the voice and choice of public gasthe voice and choice of public gas

National Gas Policy and the Stimulus Impact

John EricksonAmerican Public Gas Association

August 25, 2009

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American Public Gas Association

• ~1000 community-owned gas systems 37 states >5M Customers ~21,000 Employees ~120,000 Miles of Main

• Systems size (Meters): 12 to ~500,000• Largest cities: Philadelphia, San

Antonio, Indianapolis, Memphis, Long Beach, Richmond, Colorado Springs, Mesa

• Freedom, OK (12 meters)• Annual Conference, Indianapolis, IN

(August)

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U.S. Municipal Gas Systems

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Public Gas Systems # of Employees

No data 1-5 6-10 11-20 21-50 51-100 >1000

50

100

150

200

250

300

350

400

450

500

110

475

178

10578

21 19

the voice and choice of public gas

Public Gas Systems # of Customers

No data 1-1K 1K-10K 10K-100K >100K0

50

100

150

200

250

300

350

400

450

500

83

474

361

59

9

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Priority #1The Safe and ReliableDelivery of AffordableNatural Gas at Just &

Reasonable Rates

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National Gas Policy• Climate Change• Supply• Market Transparency• Overhaul of the Financial Markets• Section 5 Reform• Stimulus Package

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Climate Change• Focus of both Congress and the

Administration• Significant Impact on Natural Gas LDC’s• House Passed Legislation on June 26th by

a 219-212 vote• Significant impact on natural gas

Fuel switchingIncreased demandCap on emissionsPoint of regulation

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HFC, PFC, SF62%

N20 (Soil Mgmt, Combustion)7%

Methane (Landfill, Mining, Ag, Gas)8%

CO2 from Process and Non-Energy Use

4%

CO2 from Residential Combustion

5%

CO2 from Commercial Combustion

3%

CO2 from Industrial Combustion

12%

CO2 from Transportation26%

Oil1%

Gas4%Coal

28%

CO2 from Electricity Generation

33%

U.S. GHG Emissions – 2005

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What is Cap and Trade?

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Climate Change Legislation• Waxman-Markey American Clean Energy Security Act (H.R. 2454) • The bill includes:

Carbon Reduction Program (83% by 2050)Renewable Electricity mandate Carbon LabelingEnergy Efficiency mandate for gas &

electric mandate removed

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Waxman/Markey Bill• Emissions Cap begins is 2012 • Gas LDCs come under cap in 2016• Gas LDCs with 475, 000 MCF (25,000

Co2 equivalent) • Industrial users over 475,000 MCF

responsible to track their own emissions

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Waxman/Markey Bill• Gas prices will likely increase due

to fuel switching• Gas LDCs will get 9% of “free

allowances” • Sale of those must be used to

protect consumers from gas price increases

• Buy remaining allowances if you don’t meet your yearly targets – auction or open market

• Recent CBO report estimates cost to consumers about $175 per year

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What can Gas LDCs expect under a climate program?

• Tracking your emissionsEPA registry rule www.apga.org/calculator

• Yearly compliance with EPA - permits• Potentially buying & selling allowances on

the market or buying from a government auction

• Find ways to reduce emissions to meet the cap (efficiency, load reduction, etc.)

• Stress on U.S. natural gas supply and price from fuel switching

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Access to U.S. Supply

APGA has long maintained the additional supply is a

fundamental component to long-term affordable natural

gas

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Supply Estimates Up

*35% increase from last report

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Supply Examples

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Access to U.S. Supply• Moratoria removed last year on OCS on East and West Coast• A recent Senate Energy bill contains language that opens Eastern Gulf of Mexico for E&P • Dept. of Interior finalizing rules on E&P on federal lands

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Market Transparency• Restore public confidence in the pricing

of natural gas• Transparency must assure consumers

that market prices are a result of fundamental supply and demand forces and not the result of manipulation or other abusive market conduct

• APGA supported legislation became law as part of 2008 Farm Bill

• CFTC and Congress continue to focus on oversight and transparency

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Overhaul of Financial Markets• Language added to the

Waxman/Markey Bill that addresses regulation of the over-the-counter (OTC) market.

• House and Senate moving to address derivatives reform legislation

• Move towards mandatory clearing will impact the natural gas industry on multiple levels

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Natural Gas Act Section 5 – FERC Refund Authority

APGA is pushing Congress to change the law to give the agency that oversees interstate pipeline rates, Federal Energy Regulatory Commission (FERC), refund authority to protect consumers.

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• Certain pipelines are proven to be over-charging consumers

• This authority would allow FERC to grant refunds to consumers when it is proven a pipeline is charging more than just and reasonable rates

Natural Gas Act Section 5 – FERC Refund Authority

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Natural Gas and the Stimulus Package

• The American Reinvestment and Recovery Act of 2009 (Stimulus Bill) signed into law February on 17, 2009

• The legislation allocates $787 billion to help stimulate the US economy

• Dollars available reduce over time

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Stimulus Dollars to Energy• 6.4% of the package designated to

energy• $32.5 billion in programs allocated to

State Energy Agencies.• $11.0 billion in programs directly funded

by the Department of Energy• Some provisions are specifically

designated to investment in electric generation, transmission and distribution

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An Example of State Program Funding• $5 billion for Weatherization Programs• $4.3 billion for Low Income Energy Efficiency• $3.2 billion for Energy Efficiency and

Conservation Grants• $3.1 billion for State Energy Program Grants• $2.4 billion for Housing and Urban

Development energy programs• $1.0 billion for Appliance Rebates and

Efficient Fleets

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Opportunities for Potential Stimulus Bill Funding

• State energy efficiency programs• Weatherization• State energy conservation block grants• Housing and Urban Development energy efficiency

projects• Tax credits and rebates for appliances and

weatherization• Natural Gas Vehicles• Reimbursement for relocation expenses• Develop new natural gas service conversion offers

from competing fuels (i.e. propane and fuel oil) that leverage funding from the Stimulus Bill

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Definition of Reportable Incident• Proposed by PHMSA Comments due 8/31• Any event where gas ignites would be

reportable, regardless of property loss• Events where house fires involve the meter

would be reportable if the house cost more than $50,000

• Volumetric criteria (3 MMCF)• Encourage utilities to file comments by 8/31

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WWW.APGA.ORG