1. Paul Roberti, Commissioner Rhode Island Public Utilities Commission
A Northeast U.S. Energy Perspective: Seizing Opportunities to Advance Economic and Environmental Prosperity
American Gas Association
Legislative Forum
Miami South Beach, FL
May 1, 2012
Presentation by:
Paul Roberti, Commissioner
Rhode Island Public Utilities Commission

2. OVERVIEW Pipeline Safety Update Northeast Gas Supply Picture
Electric/Gas Interdependency Challenges
Energy Efficiency and DR Opportunities
Combined Heat & Power Applications
CNG Vehicles
Transmission and Distribution Expansion

3. Prominent Features of Rhode Island’s Capital Expense Tariff Rider
Accelerated Replacement Program (ARP)-Rate Case Agreement
ARP began as part of the 2008 Rate Case and during over the 2 year period, replaced 70 miles of Leak Prone Pipe and 4,391 Bare Steel, high pressure services.
Infrastructure Safety and Reliability Plan (ISR)
New ISR Plan required by Legislation replaced the existing ARP.
FY 2012 program will begin recovery of $53.4M in capital spend starting April 2011.
The plan is expected to fund and replace approximately 45 miles of Leak Prone Pipe and 2,125 Bare Steel, high-pressure inside services.
Implementation of a fully reconciling rate mechanism designed to recover actual and anticipated capital investments as reflected in the approved ISR spending plan.

4. Public Policy Value of Cap-X Tracker
Eliminates Utility-borne Risk of Traditional Rate-base Rate-of-Return Policies
Promotes Opportunities for coordination with State highway and local road projects, sewer upgrades and emergency repairs, etc. that are both economic and logistically convenient
Mitigates the need for large rate increases by spreading cost of infrastructure upgrades along broader timeframe
Consistent with good ratemaking principles of rate stability and inter-generational equity
Most importantly, advances PUBLIC SAFETY by encouraging systematic replacement of high-risk facilities

5. 5 Year Infrastructure System Reliability Plan of National Grid
For a gas Company that began operations in 1847 (10th oldest in the nation), this is signifivcant.
Total Capital over 5 years: $372 Million

6. MAIN LEAK “RATES” COMPARISON BY MATERIAL
LEAK REPAIRS
PER MILE OF MAIN
LEAKS BY MATERIAL TYPE
Data indicates capital investments are paying off!

7. Amount of Leak Prone Pipe (Mains) in New England
Courtesy of Randy Knepper, Director of Pipeline Safety, NH Public Utilities Commission

8. Despite Recent Progress, the Challenge of Removing High-Risk Infrastructure Will Persist for Decades

9. Shale Gas Growth: The Future is Bright

10. Bentek’s Latest Projections:
Northeast Production Can Grow by 8 Bcf/d by 2017!
NGA Regional Market Trends Forum| April 25, 2012
Courtesy of Spectra Energy

11. 2006 Projections for LNG Imports and Unconventional Shale Production WRONG!
Courtesy of Gary Taylor – The Brattle Group

12. LNG Imports into the Region Decline
Courtesy of Bentek Energy

13. NGA 2012 Regional Market Trends Forum – The Pipeline Perspective
TQM
M&NE
PNGTS
TCPL
Iroquois
Empire
Tennessee
Millennium
Algonquin
And finishing up, Jessica Miller, from Marketing and Business Development at Tennessee, will present their projects.
National Fuel Gas
Texas Eastern

14. Source: Northeast Observer Expansions Report
Traditional South-to-North Gas Movements Up-ended by Flows from Marcellus/ Utica Shale Basins; Northeast Will Send Gas to SE, Canada, MidCon, LNG Exports
Source: Northeast Observer Expansions Report

15. Spectra Energy Announces Expansion Projects in Response to Growth of Northeast Shale Supplies
Texas Eastern Appalachia to Market TEAM 2014
Providing producers access to diverse Texas Eastern markets
BOSTON
TORONTO
AIM
Union Gas
Ohio Pipeline Energy Network
OPEN (2014)
Connecting Utica production to diverse Texas Eastern markets
NEXT
NEW YORK
Northern Expansion Transmission NEXT (2016/2017)
Providing Appalachian producers access to Eastern Canada LDC & power markets
OPEN
PHILADELPHIA
TEAM 2014
Algonquin Incremental Market
AIM (2015)
New England market pull combined with Northeast PA supply push
$2 – $4B in expansion
opportunities in
Renaissance Gas Transmission
Renaissance
Appalachian supply to Northern Georgia & Atlanta markets
Renaissance
ATLANTA
NGA Regional Market Trends Forum April 25, 2012
Courtesy of Spectra Energy

16. Spectra Energy Announcement: Algonquin Gas Transmission (AIM) Expansion Proposal
AIM Receipt
AIM Delivery
NGA Regional Market Trends Forum| April 25, 2012
Courtesy of Spectra Energy

17. Northampton Southwick CS
El Paso’s Tennessee Pipeline Expansion Upgrade Expected to Bring 1.5 Bcf/d of Incremental Supplies to Northeast Markets
Northampton Southwick CS
Courtesy of El Paso Corporation

18. Breakdown of El Paso Pipeline Capacity Additions to Northeast U.S.
Project
Capacity (Dth/d)
Shippers
30” Pipeline Loop
(mile)
New Compression (Hp)
In-Service
300L Project
350,000
EQT Energy
127
55,000
Nov 1, 2011
NSD
250,000
Cabot, Seneca, Anadarko, Mitsui 7
N/A
Nov 1, 2012
Northampton
10,400
Berkshire, Bay State
2,000
MPP Project
240,000
Chesapeake, Southwestern 8
Nov 1, 2013
NE Upgrade
636,000
Chesapeake, Statoil 40
22,310
Courtesy of El Paso Corporation

19. Gas Efficiency Investments Ramp Up
Natural Gas Efficiency Program Budgets,
Northeast States,
$ Millions
Source: Consortium for Energy Efficiency

20. CNG Vehicles: Huge Potential w/o downside limitations of EVs

21. CHP’s Higher Efficiency Results in Energy and Emissions Savings
Category
10 MW CHP
10 MW PV
10 MW Wind
10 MW
NGCC
Annual Capacity Factor
85%
22%
34%
70%
Annual Electricity
74,446 MWh
19,272 MWh
29,784 MWh
61,320 MWh
Annual Useful Heat Provided
103,417 MWht
None
Footprint Required
6,000 sq ft
1,740,000 sq ft
76,000 sq ft
N/A
Capital Cost
$20 million
$48 million
$24 million
$9.8 million
Annual Energy Savings, MMBtu
316,218
198,563
306,871
163,724
Annual CO2 Savings, Tons
42,506
17,824
27,546
28,233
And the savings from CHP and waste heat to power are significant –
This comparison of energy savings and CO2 savings from natural gas CHP to Wind and Solar is an eyeopener for many policymakers:
Compares a 10 MW gas turbine CHP system to utility scale wind and PV
CHP system not particularly efficient – 28$ electric, 68% overall counting power and thermal output
DOE assumptions for Wind and PV – optimistic on costs and capacity factor
Energy and CO2 savings based on displacing on-site natural gas boiler and US average fossil central station generation heat rate and emissions factor – including 6% average T&D losses
Energy and CO2 savings of CHP – a technology burning a fossil fuel – is on the order, in fact larger, than the savings from these strictly renewable technology
Driven by capacity factor – reflects the high asset utilization of CHP
And don’t forget secondary comparisons in terms of capital costs and footprint
10 MW Gas Turbine CHP - 28% electric efficiency, 68% total CHP efficiency
Capacity factors and capital costs for PV and Wind based on utility systems in DOE’s Advanced Energy Outlook 2011
Capacity factor, capital cost and efficiency for natural gas combined cycle system based on Advanced Energy Outlook 2011 (540 MW system proportioned to 10 MW of output)
CHP, PV, Wind and NGCC electricity displaces National All Fossil Average Generation resources (eGRID 2010 ) - 9,720 Btu/kWh, 1,745 lbs CO2/MWh, 6% T&D losses; CHP thermal output displaces 80% efficient on-site natural gas boiler
Courtesy of Bruce Hedman, ICF International

23. Environmental Characteristics of Natural Gas Trump Oil Derivatives by Significant Margins

24. Northeast Should Foster Policies that Encourage Oil-to-Gas Conversions

25. Electric Industry’s Growing Dependence on Natural Gas Creates Challenges
New England’s dependence on gas generators is 45% and continues to grow
EPA regulations bring heavy pressure on coal/oil units
Most gas-fired units do not have firm contracts for gas supply raising reliability issues during winter peak demand periods
Current electric capacity markets do not adequately incentivize firm gas commitments
Dual fuel gas generators equally challenged by lack of sufficient incentives
Intermittent renewables suffer from similar availability constraints
Region engaged in intense review to solve ongoing reliability concerns by crafting changes to market rules and/or opportunities for region to increase transmission capacity
Potential solutions: market rule changes; pipeline infrastructure enhancements; imports of hydro-electric power

26. Thank you Paul Roberti, Commissioner
Rhode Island Public Utilities Commission
89 Jefferson Blvd.
Warwick, RI