1. Michigan Petroleum and Energy Supply Update David Svanda, Commissioner Michigan Public Service Commission & President, National Association of Regulatory Utility Commissioners Jeffrey Pillon, Manager, Energy Data & Security Michigan Public Service Commission March 21, 2003

2. Michigan Energy Expenditures Total $19.8 Billion Source: EIA State Energy Price and Expenditure Report

3. Michigan Energy Use by Type and Sector By SectorBy Fuel Source: State Energy Data Reports

4. Michigan Electricity Generation by Source of Energy, 1999 Source Megawatt hours Coal 70,501,323 Nuclear 14,590,711 Natural Gas 13,411,817 Petroleum 1,486791 Hydroelectric 525,859 Other 2,833,877 Michigan Electricity Generation Capacity by Source 1999 Source Megawatts Coal 12,556 Natural Gas 4,332 Nuclear 3,921 Petroleum 2,641 Hydroelectric 2,141 Pet/Gas Combine 80 Other 417

5. Residential Space Heating by Fuel Type in Michigan Number of Homes and % of Total Natural Gas - 2,961,000 78% Propane - 358,000 9.4% Electric - 251,000 7% Fuel Oil - 131,000 3% Other - 85,000 2% Source: 2000 Census of Housing

6. Michigan Petroleum Overview Petroleum Supply (Upstream) Crude Oil Production: 20,000 barrels per day (2001), ranked 17th (18th including Federal Offshore). Accounts for about 3% of U.S. crude oil production. Total Producing Oil Wells: 3,700 (2001) Major Pipelines: Crude Oil - Lakehead, Shell, Marathon Product - Buckeye, Marathon, Wolverine, BP Amoco Liquefied Petroleum Gas - Cochin, Shell, Lakehead

7. Michigan Petroleum Overview Cont. Ports & Waterway Systems Detroit (Port), Trenton (Port), Wyandotte (Port), Ecorse (Port), River Rouge (Port), Dearborn (Port), Essexville (Port), Bay City (Port), Ludington (Port), Muskegon (Port), Escanaba (Port) Refining & Marketing (Downstream) Refineries: Marathon Ashland Petro LLC Detroit @ 74,000 barrels per calendar day Gasoline Stations: 5,193 outlets (2002), or about 3% of U.S. total Sources and notes: Energy Information Administration, Bureau of Census, and National Petroleum News "Market Facts 2001." Rankings include the District of Columbia.

8. Michigan Total Petroleum Use and Crude Oil Production Total Petroleum Use Michigan Crude Oil Production

9. Michigan Petroleum Use by Fuel Type 207,214 thousands barrels consumed in 1999 Source: State Energy Data Reports

10. Michigan Petroleum Product Pipelines

12. Sources of World Oil Supply, 2001 Venezuela – 2.9 m/b/d or 3.8% of world supplies Iraq – 2.4 m/b/d or 3.2% of world supplies Total World Oil Production 76.7 m/b/d Source: Energy Information Administration

13. Source of U.S. Oil Supply 19.7 million barrels per day 2001

14. Positive World Oil Supply Factors  Venezuelan production is now up to at least 2.4 million barrels per day (m/b/d), from 614,000 barrels per day in January.  Saudi production up to 9.2 m/b/d in March, from 8.7 m/b/d in January  Saudi Arabia has stockpiled nearly 50-mil bbl of oil which it will use if war disrupts Iraqi exports, the New York Times reported Tuesday.  Global Seasonal decline in oil demand is in the range of 2-3 m/b/d  Strategic Petroleum Reserve at nearly 600 million barrels, and is capable of being drawn down at a maximum rate of 4.3 m/b/d Spare CapacityProduction levels first nine months of 2002 Previous oil supply disruptions Million of Barrels per day

15. Risk Factors Uncertainty of War Loss of Iraqi oil exports of 2 million barrels per day Potential for disruptions to Kuwaiti oil production Political turmoil in Venezuela and civil unrest in Nigeria Al Qaeda threats to Saudi oil export facilities Availability of oil tankers to transit the Persian Gulf Very low U.S. crude oil and refined product inventories

16. Inventories are Low As of March 14, 2003

17. Crude Oil Prices WTI– Daily Spot Price Through March 19, 2003 Source: Energy Information Administration WTI -- West Texas Intermediate

18. Michigan Population Weighted Heating Degree Days

19. Heating Degree Days -- Lansing Through March 2, 2003 Through March 9, 2003

20. Weekly Crude Oil and Home Heating Fuel Prices Source: Michigan Public Service Commission and Energy Information Administration 2001-02 Heating Season 2002-03 Heating Season

21. Residential Heating Oil Prices Weekly Average Prices, $/gallons excluding sales tax Source: Michigan Public Service Commission and Energy Information Administration National Michigan $1.59 3/17 Midwest

22. Residential Propane Prices Weekly Average Prices, $/gallons, excluding sales tax National Michigan $1.62 3/17 Midwest Source: Michigan Public Service Commission and Energy Information Administration

23. Propane Daily Wholesales Prices U.S. Mid-continent -- through March 19, 2003 Source: Energy Information Administration

24. Residential Propane Prices Heating Seasons 1995 to 2003 Source: Michigan Public Service Commission and Energy Information Administration

25. Michigan Gasoline Demand  2002 consumption is estimated to be 4.8 billion gallons  Average daily demand is 13 million gallons  Michigan consumption is projected to increase 11.1 million gallons through the first half of 2003, or 0.5%. Given higher prices, this growth could be depressed.  Michigan has nearly 8.5 million registered motor vehicles.  Total 2002 expenditures for gasoline were about $6.7 billion. Based on current prices and projected demand, expenditures through the first half of the year could increase by $2 million per day.

26. Michigan Monthly Gasoline Consumption Usage has a seasonal pattern

27. Michigan Primary Gasoline Inventories The trend has been to operate with less in storage

28. U.S. refinery capacity has become increasingly concentrated

29. Gasoline prices typically follow crude oil prices

30. Detroit Area Unleaded Regular Gasoline Retail Prices Prices through March 17, 2003 Source: AAA Michigan

31. Michigan Unleaded Gasoline Prices Source: AAA Michigan, U.S. Census Bureau Real Prices (Today’s $) Actual Prices (Nominal $)

32. Michigan

34. Cost Component Comparison Statewide Regular Unleaded Gasoline 40.9% 31.9% 18.0% 9.3% 46.1% 26.2% 18.9% 8.8% $1.39 $1.77 Source: AAA Michigan, Energy Information Administration

35. Cost Components of Gasoline Statewide Regular Unleaded Gasoline January 2000 to February 2003 Crude Oil Costs State and Federal Taxes Gross Markup Crude Oil to Wholesale Gross Retail Markup

36. Petroleum Price Impacts in Michigan Direct Consumer Impacts Motorists pay higher gasoline bills Higher heating costs for heating oil and propane users Higher business operating costs passed on to consumers Durable Goods Manufacturing Tourism Agriculture

37. Petroleum Price Impacts on Michigan Households Cold weather and higher prices have increased bills

38. Critical Infrastructure Protection The MPSC is working with the private sector to reduce risk and vulnerabilities at key energy facilities. Participating on Michigan Homeland Security Task Force to assure a coordinated State Government response.