SEARUC 2003 Annual Meeting Pinehurst, North Carolina June 9, 2003 Pat Wood, III Federal Energy Regulatory Commission

FERC Strategic Plan Vision: Dependable, affordable energy through sustained competitive markets Goal No. 1: Infrastructure Adequacy Goal No. 2: Competitive Energy Markets Goal No. 3: Vigilant Market Oversight

Goal No. 1: Promote Infrastructure Adequacy Gas Pipelines LNG Storage Facilities Electric Generation Electric Transmission

Natural Gas Industry

Major Interstate Natural Gas Pipelines Source: FERC Staff NIP Map: Please contact FERC’s Public Reference Room if you need a copy. Public Reference Room may be contacted by: at or ; or toll free at

Major Pipeline Projects Certificated (MMcf/d) January 2002 to June 2003 Transco (359) Southern (330) Kern River (886) CIG (272,92) North Baja (500) Tuscarora (96) Northwest (162) Kern River (282) Iroquois (70) TETCO (250) Northwest (224) NFS/DTI (150) Georgia Straits (96) 1. Algonquin (285) 2. Islander East (285) 3. Iroquois (85) 4. Columbia (165,270) SCG Pipeline (190) Northwest (175) East Tennessee (510) Tennessee (320) TETCO (197) Greenbrier (600) El Paso (320) WBI (80) 7.1 BCF/D Total 2,192 Miles Source: FERC Staff

Major Pipeline Projects Pending (MMcf/d) June BCF/D Total 604 Miles Calypso (832) Maritimes (400) Ocean Express (842) Columbia (135) ANR (220) Texas Eastern (223) Algonquin (200) El Paso (140) Cove Point (445) Cheyenne Plains (560) CIG (118) Source: FERC Staff

Major Pipeline Projects On The Horizon (MMcf/d) June 2003 Transco (250) Alabama-Georgia (Duke) (240) Seafarer Pipeline (El Paso) (700) Gulf Pines (Gulf South) (1,000) Blue Atlantic (El Paso) (1,000) Northwinds Pipeline (NFG) (570) Ruby Large (CIG) (750) Samoa Point (Calpine) (1,000) CIG/WIC (1,936) Sun Devil Project(Transwestern) (450) Advantage Pipeline (KM Interstate) (330) Silver Canyon Project (KM Interstate) (750) TransColorado (750) KM West Texas (KM Interstate) (300) Wheatland Expansion (KM Interstate) (80) Desert Crossing (800) Coronado (750) Alaska Gas (4,500) Bison Pipeline (Northern Border) (300) Lebanon Lateral (ANR) (250) North Leg (ANR) (514) Trailblazer (100) 17.3 BCF/D Total 6,574 Miles Source: FERC Staff

Existing and Proposed LNG Import Terminals April, 2003 Source: FERC Staff NIP Map: Please contact FERC’s Public Reference Room if you need a copy. Public Reference Room may be contacted by: at or ; or toll free at

Storage Projects June 2003, Capacity in Bcf Certificated Since 2001 On The Horizon Currently Pending Source: FERC Staff NIP Map: Please contact FERC’s Public Reference Room if you need a copy. Public Reference Room may be contacted by: at or ; or toll free at

Electric Power Industry, including Hydroelectric Power

Electric Market Size, 2002 Demand (MW) Capacity (MW) Transmission (Circuit Miles) ECAR99,346122,99516,207 FRCC40,14544,7356,822 MAAC54,18864,0037,031 MAIN56,88870,8426,177 MAPP (US)28,19132,96714,177 NPCC (US)54,67567,9926,463 SERC158,928176,16828,539 SPP41,48347,5917,618 ERCOT57,89876,4827,373 WECC (US)116,852142,88056,838 Source: NERC Reliability Assessment

Average Age of Generation Fleet Source: RDI PowerDat Age, in years Duke Energy54, with Hydro 32, without Hydro Entergy40, with Hydro 38, without Hydro Florida Power & Light29, no Hydro Southern Companies44, with Hydro 31, without Hydro

Streamlining Generator Interconnection Standard Generation Interconnection Agreements and Procedures –To ensure non-discriminatory access to transmission grid –Reduce costs and time of interconnecting to grid –Separate rulemakings for large and small (<20MW) generation

StateHydroelectric Generation Capacity (MW) Percent of Total In-state Electric Generation Capacity Tennessee South Carolina Virginia Arkansas Georgia Alabama North Carolina Kentucky3482 Louisiana1991 Florida470.1 Mississippi30.04 Hydropower in the Southeast Source: EIA, FERC Staff HYDROELECTRIC CAPACITY FACILITY LOCATION NIP Map: Please contact FERC’s Public Reference Room if you need a copy. Public Reference Room may be contacted by: at or ; or toll free at

Generation Capacity Built, 1998-Feb Only the new capacity built in the portions of TX, OK, MO & VA in SERC region are shown here. Source: RDI PowerDat; New Gen     

Protecting Energy Infrastructure Critical Energy Infrastructure Information Gas Pipeline Emergency Reconstruction Electric Cyber-Security Dam Safety and Inspections Coordination with other federal agencies, NARUC and industry on many other security related issues.

Goal No. 2: Foster Competitive Wholesale Energy Markets Advance Competitive Market Institutions –NAESB, NERC: commercial and reliability standards –RTOs and ISOs: –Regional and State Coordination –Regional Transmission Planning

2002, Estimates Average Revenue per kWh for All Sectors; US Average 7.21 ¢/kWh Source: EIA; FERC Staff

Goal No. 2: Foster Competitive Wholesale Energy Markets Establish Balanced, Self-Enforcing Market Rules –Link Market-Based Rate Authority to Continued Presence of Balanced Market Conditions. –Encourage Standardized Business Rules and Practices

Initiatives Toward Balanced, Self- Enforcing Market Rules, (cont’d) Order No. 637 –Implementation initially complete on 90 pipes Pipeline Creditworthiness Standards –Result of credit rating downgrades and concern over defaults by shippers –Proposals involve criteria to prove creditworthiness and stricter requirements for non-creditworthy shippers to receive service –NAESB attempting to develop standards

Goal No. 3: Protect Customers and Market Participants Through Vigilant Oversight of Transitioning Energy Markets

Office of Market Oversight and Investigations Two Divisions Expert market oversight, analysis Enforcement of law, rules

Price Transparency Review of Natural Gas and Electric Price Reporting –Concerns about inaccurate reporting erodes confidence –June 24 conference –Next steps

Hot Line Energy Markets “Neighborhood Watch” Established in