to employees other than the executives named in the Summary Compensation Table.

      Other Benefits: Effective October 1, 2005, the Company initiated a program of income tax, estate and financial planning services for executive officers of the Company. The Company will pay the actual cost of these services provided to the executive up to a pre-determined ceiling depending on the level of the executive officer. The highest amount provided to any executive under this program is $10,000 per year. Since this benefit was initiated after the close of FY 2005, it is not reflected on the Summary Compensation Table in this proxy statement.

      The Company also pays the cost of certain other perquisites for executive officers, including parking at the Company’s headquarters building, a gasoline allowance and an annual physical examination. The Company has a membership at one club held in the names of the Chairman and Chief Executive Officer and the President and Chief Operating Officer that is for use in business purposes. The Company also has rights to the use of suites at certain other facilities that are available for use in business purposes by Company employees and directors. Other benefits available to executive officers are noted in footnotes to the Summary Compensation Table elsewhere in this proxy statement.

Compensation of the Chairman and Chief Executive Officer

      In consultation with the committee’s independent consultant, the committee reviews all components of the compensation of the Chief Executive Officer including salary, bonus, equity grants, retirement and other benefits. These benefit levels are compared to benefits provided to chief executives of peer companies. A report is prepared by the independent consultant detailing the actual and projected value of these benefits and the report is reviewed by the committee. Based on factors included in these reviews, the committee decides on levels of base salary, short-term incentive and long-term incentive that the committee determines to be reasonable, competitive and appropriate for the Chief Executive Officer.

      Mr. DeGraffenreidt served as Chairman and Chief Executive Officer during fiscal year 2005. Mr. DeGraffenreidt’s base salary has been set at a level approximately equal to the relevant market for positions of similar responsibilities. Mr. DeGraffenreidt was awarded an incentive payment under the 1999 Incentive Compensation Plan applicable to fiscal year 2005 of $610,706 which was equal to 46.4% of his total cash compensation for the period. This incentive payment recognizes substantial corporate achievements of the Company during the year under the executive leadership of Mr. DeGraffenreidt. These achievements include achieving outstanding safety performance, continuing progress toward meeting the Company’s published five-year financial objectives, earning record net income in the non-utility business segments and implementing new regulatory provisions that protect shareholders and ratepayers from revenue variations due to unusual weather, volatility in the cost of gas supply and conservation by customers. Mr. DeGraffenreidt continued to strengthen the leadership team through developmental assignments as well as successful recruiting. Under Mr. DeGraffenreidt’s leadership, the Company also timely and effectively addressed a change in operating conditions in a portion of its system in Maryland by initiating a major program to rehabilitate a portion of the Washington Gas underground system, and enhancing the system’s sources of future natural gas supplies. These far-reaching and extensive programs substantially strengthen the Company’s ability to continue to grow and to provide a competitive return for investors while maintaining a safe, reliable natural gas distribution system that provides sustainable value for customers.

      Long-term incentive awards in the form of stock options and performance shares were granted to Mr. DeGraffenreidt and to certain officers of the Company and its subsidiaries during fiscal year 2005 under terms of the 1999 Incentive Compensation Plan. These grants were at competitive levels based on a market study conducted by the committee’s independent advisor. The shares awarded to Mr. DeGraffenreidt are shown in the Executive Compensation section of this proxy statement. As for other executives, the level of overall compensation, which includes these grants, was set to approximate the size-adjusted median of the utility market. As described above, these stock option awards under the 1999 Incentive Compensation Plan vest in three years and expire on the tenth anniversary of the date of grant. The exercise price of the stock options is the fair market value of the shares on the date of grant. Performance shares granted in fiscal year 2005 may be earned after 36 months. Performance shares are earned only if WGL Holdings achieves specified total shareholder return levels compared to a group of peer companies over a three-year period.

Deductibility of Compensation

      Under Section 162(m) of the Internal Revenue Code, the Company and its subsidiaries may not deduct compensation in excess of $1 million paid to the Company’s Chief Executive Officer and to the other four highest compensated executive officers unless it meets specific criteria for performance-based compensation. As discussed in this report, the committee intends to provide compensation that is both market and performance based. Awards under the 1999 Incentive Compensation Plan are performance-based awards and are intended to meet the Section 162(m) performance based plan requirements. The compensation program is designed to achieve full tax deductibility. However, we reserve the right to approve non-deductible compensation if we believe it is in the best interests of the shareholders. All compensation paid for fiscal year 2005 was fully deductible for federal income tax purposes.

HUMAN RESOURCES COMMITTEE

Melvyn J. Estrin (Chairman)

George P. Clancy, Jr.

Debra L. Lee

AUDIT COMMITTEE REPORT

      The Audit Committee of the Board of Directors of the Company is composed of four directors who are not employees of the Company. Members of the committee are independent under rules of the Securities and Exchange Commission and the New York Stock Exchange. The names of the members of this committee as of the date of this proxy statement appear at the end of this report.

      The Audit Committee oversees the Company’s financial reporting process on behalf of the Company’s Board of Directors and is directly responsible for the appointment, compensation and oversight of the Company’s independent public accountants. The committee maintains a charter that outlines its responsibilities. A copy of that charter is attached as Appendix A to this Proxy Statement. The committee met seven times during fiscal year 2005.

      The Audit Committee has implemented the requirements of the Sarbanes-Oxley Act of 2002 and rules of the New York Stock Exchange with respect to the responsibilities of audit committees of public companies. Among other matters, the Audit Committee reviews procedures on internal control over financial reporting with management and with the Company’s independent public accountants. The Audit Committee and the Company’s full board of directors are committed to compliance with all provisions of that statute and related regulations. Even before passage of the Sarbanes-Oxley Act, the Audit Committee and the Company had taken a number of actions in this regard, including placing decision making authority on the Audit Committee with respect to the appointment, compensation and oversight of the independent

public accountants. Further actions have been taken by the Audit Committee and the board of directors as statutory and regulatory provisions became effective for audit committees and independent auditors.

      The Audit Committee reviewed and discussed the Company’s audited financial statements with management of the Company and the independent public accountants. The Audit Committee discussed with the Company’s internal auditor and the independent public accountants the overall scope and specific plans for their respective audits and the adequacy of the Company’s internal controls.

      The Audit Committee discussed with the independent public accountants those matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended. The committee received the written disclosures and the letter from the independent public accountants required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees. The committee discussed with the independent accountants the issue of their independence from the Company. The Audit Committee also has considered whether the provision of non-audit services by the Company’s principal auditor is compatible with maintaining auditor independence.

      Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2005, for filing with the Securities and Exchange Commission.

AUDIT COMMITTEE

Karen Hastie Williams (Chair)

George P. Clancy, Jr.

Melvyn J. Estrin

James F. Lafond

FISCAL YEARS 2005 AND 2004 AUDIT FIRM FEE SUMMARY

      During fiscal years 2005 and 2004, the Company retained its independent auditor, Deloitte & Touche LLP (“Deloitte”), to provide services in the following categories and amounts.

Services Provided by Deloitte

      All services rendered by Deloitte are permissible under applicable laws and regulations and were pre-approved by the Audit Committee, or by the Chair of the Audit Committee by delegated authority as required by law. The fees paid to Deloitte for services are described in the above table under the categories listed below.

      These services are actively monitored (as to both spending level and work content) by the Audit Committee to maintain the appropriate objectivity and independence in Deloitte’s core work, which is the audit of the Company’s consolidated financial statements and the assessment of internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.

Pre-approval policy for audit and non-audit services

      In accordance with provisions of the Sarbanes-Oxley Act of 2002, all audit and non-audit services provided to the Company by its independent auditors must be pre-approved by the Audit Committee. As authorized by that statute, the Audit Committee has delegated authority to the Chair of the Audit Committee to pre-approve up to $100,000 in audit and non-audit services. This authority may be exercised when the Audit Committee is not in session. Any decisions by the Chair of the Audit Committee under this delegated authority are reported at the next meeting of the Audit Committee. All services reported in the schedule shown above for fiscal years 2004 and 2005 were pre-approved by the full Audit Committee or by the Chair of the Audit Committee, by delegated authority.

SHAREHOLDER RETURN PERFORMANCE PRESENTATION

      The Company’s common stock was first issued to the public effective November 1, 2000, in exchange for shares of Washington Gas Light Company. Accordingly, the following graph shows the yearly cumulative total shareholder return on Washington Gas Light Company’s common stock from September 30, 2000 through October 31, 2000, and WGL Holdings common stock from November 1, 2000 through September 30, 2005 against the cumulative total return of the Standard & Poor’s 500 Stock Index and the Dow Jones Utility Average for the period of five years commencing September 30, 2000 and ending September 30, 2005. This calculation is based on $100 invested on September 30, 2000 and reinvestment of dividends.

Comparison of Five-Year Cumulative Total Returns

[Cumulative Total Returns Chart]

PROPOSAL 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

      At a meeting held December 16, 2005, the audit committee of the board of directors appointed the firm of Deloitte & Touche LLP, independent public accountants, to audit the books, records and accounts of the Company for fiscal year 2006. The board of directors recommends that the shareholders ratify this appointment.

      Representatives of Deloitte & Touche LLP will be present at the annual meeting with the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.

The board of directors recommends a vote “FOR” this proposal.

PROPOSAL 3

SHAREHOLDER PROPOSAL

      Mrs. Evelyn Y. Davis, whose address is The Watergate Office Building, 2600 Virginia Ave., N.W., Suite 215, Washington, D.C. 20037, has given notice of her intention to present a proposal for consideration by the shareholders at the annual meeting. The proposal of Mrs. Davis, who is owner of record of 280 shares of common stock of the Company, is set forth below in the form of a resolution along with her supporting statement.

       Your board of directors and the management of WGL Holdings, Inc. oppose the adoption of the following proposal for the reasons stated after the proposal and, therefore, recommend that shareholders vote “AGAINST” the proposal.

Shareholder Proposal

      RESOLVED, “That the shareholders of WGL Holdings, Inc., assembled in annual meeting in person and by proxy, hereby request the Board of Directors to take the necessary steps to provide for cumulative voting in the election of directors, which means each stockholder shall be entitled to as many votes as shall equal the number of shares he or she owns multiplied by the number of directors to be elected, and he or she may cast all of such votes for a single candidate, or any two or more of them as he or she may see fit.”

      The statement submitted by Mrs. Davis in support of her resolution is as follows:

      REASONS: “Many states have mandatory cumulative voting, so do National Banks.” “In addition, many corporations have adopted cumulative voting.”

      Last year the owners of 11,909,630 shares, representing approximately 38.4% of the shares voting, voted for this proposal.

      “If you AGREE, please mark your proxy FOR this resolution.”

Opposition of Your Board of Directors and the Management and Reasons Therefor

      Your board of directors believes it is important for each member of the board to represent all shareholders, not just a particular interest group or faction.

      Persons serving on the Company’s board of directors have wide experience in law, accounting, business and finance. Directors are not elected to represent a particular viewpoint, and the directors do not believe it is desirable to select candidates for election in that manner.

      These objectives of your directors are fundamentally different from the objectives of a cumulative voting procedure. Cumulative voting could permit a relatively small group of shareholders to elect a particular director. A director elected through cumulative voting might therefore become (or appear to become) an advocate for a particular shareholder group. This result would be directly opposite to the purpose of having each member of your board of directors represent all shareholders. Cumulative voting for directors could also result in factions and interest groups being created in the board, causing significant interference with the board deliberative process.

      For these reasons, the board of directors and the management oppose the proposed resolution.

      Mrs. Davis has submitted substantially the same proposal each year since 1986 and it has been defeated by our shareholders each year.

       The board of directors and the management of the Company recommend a vote “AGAINST” the adoption of this shareholder proposal.

PROPOSAL 4

SHAREHOLDER PROPOSAL

      Mr. George Taylor, whose address is 7302 Franklin Rd.; Annandale, VA 22003, has given notice of his intention to present a proposal for consideration at the annual meeting. The proposal of Mr. Taylor, who is the owner of record of 2,118 shares of common stock of the Company, is set forth below in the form of a resolution along with his supporting statement.

       Your board of directors and the management of WGL Holdings, Inc. oppose the adoption of the following proposal for the reasons stated after the proposal and, therefore, recommend that shareholders vote “AGAINST” the proposal.

RESOLVED, That stockholders of WGL Holdings, Inc. (“WGL” or the “Company”) ask the board of directors to adopt a policy that the board’s chairman be an independent director who has not previously served as an executive officer of WGL Holdings. The policy should be implemented so as not to violate any contractual obligation. The policy should also specify (a) how to select a new independent chairman if a current chairman ceases to be independent during the time between annual meetings of shareholders, and (b) that compliance with the policy is excused if no independent director is available and willing to serve as chairman.

      SUPPORTING STATEMENT: It is the responsibility of the Board of Directors to protect shareholders’ long-term interests by providing independent oversight of management, including the Chief Executive Officer (CEO), in directing the corporation’s business and affairs. Currently at our Company, Mr. James DeGraffenreidt, Jr. holds both the positions of Chairman of the Board and CEO. I believe that this current scheme may not adequately protect shareholders.

      Shareholders of WGL Holdings require an independent leader to ensure that management acts strictly in the best interests of the Company especially when our Company is facing significant challenges. Our Company recently announced that it would have to spend more than $100 million dollars to repair gas leaks due to faulty equipment and poor installation measures after an estimated 1400 leaks were found on the Company’s pipeline.¹ In addition, Washington area legislators have noted their concern over the safety of the Company’s natural gas pipeline after a home exploded earlier this year.² Shareholders need to be assured that the Board of Directors is representing their best interests during these potential crises.

      As a long-term shareholder of our Company, I believe that ensuring that the Chairman of the Board of our Company is independent, will enhance board leadership at WGL Holdings, and protect shareholders from future management actions that can harm shareholders. Other corporate governance experts agree. As a Commission of The Conference Board stated in a 2003 report, “The ultimate responsibility for good corporate governance rests with the board of directors. Only a strong, diligent and independent board of directors that understands the key issues, provides wise counsel and asks management the tough questions is capable of ensuring that the interests of shareowners as well as other constituencies are being properly served.”

      I believe that the recent wave of corporate scandals demonstrates that no matter how many independent directors there are on the Board, that Board is less able to provide independent oversight of the officers if the Chairman of that Board is also the CEO of the Company.

      I therefore urge shareholders to vote FOR this proposal.

      Board of Directors’ Recommendation — The Board of Directors recommends that shareowners vote AGAINST proposal #4 for the following reasons:

      Mr. Taylor’s supporting statement contains significant factual errors about your Company. Perhaps his most glaring misstatement relates to the cause of certain gas leaks in Maryland. Specifically, Mr. Taylor states that, “[o]ur Company recently announced that it would have to spend more than $100 million dollars to repair gas leaks due to faulty equipment and poor installation measures after an estimated 1400 leaks were found on the Company’s pipeline”. Mr. Taylor cites an article from the Baltimore Sun newspaper, attributing an announcement regarding the cause of those leaks to a statement by your Company. In fact, as reported in the same article cited by Mr. Taylor, your Company did not make the statement, but rather, it apparently was a statement by a spokesman for Dominion Resources who offered no support for this statement. As the Company often has stated, and as supported by an independent expert study, the cause of these gas leaks is the direct result of certain operations of Dominion Resources, and not the operations of your Company. In fact, your Company publicly announced the cause of the leaks in a filing with the Securities and Exchange Commission on July 6, 2005. Your Company has also documented contrary to Mr. Taylor’s misleading statement, that the equipment and facilities involved in the affected area had provided safe and reliable service for over 40 years.

      The Company has reason to believe that Mr. Taylor’s proposal and misleading supporting statement have been submitted in connection with the tactics of a collective bargaining unit representing certain employees of the Company. As noted above, there is no basis for the claims of unsafe practices noted above and there is no relevant connection between the factual errors in the supporting statement and the substance of this proposal.

      Mr. Taylor’s misstatements alone might justify rejection of his proposal. However, his proposal also requires your board of directors to explain that there are serious problems inherent in the proposal itself. Your board of directors believes this proposal, if adopted, would interfere with the proper, efficient and effective operation of your board of directors. Implementing the proposal would arbitrarily deprive the board of the important ability to select a management director as its Chairman. The long and successful record of this Company strongly suggests that a change of this nature would not be in the best interests of our shareholders, customers and employees.

      The independent directors and management of your company depend on a constant, honest and relevant exchange of information. Your board’s Chairman, who is also Chief Executive Officer of the Company, provides an important bridge for this interaction between the board and management. This board leadership structure is consistent with applicable law and the practice of most Standard & Poor’s 500 companies. According to a recent study published by the Investor Responsibility Research Center, less than 10% of the Standard & Poor’s 500 companies have independent chairmen.

      Currently, seven of your eight directors are independent under standards established by the New York Stock Exchange. The Company’s corporate governance structure, with its emphasis on independence, makes it unnecessary to require that the Chairman be an independent director. The board also believes that board independence and oversight of management are effectively maintained through the board’s current composition and committee system. Each of the board’s Human Resources, Governance and Audit committees is comprised solely of independent directors. The board conducts regular executive sessions led and attended by only independent, non-employee directors. The board long ago established procedures that identify an independent director to lead each executive session. The board therefore is comfortable that the candor and objectivity of the board’s deliberations are not affected by whether its chairman is independent or a member of management.

      Shareholders of this Company can be proud that their board and management have been recognized as leaders in the practice of good corporate governance. In 2005, Governance Metrics International (GMI), an independent corporate governance research and ratings agency, rated the Company an 8.5 out of a possible 10.0, placing the Company among the top ten percent of the companies reviewed by GMI. The Company also is rated twentieth among the 100 Best Corporate Citizens by Business Ethics magazine. The Company has adopted corporate governance guidelines which may be viewed on the Company’s website, www.wglholdings.com.

      The Company’s current board leadership structure that features the Chief Executive Officer serving as Chairman has supported sustained and successful corporate performance and has also maintained performance based executive compensation. The independent directors hold the Company’s Chairman and Chief Executive Officer directly accountable for the performance of the Company. This process is perhaps most effective and visible with respect to setting the compensation of the Chairman and Chief Executive Officer. That process, as described elsewhere in this proxy statement, is under the direct control of the Human Resources Committee (the “HR Committee”) of the Board of Directors, which is comprised only of independent directors.

      Each year the HR Committee sets individual and corporate performance targets for which the Chairman and Chief Executive Officer is accountable. The HR Committee regularly evaluates the performance of the Chairman and Chief Executive Officer and determines compensation based on that performance. Each year the HR Committee reviews the levels of compensation of the Chairman and Chief Executive Officer in consultation with the independent benefits consultant retained by the HR Committee. The HR Committee establishes the compensation of the Chairman and Chief Executive Officer in light of data from the relevant market of peer companies and at levels that are competitive and comparable to chief executives of those companies.

      Your Company’s stock has outperformed comparable indices under this board leadership structure. The shareholder return performance table printed earlier in this proxy statement illustrates that the Company has outperformed both the Standard & Poor’s 500 index and the Dow Jones Utility Average for the five fiscal years ended September 30, 2005.

      Shareholders, customers and employees of the Company and its affiliates can be proud of the steady performance of their Company as a safe, reliable and cost-effective enterprise. Your board of directors believes that this record of achievement has been facilitated by the board’s independent structure and under the leadership of a management director. The current structure of the board allows board members to intervene and assert direct and prompt challenges to management’s most senior officer on matters of concern to the independent directors. Over many decades, this direct line of communication between directors and management has resulted in consistently high levels of management performance.

      Based on many years of experience serving on your board, your directors believe the current board structure with a management Chairman has been and continues to be the most appropriate structure for your Company. Mr. Taylor’s proposal and his supporting statement do not support or justify imposition of restrictions on what has been a highly effective and successful board organization. Therefore, your board of directors and management urge that you cast your vote AGAINST proposal #4.

      FOR THE ABOVE REASONS, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “AGAINST” PROPOSAL #4.

OTHER MATTERS

      The board of directors knows of no other matters to be brought before the annual meeting. However, if any other matters come before the meeting, it is the intention of the persons named in the enclosed proxy card to vote in accordance with their best judgment on such matters.

      The annual report for 2005, including financial statements, was first mailed to shareholders on or about January 13, 2006.

      Upon written request, the Company will furnish without charge a copy of its most recent annual report on Form 10-K. Please direct these requests to: Shelley Jennings, Treasurer, WGL Holdings, Inc., 101 Constitution Ave., N.W., Washington, D.C. 20080.

      The solicitation of proxies is being made on behalf of the board of directors, and the cost will be borne by the Company. Brokerage houses and other custodians will be reimbursed by the Company for their expenses in forwarding proxy materials to principals. Further solicitation of proxies may be made by telephone or other communication by regular employees of the Company. Morrow & Company has been retained by the Company for a fee of $4,500, plus expenses, to assist in the solicitation of proxies.

SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING

      Any shareholder who wishes to submit a proposal for printing in the Company’s proxy statement for the annual meeting of shareholders to be held in year 2007 (expected to be held in March 2007) must submit that proposal so it is received by the Company’s corporate secretary no later than the close of business on September 29, 2006. To be included in the Company’s proxy statement, the shareholder proposal must meet the requirements of the applicable rules of the Securities and Exchange Commission. Proposals should be addressed to the corporate secretary, WGL Holdings, Inc., 101 Constitution Ave., N.W., Washington, D.C. 20080.

      Other business matters to be brought by shareholders, including any nominations for board membership, can only be considered at the shareholder meeting in accordance with advance notice provisions of the Company’s bylaws. Notice of these matters must be received by the Company’s corporate secretary not less than sixty (60) days prior to the scheduled date of the next annual meeting of shareholders, or January 2, 2007, assuming the next annual meeting of shareholders is held on March 1, 2007. Notice of such matters should be addressed to the corporate secretary, WGL Holdings, Inc., 101 Constitution Ave., N.W., Washington, D.C. 20080. A copy of the corporate bylaws which describes the advance notice procedures can be obtained from the corporate secretary at the address shown in this paragraph.

VOTING BY PROXY

      Proxy cards will be voted as specified, but if not otherwise marked they will be voted: “FOR” Proposals (1) and (2) and “AGAINST” Proposals (3) and (4).

By order of the board of directors,                                

January 25, 2006

APPENDIX A

WGL Holdings, Inc.

Audit Committee

Charter

As Amended Effective December 9, 2005

WGL Holdings, Inc.

Audit Committee

Charter

As amended Effective December 9, 2005

Table of Contents

WGL HOLDINGS, INC.

CHARTER OF THE AUDIT COMMITTEE

OF THE BOARD OF DIRECTORS

As amended Effective December 9, 2005

I.     Membership

      A. The Audit Committee (the “committee”) of the Board of Directors (the “Board”) of WGL Holdings, Inc. (the “Company”) shall consist of not less than three, or more than five, members of the Board. Members of the committee shall be “independent” as defined in applicable law, regulations of the Securities and Exchange Commission (“SEC”) and the listing standards of the New York Stock Exchange (“NYSE”). Members of the committee shall also meet all other applicable requirements for financial, accounting or related expertise. The committee may, in its discretion, include one or more members having the qualifications of an “audit committee financial expert,” as defined by applicable SEC regulations.

      B.     Members of the committee shall be recommended by the Governance Committee of the Board and appointed by vote of a majority of the independent directors of the Board for one-year terms. The Governance Committee shall recommend and the independent directors of the Board shall designate one member to serve as Chair of the committee.

      C.     Members of the committee shall serve until their resignation, retirement or removal by the Board or until their successors are appointed. No member of the committee shall be removed except by majority vote of the independent directors of the full Board then in office.

II.     Purpose

      The purpose of the committee is to:

      A. assist the Board in its oversight responsibilities and to meet the committee’s responsibility for (1) the integrity of the Company’s financial statements, (2) the Company’s compliance with legal and regulatory requirements, (3) the independent auditors’ qualification and independence, and (4) the performance of the Company’s internal audit function and independent auditors;

      B. perform the duties and responsibilities of the committee as specified by law, regulation, NYSE listing requirements and this charter; and

      C. prepare the report required by the SEC’s proxy rules to be included in the Company’s annual proxy statement.

III.     Meetings

      The committee shall meet from time to time at the call of the Chair or upon the request of any member, but in no event shall it meet less than four times during each fiscal year of the Company. A majority of the members of the committee shall constitute a quorum.

IV.     Duties and Responsibilities

      B.     Independent Auditors — audit and non-audit services

      C.     Financial Reporting Process; Risk Assessment

      1.     The Company’s independent auditors shall timely report to the committee:

History of this committee charter document: