Regional Gas Market UpdatePresentation to:

ISO-NE Planning Advisory Committee

Tom KileyNortheast Gas Association

April 20, 2016Westborough, MA

Continued on NGA web site…

http://www.northeastgas.org/about-nga/antitrust-guidelines2.

About NGA

Non-profit trade association

Local gas utilities (LDCs) serving New England, New York, New Jersey, Pennsylvania

Several interstate pipeline companies

LNG importers (Distrigas, Repsol) and LNG trucking companies

Over 300 “associate member” companies, from industry suppliers and contractors to electric grid operators

www.northeastgas.org 3.

4.

New Members from Pennsylvania

421,822 customers 213,089 customers 501,352 customers

498,931 customers 612,000 customers 8,000 customers

Issues

The Recent Winter

Natural Gas Supply Trends

Proposed Regional Infrastructure

Regulatory Issues

5.

Winter Summary…in Brief

• 18% warmer than average

• One very cold weekend, Feb. 13-14, with many new records – but brief

• Storage levels remain high

• Low prices for consumers1400 2400 3400 4400

New Eng. ActualNew Eng. Normal

Mid-Atl. ActualMid-Atl. Normal

Source: U.S. NOAA

Heating Degree Days,Nov. 2015 - Feb. 2016

6.

New England Gas Utilities Set New Sendout Record, 2-14-16

• Gas LDC sendout of 4 Bcf on Feb. 14, 2016 (a Sunday) – new record

• Gas LDC design day for this winter was 4.5 Bcf, reflecting system growth

• 2013/14 winter design day collectively was 4 Bcf

7.

Spot Price Less Volatile than Previous Winters

Chart: U.S. EIA, April 2016

8.

LNG Imports

• Annual imports still lower compared to 2005-2011 period, but winter injections remain valuable.

Source: U.S. EIA, 4-16

9.

Changing Differential,Gas vs. Oil

10.

Natural Gas Supply Trends

11.

Source: U.S. EIA, 7-14

Marcellus Shale Production

Source: U.S. EIA, 4-16

12.

Current Storage Levels,Post-winter

Source: U.S. EIA, April 2016

As of 4-1-16 As of 4-10-14

U.S. Total (Bcf) 2,480 847

5-year average 1,606 (+54%) 1,684 (-50%)

East U.S. only 434 310

5-year average 298 (+46%) 700 (-56%)

EIA, 4-12-16: “The estimated end-of-March inventory level this year is the highest end-of-season level on record, slightly above the previous record, set in 2012. March 2016 was much warmer than normal, and the milder weather limited inventory withdrawals. Looking ahead to the start of next winter, EIA forecasts inventories to be 4,112 Bcf at the end of October 2016, which would be the highest level on record to begin the heating season.”

13.

Short-Term Price Outlook: EIA

Source: U.S. EIA, April 2016

EIA, 4-12-16:“The Henry Hub natural gas spot price averaged $1.73/MMBtu in March, a decline of 26 cents/MMBtu from the February price. Warmer-than-normal temperatures through most of the winter, record inventory levels, and production growth have contributed to sustained low natural gas prices. Monthly average Henry Hub spot prices are forecast to remain lower than $3.00/MMBtu through December 2016. Forecast Henry Hub natural gas prices average $2.18/MMBtu in 2016 and $3.02/MMBtu in 2017.”

14.

Proposed Infrastructure

15.

Projects are Advancing out ofNortheast Production

Source: U.S. EIA, 2-16 16.

17.

A Number of Proposals

Map: FERC presentation to NECPUC, 6-15 18.

Algonquin Incremental Market (AIM) Project: Spectra Energy

Regional Supply

Map and info: Spectra Energy

19.

Purpose:Provide growing New England demand

with access to abundant regional natural gas supplies

Project Scope:Providing ~340 MMcf/d of additional

capacity to move Marcellus production to Algonquin City GatesCapEx: $1 BCustomers (15 year terms): LDC Affiliates of UIL Holdings,

Eversource, National Grid, NiSource City of NorwichMiddleboroughProject Status:Received FERC certificate, Mar. 3,

2015Under construction In-service 2H16

Facilities: Take up segments of 26” pipeline and replace with 42”; one segment

of 36” loop; reinforcement of existing laterals; construction of new lateral Horsepower additions and modifications at 5 existing compressor

stations New meter station installations and modifications to existing meter

stations

AIM: Examples of Facility Construction in CT

Photos: Spectra Energy 20.

Connecticut Expansion Project:Kinder Morgan / TGP

Project Scope: Providing 72 MMcf/d of

additional capacity to meet utility demand

Customers:UIL Holdings (CT Natural

Gas & Southern CT Gas) Eversource (Yankee Gas)

Project Status: FERC issued final approval,

Mar. 2016 Planned In-Service Date

– November 2016

Source: Kinder Morgan

21.

Pending / Future Projects

22.

Year Project Company2016 Salem Lateral Algonquin/Spectra

2016 New Market Dominion

2016/2017 Garden State Expansion Williams

2017 Constitution Cabot/Williams

2017 Wright Interconnect Iroquois

2017 Northern Access National Fuel

2017 Valley Lateral Millennium

2017 C2C PNGTS

2017 South to North Iroquois

2017 Atlantic Bridge Spectra

Future Projects (cont’d)

23.

Year Project Company2017 New York Bay Expansion Williams

2017 Ramapo Expansion Millennium

2017/18 PennEast NJ LDCs, Spectra

2018 Northeast Energy Direct Tennessee/Kinder Morgan

2018 Access Northeast Spectra, Eversource, Nat’l Grid

2018 2018 Project PNGTS

2018 Eastern System Upgrade Millennium

Gas LDCs are committing to infrastructure investments

Gas utilities are investing in proposed pipeline projects – to meet future utility demand.

Over 1 billion cubic feet per day of new capacity –New England gas LDCs’ contract commitments.

24.

New England Governors’ Energy Initiatives

Photo: Hartford Courant, April 2015

Starting in Dec. 2013, several joint statements expressing concern over region’s high energy (electric) costs and impacts on economy and energy reliability.

NESCOE 2014 concept for regional electric tariff for pipeline investment – did not advance.

States pursuing multi-state “clean energy RFP,” and individual state regulatory/legislative actions on electric tariffs and pipeline investments.

25.

Current State Processes

26.

State Process

Connecticut • Public Act 15-107, enacted 6-15• DEEP released draft gas capacity RFP, 3-9-16• Comments on draft due at end of March

Maine • Legislature enacted energy bill, 6-13, with provision for possible state investment in gas pipeline capacity up to 200 MMcf/d

• PUC still investigating

Massachusetts • DPU issued policy decision in DPU 15-37, 10-15, finding that it has legal authority to review and approve contracts filed by Electric Distribution Companies (EDCs) for pipeline capacity.

• State’s 2 largest EDCs – Eversource and National Grid – issued joint RFP for gas capacity, 10-15

• Eversource and National Grid separately filed for 20-year transportation agreements on behalf of EDC customers, 1-16, requesting DPU response by 10-16

New Hampshire • PUC staff report in Sept. 2015 concluded “that the Commission may hold that NH EDCs have authority to enter into gas capacity contracts for the benefit of gas-fired generators…”

• Eversource filed for gas transportation contract on behalf of EDC, 2-16

Rhode Island • Office of Energy Resources (OER) issued RFP for consulting services, 11-15, to advise on potential interstate gas capacity & infrastructure contracts which may be filed pursuant to Affordable Clean Energy security (ACES) Act.

Regulatory Initiatives

27.

Northeast States Lead U.S. in Gas Efficiency Investments

9 Northeast states = $536 million investment in 2014

Equal to 37.5% of U.S. total of $1.4 billion

Source: ACEEE, “2015 State Energy Efficiency Scorecard”, released Oct. 201528.

System Safety & Public Awareness

• Congress considering pipeline safety bill re-authorization.

• Operator qualification.

• Pipeline safety.

• Public awareness.

29.

• Aug. 2015: Obama Administration announced regulations to cut methane emissions• Among goals is to “reduce leaks from

well sites, gathering and boosting stations, and compressor stations…”

• Dec. 2015: COP21 Summit, Paris

• Aliso Canyon underground storage leak, near L.A.

• Mar. 2016: Canada & U.S. announce joint plant to reduce methane emissions – main focus on production sector.

Methane emissions from natural gas systems in MA have declined by 50% since 1990, according to MA EEA’s recent GHG assessment report. Natural gas sector in MA = 1.3% of total state GHG emissions.

30.

Environmental Issues – GHG, Methane

Questions?

30.31.