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Spectra Energy’s Perspective on Natural Gas
Service to Electric Generation during the Winter
Rich PagliaVice President
Northeast Marketing
Presentation Overview
• Spectra Energy Transmission and Power Plant Attachments
• System Conditions January 23-24, 2011
• Growing Power Generation Demand/Decreasing Firm
Transport Contracts for Power Generation
• Value of Pipeline Infrastructure to the Electric Grid
• Access to Growing and Diverse Gas Supply
• Summary
• Appendix
Spectra Energy U.S. Transmission Map
3
Miles of Pipe 14,007
Number of Compressor Stations 125
Total Horsepower 1,962,667
Storage Capacity 158 Bcf
21 GW of power generation load attached to Texas Eastern and
Algonquin in the Northeast and New England markets
Serving Power Plants in the Northeast
AGT & Northeast TETLP Power Plants
# Plant NameCapacity
(MW)
1 ANP Bellingham 576
2 Bellingham 300
3 Brayton Point 432
4 Chambersburg 88
5 CMEEC - Pierce Power 85
6 Cromby 201
7 Dartmouth Power 68
8 Delmarva New Castle 311
9 Dighton Power 168
10 Duke Energy Fayette 700
11 Duke Energy Hanging Rock 600
12 Duke Energy Madison 1,200
13 Duke Energy Washington 600
14 Duke Energy Woodsdale 500
15 Eddystone 760
16 EW Brown Generating Station 800
17 Gray's Ferry 150
18 Hunterstown 903
19 Ironwood 765
20 JK Smith Power Plant 800
21 Kleen Energy 620
22 Lake Road 750
23 Liberty Electric 610
24 Manchester Street 489
25 Martins Creek 1,664
26 Middletown 367
27 Milford Power 140
28 Mirant Canal 295
29 Montville 78
30 Ocean State Power 500
31 Ontelaunee 728
32 Potter Street (BELD I) 77
33 PSEG Linden 1566
34 PSEG Sewaren 558
35 Tenaska Rolling Hills 815
36 Tiverton 267
37 TMLP 118
38 Wallingford Energy 244
39 Waterford 800
40 Watson Generating (BELD II) 116
41 West Medway Edison 173
12
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5
6
7
8
9
10
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12
1314
15
16
1718
19
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21
22
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24
25
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27
28
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30
31
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3736
35
38
39
4041
33
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AGT and TETLP System Conditions 1/23 -1/24
5
•January 23-24 very cold but no operational issues on AGT or TETLP:•January 23, 2011:
•No. 12 of top 25 delivery days on AGT
•No. 5 of top 25 delivery days on TETLP
•January 24, 2011:
•No. 5 of top 25 delivery days on AGT
•No. 7 of top 25 delivery days on TETLP
•Both AGT and TETLP systems were in good health:•Pipelines operated under peak operating conditions, as designed
•Services rendered as subscribed — customers holding firm capacity received service
•Limited interruptible (IT) capacity was available on AGT:
• 25% of IT flowed through Stony Point compressor station on 1/23; 15% flowed 1/24
•Total deliveries to plants on AGT:•1/23: ~297 MDth
•1/24: ~311 MDth
AGT Power Plant Load Duration – Winter 2010-11
6
0
100,000
200,000
300,000
400,000
500,000
600,000
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97 101105109113117
Dth
Days
W10_11
W09_10
W08_09
W07_08
W06_07
TETLP Market Zones M2 & M3
Power Plant Load Duration – Winter 2010-11
7
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97 101105109113117
Dth
Days
W10_11
W09_10
W08_09
W07_08
W06_07
8
Power Generation Load Relative to
Firm Capacity Held by Power Generators
Texas Eastern Algonquin
Non-Coincidental Burn Potential 1,630 MDth / D 856 MDth / D
Coincidental Peak Day (Summer) 1,391 MDth / D 740 MDth / D
Coincidental Peak Day (Winter) 1,053 MDth / D 487 MDth / D
Contracted Mainline Capacity 281 MDth / D 91 MDth / D
Contracted vs. Summer Peak 20.2% 12.3%
Contracted vs. Winter Peak 26.7% 18.7%
9
Declining Firm Mainline Capacity
Held by Power Generators on AGT
0.0
581.0
789.4 789.4
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1991 2005 2010 2011
Fir
m L
ater
al M
DQ
(M
Dth
/d)
The "Last Mile" of Firm Capacity to Generators on AGT
Held by Generators Held by Others
62.0
395.5
224.5
80.50.0
25.0
11.0
11.0
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
1991 2005 2010 2011
Fir
m M
ain
line
MD
Q (
MD
th/d
)
Declining Firm Mainline Capacity to Generators on AGT
Held by Generators Held by Others
10
• Generators cannot run if they cannot get scheduled quantities to their delivery point
• In the event generators continue to utilize interruptible or secondary firm
transportation, there is a higher probability their nominations will be restricted when
the system is at capacity. The pipeline system schedules quantities to shippers who
pay for primary firm service before scheduling other services.
• If power plants are incented to secure firm service, they will have the surety of firm
delivery to the plants
• Firm service back to a liquid supply point will also provide generators with the ability
to secure lower cost natural gas in addition to reliability – thus bringing down the
power cost to the grid and offsetting demand charges for firm supply and transport
• Arguably, additional infrastructure will also bring down natural gas prices to the
region – a benefit to the broader energy users (i.e., gas consumers) in the region as
well
• AGT is currently in an open season process for new transmission facilities to
provide this level of additional firm service
Value of Pipeline Infrastructure
to the Electric Grid
Spectra Energy Markets Value Diverse Sources of Supply
Access Area Supplies Strong performance from shale
plays in the access area
Rockies ~700 MDth/d of new take-away
capacity on Texas Eastern
Significant flows at Lebanon and
Clarington
Marcellus Shale 3 Bcf/d of new interconnect
capacity under agreement
180 MDth/d of current flow
LNG 3 new LNG terminals directly
connected to Spectra Energy
Significant impact on AGT
throughput for winter ‘09-’10Storage Facility
11
Summary
• The pipelines operate as they are designed on peak days
– Facilities are designed to support primary firm obligations even though actual operation may differ
from these obligations
• Most generators do not have firm contracts back to a liquid supply point
– On peak days, only firm services will be assured flow
– Absent firm commitments, generators will not have gas supplies to meet electric generation needs
• If generation is not able to access reliable natural gas supplies on peak days, it is
because they have not been given the right incentives to sign up for firm gas supply
or firm transportation
– Number of opportunities exist for generators to procure firm service:
• Subscribe to firm capacity from the pipelines
• Enter into capacity release agreements with existing shippers
• Sign up with a merchant supplier
• Firm capacity will provide generators with reliability of supply, including peak days,
and can deliver an energy price break for the electric grid by providing access to
growing, diverse and attractive supply points
12
APPENDIX
13
14
• Facilities designed to support primary firm obligations
even though actual operation may differ from these
obligations
• Assume all primary firm contracts are coincidental and at
100% contract quantity representing a peak day
scenario
• No extra capacity exists above the coincidental peak day
firm capacity
• Contractual Obligations – we build capacity for firm
contract customers
Pipeline Capacity Designed to Meet
Firm Contractual Obligations
General Pipeline Services Offered
Transportation – primary firm, secondary firm, interruptible
Storage – inventory quantity, injection/withdrawal rights
Imbalance Service – daily/monthly supply vs demand
balancing
Hourly (non-ratable) flow flexibility
Park and Loan – short term ability to be short or long supply
into the system
Pipeline Capacity Scheduling Priorities
- General hierarchy of firm transport services
Priority 1: Primary Receipt to Primary Delivery
Priority 2: Secondary within contracted path
Priority 3A: Secondary outside of path if restriction is
in contract path
Priority 3B: Secondary outside of path if restriction is
outside the contract path
- Interruptible transport
- Imbalance Service
- Park and Loan
Peak Day Physical Flow Management
Actual flow flexibility is limited to scheduled services on peak
days. Likely, no services other than firm transport.
Delivery Points without nominations will likely not be allowed
to flow
Supply/demand imbalances are monitored very closely to
ensure that all customers receive their scheduled volumes
18
0
500
1000
1500
2000
2500
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
MD
th/d
09_10 10_11
Algonquin Gas Transmission
Top 25 Days
1-242-312-152-12-152-81-232-10
2-21
1-13 2-92-111-141-25
19
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
MD
th/d
03_04 07_08 08_09 10_11
Texas Eastern Transmission, L.P.
Perulack/Chambersburg East Top 25 Days
12-26 12-2712-161-2412-1412-15 1-12 1-6
2-10
1-22 1-31 1-101-131-23 1-212-8
2-3 2-9 2-21
20
Algonquin Gas Transmission Supply Diversity
Winter Season Comparison – MDth
Receipt Operator 08/09 09/10 10/11
Texas Eastern 84,531 76,516 90,259
Tennessee 11,446 8,713 14,867
Transco 8,965 7,559 7,435
Columbia/Hanover 13,837 15,721 12,511
Maritimes & Northeast/Salem 1,982 9,991 24,584
Everett 17,522 13,576 13,035
Millennium 14,160 23,008 33,936
East End LNG 542 18,009 0
21
Texas Eastern Supply Diversity
Winter Season Comparison - Mdth
Receipt Operator 08/09 09/10 10/11
ANR- Glen Karn, Ohio 48,265 32,359 23,225
PEPL- Gas City, Indiana 30,804 17,013 21,597
TX GAS-Lebanon, Ohio 31,667 23,325 23,172
REX-Lebanon, Ohio 0 27,665 14,296
Texas Eastern 24” ML 20,311 11,028 15,817
REX-Clarington 0 3,687 40,748
Texas Eastern 30” ML 223,476 207,158 220,495