Natural Gas: Americas Responsible Energy Choice

1
Natural Gas Americas Responsible Energy Choice

• Christopher McGill
• Managing Director, Policy Analysis
• American Gas Association
• Boston Financial Community
• March 12, 2009
• Boston, Massachusetts

2
Natural Gas Supply(January 1-December 31, 2008)
Sep
Mar
Source Bentek Energy LLC, Energy Market
Fundamentals, December 31, 2008.
3
Net Storage Activity(January 1-December 31,
2008)
Net Withdrawals
Net Withdrawals
Net Injections
Source Bentek Energy LLC, Energy Market
Fundamentals, December 31, 2008.
4
Natural Gas Consumption (January 1-December 31,
2008)
Source Bentek Energy LLC, Energy Market
Fundamentals, December 31, 2008.
5
Power Generation Consumption(January 1-December
31, 2008)
Source Bentek Energy LLC, Energy Market
Fundamentals, December 31, 2008.
6
Future Natural Gas Supply(2010-2030)
Source Energy Information Administration,
Annual Energy Outlook 2009-2030.

7
Future Natural Gas Demand(Typical 2005 Outlook)
Source Energy and Environmental Analysis.
8
Future Natural Gas Demand(2010-2030)
Source Energy Information Administration, Annual
Energy Outlook 2009-2030.

9
Global Climate Change
Percent of Public Saying Global Climate Change is
a
"Very Serious" Problem
80
x
Germany

France
70
U.K.
60
Canada
U.S.
50
40
Percent Response
30
20
10
0
1998
2000
2003
2005
Source GlobeScan, Presentation to G85
Legislators Forum, 6 December 2005.
10
Natural Gas Is By Far The CleanestOf All Fossil
Fuels
Pounds of CO2 Per MMBtu
Source U.S. Energy Information Administration.
11
Residential Natural Gas Customers Are
Growing,But Their Greenhouse Gas Emissions Have
Declined
MILLIONS OF CUSTOMERS
GREENHOUSE GAS EMISSIONS
MILLIONS OF TONS/YR.
Source U.S. Environmental Protection Agency,
U.S. Energy Information Administration
and American Gas Association.
12
Consumption Per ResidentialNatural Gas Customer
32 EfficiencyImprovement
MMBtu/Year
Source U.S. Energy Information Administration
and American Gas Association. NOTE Data is
weather normalized or adjusted to reduce the
impact of abnormally warm or cold weather.
13
NATURAL GAS AMERICAS RESPONSIBLE ENERGY CHOICE
14
Total Energy Efficiency(Source Energy Required
To Deliver 100 Mmbtu To End-use Customer)
Million Btu
NOTE National average electricity generation
mix.
15
Direct Natural Gas Use ReducesGreenhouse Gas
Emissions
Tons of CO2 /Year
16
American Gas Foundation StudyDirect Use of
Natural Gas

• A 7 shift of the total electric load to natural
  gas for residential and commercial applications,
  can save from 1.25-2.00 quadrillion Btu in 2030.
• Potential avoided generation capacity will range
  from 63 to 80 GW.
• The avoided investment costs will range from 49
  billion to 122 billion.
• In the studys scenario where CO2 restrictions
  meet levels in the Lieberman-Warner Senate bill,
  the cost savings is significant - from 18 to
  almost 29 billion dollars by the year 2030.

17
Number Of Natural GasCustomers Increasing
MILLIONS OF CUSTOMERS
18
States With Non-Volumetric Natural Gas Rate
Designs (As Of December 2008)
19
APPROVED 28 Companies, 16 States, 20 Million
Res. Customers
Decoupling Tariffs (As Of January 2009)

• AR Arkansas Oklahoma
• AR Arkansas Western
• AR CenterPoint Energy
• CA Pacific Gas and Electric
• CA - San Diego Gas and Elec.
• CA Southern California Gas
• CA Southwest Gas
• CO PSC of Colorado
• IL Integrys - Peoples Gas
• IL Integrys - North Shore Gas
• IN Citizens Gas Coke
• IN Vectren Indiana Gas
• IN Vectren Southern Indiana Gas
• MA Generic Proceeding
• MD Baltimore Gas and Elec.

• MD Washington Gas
• NJ NJ Natural Gas
• NJ South Jersey Gas
• NV Generic Proceeding
• NY Consolidated Edison
• NY National Fuel Gas Dist.
• NC - Piedmont Natural Gas
• NC PS Co. of North Carolina
• OH Vectren Ohio
• OR Cascade Natural Gas
• OR NW Natural Gas
• UT Questar Gas
• VA Virginia Natural
• WA Avista
• WA Cascade Natural Gas

PENDING 11 Companies, 5 Additional States, 6
Million Res. Customers

• MN - CenterPoint Minnesota Gas
• NY Central Hudson Gas Electric
• NY National Grid Niagara Mohawk
• WA NW Natural Gas
• WI - Integrys - Wisconsin Public Service Co.

• CT Connecticut Natural Gas
• CT Southern Connecticut Gas
• IA Black Hills Iowa Gas Utility
• IL Nicor
• MA New England Gas
• MI Consumers Energy

Of 65 Million US Residential Customers (2007)
20
Natural Gas UtilitiesAn Attractive Investment
21
Utilities Dividends

• Most utilities have paid dividends continuously
  for more than 50 years
• 4.33 average current yield
• 15 maximum dividend tax rate

22
Defend My DividendNational Grassroots Advocacy
Campaign
23
Average Utility Credit RatingsExceed Corporate
Ratings
Source Standard Poors
24
Growth Of AGA Index (Vs. Dow Jones Industrials
SP 500)
-16
-40.00
25
Natural Gas UtilityInfrastructure Growth
Projections

• To meet projected natural gas demand, 100
  billion worth of new
• infrastructure must be built over the next
  20 years.

26
Our Industrys Future Looks Bright
Increased direct use of natural gas can reduce
energy consumption and costs, lower carbon
emissions and enhance national energy security
Abundant domestic supply resource base can serve
future demand growth
Gas utility industry provides safe and reliable
energy services through asset based businesses
Natural gas utilities have solid fundamentals and
good business practices
25
27
Keys to Future Success
Grow direct use of natural gas through new
products and services and technological innovation
Access new domestic supply sources and develop
transportation and storage infrastructure
Raise cost effective capital to expand our
natural gas delivery infrastructure
Adopt innovative regulatory tariffs that align
the interests of energy utilities with consumers
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Natural Gas Americas Responsible Energy Choice

• Boston Financial Community
• March 12, 2009
• Boston, Massachusetts