Natural Gas Market Dynamics

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Natural Gas Market Dynamics

• Jeffrey A. Murphy
• Managing Director, Commercial Operations
• Dominion East Ohio
• June 5, 2009

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Natural Gas Market Dynamics

• Price Volatility
• Supply and Demand Fundamentals
• Dominion East Ohio Market

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Natural Gas Market Dynamics

• Price Volatility

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Historical Price Movement
Source www.hessenergy.com
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July 09 NYMEX Contract Pricing
Source www.hessenergy.com
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Forward NYMEX NG Prices
Source www.nymex.com
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June 2, 2009 Gas Daily Headlines

• NYMEX leaps 41.4 cents, but cash prices weaken
• the NYMEX price soared for no good reason
  given that fundamentals have not changed much
  from last week.
• Bears in control as new hurricane season begins
• nothing - save a catastrophic hurricane -
  should prevent gas prices from falling even
  further this summer
• SP Outlook murky for North American gas sector
• the key for oil and gas is the development of
  demand, and demand right now is heading downhill

See www.platts.com
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Natural Gas Market Dynamics

• Key Drivers

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Key Drivers Reduced Demand
Weather-Normalized RC Demand Is Less
Source www.eia.doe.gov
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Key Drivers Reduced Demand
Industrial and Power Generation Demand Is Much
Less
Source www.eia.doe.gov
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Key Drivers Drilling Activity
Source EIA Natural Gas Year In Review 2008
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Key Drivers Drilling Activity
Source www.bakerhughesdirect.com
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Key Drivers Domestic Production
Source www.eia.doe.gov
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Key Drivers Domestic Production
Source EIA Annual Energy Outlook 2009
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Key Drivers New Reserves
Source FERC Natural Gas Market Overview
(12/5/08)
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Key Drivers LNG Imports
Source www.eia.doe.gov
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Key Drivers Storage Inventories
Source www.eia.doe.gov
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Key Drivers Pipeline Capacity
Source rexpipeline.com
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Natural Gas Market Dynamics

• Dominion East Ohio Market

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Energy Choice Enrollments
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Pre-SSO (9/06) to Today (12/08)
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Energy Choice Market Shares 12/08
Other 13
F
E
D
Aggregation (36)
C
B
A
Energy Choice Participation Rates Residential
Non-PIPP 78 Nonresidential 75
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What is Dominion Doing Now?

• Dominion is continuing its transition from
  traditional regulated natural gas sales to a more
  competitive market for its customers
• Dominion will continue to focus on providing
  regulated distribution service to its 1.2 million
  customers
• Dominion conducted its first Standard Service
  Offer auction in August 2006 to purchase natural
  gas for its sales customers
• In February 2009, Dominion conducted two more
  auctions for Standard Service Offer (SSO) and
  Standard Choice Offer (SCO) commodity service
• In April 2009, Dominion placed all
  Choice-eligible customers into a direct retail
  relationship with an Energy Choice supplier at
  the SCO rate established in the auction
• SSO/SCO auction process will be repeated in 2010

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Resources
Residential/Small Commercial www.dominiongaschoice
.com
Larger Commercial/Industrial www.dom.com