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Representing and Serving Our Customers
Representing and Serving Our Customers
Representing and Serving Our Customers
Stephen E. Ewing Chairman, The American Gas Association Vice Chairman, DTE Energy New York Society of Security Analysts January 19, 2006 New York, New York
50
Bcfd
45
40
Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07
Gas Production
Productive Capacity
10 8
Forecast
20 16
12.34
12.61
12.02 9.93
6 4
2.4
12 8
2 0
8/22 9/11 10/1 10/21 11/10 11/30
* Trading on Henry Hub suspended from 9/23 10/6
1.5
1.0
4 0.7 0
Mar
Dec
Jan
Feb
Bcf/d = Billion cubic feet per day, $/Mcf = Dollars per thousand cubic feet
Supply Outlook
0.5 3.3
2.7 19
22.5 Quads
Lower 48
Canada
LNG
6.8 2.3
30.7 Quads
Lower 48
Canada
LNG
Alaska
346 TCF 40% 40% 31 TCF 100% 100% Restricted Percentage 43 TCF 56% 56%
Approximately 29 trillion cubic feet (TCF) of the Rockies gas resources are closed to development and 108 TCF are available with restrictions
Import Terminals
Existing Potential
Source: American Gas Foundation 8
5 TCF
10
11
Increase LIHEAP Funding Number of households applying for LIHEAP is expected to increase to 5.6 million in 2006highest level in 12 years Current funding levels provide assistance to less than 15 percent of the eligible population
$5.1 Billion in LIHEAP funding needed
12
Regulatory Strategies in a High Price Environment Decoupling Tariffs Increased use of Hedging Conservation Riders Margin Recovery Trackers Revenue Stabilization Mechanisms Diversified Supply Portfolios, including Long-term Contracts
13
Increasingly, Energy Utilities That Deliver Natural Gas are Using Hedging as a Financial Tool to Help Stabilize Prices
70% 60% 50% 40% 30% 20% 10% 0%
% of Companies
0%
1 to 49%
50 to 99%
100%
% of Winter Supply
1999-2000
2004-2005
14
Industry Investment
To meet projected natural gas demand, 255,00 miles of new distribution infrastructure must be built, costing $100 billion
More allowance of marketbased rates for new storage would increase storage projects and mitigate price volatility
15
47.2
$40 $30 $20 $10 $0 LDCs Pipelines Storage LNG Supply
2.4 5.3
0.4
0.3
16
Energy Utilities: An Attractive Investment Opportunity Even in Challenging Times Steady Core Market Growth Transparent Business Model Improving Financial Profiles Competitive Dividend Yield Regulatory Innovation Strong Total Return Potential
17
Growth of AGA Index (vs. S&P 500 & Dow Jones Industrials)Since Dividend Tax Legislation Enacted
70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% AGA Index S&P 500 DJI
65%
37% 27%
18