1. PA Energy Development Authority PA Energy Development Authority April 7, 2014 April 7, 2014

2. All of the Above – and Below Since January 18, 2011, Governor Corbett has implemented a straight forward energy policy. His All of the Above – and Below – approach reflects Pennsylvania’s diverse energy portfolio. Home to abundant resources such as coal, natural gas, nuclear, oil, hydropower, wind, solar and other renewables, Pennsylvania is a national leader in both energy production and resource diversity. 2

3. PA Energy Policy – Core Principles  ‘All of the Above’ – and Below  We need all our resources  Embracing free markets  Consumers win when they can choose  Energy independence leads to energy security  Energy imported = dollars exported  Abundant, affordable & domestic  American energy for American jobs  Enhancing our environment  Yesterday’s legacies are today’s opportunities 3

4. How is Energy Meeting Gov. Corbett’s Goals?  Putting Pennsylvania on Sound Fiscal Ground?  Contributions to PA’s Economy and Tax Revenues  Creating Jobs for All Pennsylvanians?  Employment (direct, indirect & induced) within each energy sector  Increasing competitiveness of PA businesses  Helping to Create an Educated & Trained Workforce?  PA seizing opportunities to produce and use energy  Aligning job-training & workforce development initiatives with opportunities 4

5. Who is the Audience?  Job-Creators:  Business & Industry  Capital Investors & Decision Makers  Regional Chambers of Commerce  Governor’s Administration  Cabinet Members  Agency Personnel Involved in Energy Policy & Economic Development  General Assembly & Other Elected Officials  All Pennsylvanians  Clear Understanding of Pennsylvanians Assets  Clear Understanding of Gov. Corbett’s Vision for these Assets 5

6. Plan Contents  Pennsylvania’s history as an Energy Capital  The energy resources positioning PA as the new Energy Capital  Energy Portfolio  What we have  Making use of our resources  Benefits & opportunities for job-creators  Abundant, affordable, domestic  Enhancing Pennsylvanians’ quality of life  Today’s opportunities helping clean up  yesterday’s environmental legacies  Highlighting success stories  Resources  Where to go next? 6

7. Keystone State’s Energy Portfolio ~ continued ~  2 nd largest energy field in the world  4 th largest energy producer in U.S.  2 nd largest electric generator in U.S.  2 nd largest nuclear generator in U.S.  4 th largest coal producer in U.S.  2 nd in natural gas production in U.S.  3 TCF in 2013; 50% increase from 2012  Net exporter for first time in 100 years  9 th in total solar capacity installed  15 th in total wind capacity installed  2.2 million electric choice customers 7

8. Reduced Energy Costs 8

9. Reduced Energy Costs Lower Purchased Gas Costs * 1st Quarter 2008 & PUC-approved rate for 2013* Residential heating customer using 15 mcf/month UtilityPGC Rate / mcf% ChangeCustomer^ Savings 2008*2013*2008-2013Monthly PECO$11.10$6.0745%$75.45 NFG$10.34$5.2549%$76.35 PGW$10.58$6.0743%$67.65 Columbia$10.25$4.8153%$81.60 Equitable$11.81$6.0549%$86.40 UGI$11.79$6.7143%$76.20 UGI Penn$10.66$5.5548%$76.65 Peoples$9.53$4.5952%$74.10

10. Marcellus Shale – A Game Changer Marcellus What?? 10

11. Marcellus Shale – A Game Changer  489 tcf of technically recoverable gas (2009 – T. Engelder)  Largest unconventional shale gas play in nation  12 bcf/day – 25% of all U.S. shale gas production  Production doubled in 2011 & 2012 (50% in ‘13) 11

12. By the Numbers...Drilling  Gas wells drilled *  7,733 (since 2005)  1,365 (2012)  1,210 (2013)  304 (2014 – thru 3/30)  Gas production *  4,922 producing wells (Dec. 31, 2013)  686 well increase  Amount of production reported every 6 months  894 bcf (Jan-June ’12)  1,146 bcf (July-Dec ’12)  1,406 bcf (Jan-June ’13)  1,689 bcf (July-Dec ’13) 12 * PA Unconventional

13. Natural Gas Production – Marcellus Shale Region Source: Energy Information Administration, January 2014 13

14. A Changing Energy Landscape PA Electricity Generation by Fuel Type 14

15. A Changing Energy Landscape Pending Coal Fired Power Plant Retirements 15

16. A Changing Energy Landscape Proposed Gas Fired Power Plants 16 Source: PA Department of Environmental Protection ApplicantCounty Approximate Capacity (MW) Panda PowerBradford900 Berks Hollow Energy Associates, LLCBerks855 Panda PowerLycoming900 Bakers Farm Energy, LLCYork650 Hickory Run Energy, LLCLawrence750 Tenaska Pennsylvania Partners, LLCWestmoreland900 Tenaska Pennsylvania II Partners, LLCLebanon900 Sunbury Generation LPSnyder1,064 Future Power PA, Inc.Schuylkill300 TOTAL 7,219

17. A Changing Energy Landscape PJM Fuel Mix: 2005 – 2012 17

18. Benefits to Consumers Reduced Energy Costs – 2008 v. 2012 18

19. Benefits to Consumers Improved Air Quality 19

20. Alternative & Renewable Energy  Alternative Energy Portfolio Standards Act  Tier 1, Tier 2 & solar carve out  18% by 2021  8% Tier 1 (including 0.5% solar)  10% Tier 2  Alternative Energy Investment Act  $650 million  $180 m residential & commercial solar projects  Competitive Electricity Markets  At least 20 suppliers offering 24 “green” products  www.choosepawind.com www.choosepawind.com  www.oca.state.pa.us www.oca.state.pa.us 20

21. Energy Efficiency & Demand Response Energy Efficiency  Act 129 of 2008  Phase 1: 3.5% consumption reductions by May 2013  $1.5 : $1 benefit to cost ratio  Phase 2: Staggered targets May 2013-May 2016: 21 Utility Territory Three-Year % of Energy Efficiency Reductions Duquesne2.0 Met-Ed2.3 Penelec2.2 Penn Power2.0 PPL2.1 PECO2.9 West Penn1.6 AVERAGE2.2

22. Energy Efficiency & Demand Response Demand Response  Act 129 of 2008  4.5% reduction during summer 2012 peak 100 hours  Robust economic DR participation in PJM Auction:  14,832 MW in 3-yr forward auction (May 2012)  12,408 MW in 3-yr forward auction (May 2013)  FERC Order 745 – full wholesale price paid for economic DR instead of difference with retail pricing 22

23. Competitive Markets Electric Competition in PA  2,208,484 customers shopping *  39% of all customers  38% residential  47% commercial  87% industrial  1st in nation with 47 licensed residential suppliers **  109 total suppliers & 200 brokers/marketers  2nd in nation in competitive residential markets **  Drivers:  Lower costs, locked-in rates & associated products  Preferred generation sources * As of 3/26/14 ** Annual Baseline Assessment of Choice in Canada & the United States (ABACCUS) 23

24. Making Use of PA’s Resources  Increasing energy independence & security  Enhancing & restoring Pennsylvania’s environment  Building our infrastructure  Delivering energy – and goods – from production to consumption  PA’s economic development network  PA’s workforce development network  Educating for the jobs of today & tomorrow  Research & development  Lower costs for PA consumers 24

25. 238 Main Capitol Building Harrisburg PA, 17120 717-772-3820 phenderson@pa.gov Patrick Henderson, Governor’s Energy Executive 25 Website: governor.pa.gov/energygovernor.pa.gov/energy