High Prices: What Happened?

1. High Prices: What Happened? Cindy McCarran Deputy Director, Gas and Water New York State Department of Public Service October 8, 2014

2. Reasons for the high gas prices • The impact of gas prices on electricity prices • Current pipeline capacity situation • Efforts to increase pipeline capacity in the State • Will it happen again?

3. Sustained Cold Weather • High Demand Reasons for the high natural gas prices

4. Source: FERC

5. Con Edison Monthly and Daily Records CECONY Top Daily Throughputs 1600 1,592 1,576 1,575 1,575 1,550 1,522 1,521 1,519 1,518 1,517 1400 • Previous daily record: 1,445 MDt on 1/15/2012 MDt 1200 1000 800 600 400 200 0 40,000 39,58839,11938,92037,78436,77336,02735,70534,80237,73134,711 35,000 Previous monthly record: 36,773 MDt on Jan 2011 30,000 25,000 MDt 20,000 15,000 10,000 5,000 0 Feb Jan Mar Dec Jan JanJanJan Feb Dec 2014 2014 2014 2013 2011 2013 2012 2009 2013 2012

6. Courtesy of National Grid

7. Courtesy of National Grid

8. January 7th Eastern Gas Prices • Record Gas demand • Gas prices reached high levels throughout the Eastern region • Highest prices in Mid-Atlantic and Southeast regions • Very cold weather • -Average 8°F in NYC • High utilization rates resulted in capacity constraints • Pipeline equipment malfunctions • Supply reductions Iroquois Z2 $39.38 Algonquin City Gate Algonquin Receipts $34.44 Leidy $35.80 $4.87 Transco Z6 NY $56.40 Tetco M3 $43.51 Dominion South Point Transco Z6 Non-NY $71.14 $4.25 Transco Z5 NYH No. 6 $17.31 NYH No. 2 $21.70 $70.43 Source: Platts Gas Daily

9. January 22nd Eastern Gas Prices • Gas prices reach EVEN HIGHER levels through the Eastern region –broke all previous records • -Transco Z6 NY and Transco Z6 Non- NY reached record levels • -Transco Z5 not far behind • -Average 12°F in NYC • Continued high utilization of regional capacity • Supply reductions as a result of freeze-offs • -At least 1.5 Bcfd of U.S supply was shut-in due to freeze-offs • -Northeast gas productions down 0.8 Bcfd Iroquois Z2 $73.80 Algonquin Citygate $55.54 Leidy $6.10 Algonquin Receipts $41.62 Transco Z6 NY $123.81 Dominion South Point $5.04 Tetco M3 $72.58 Transco Z6 Non-NY $123.49 Transco Z5 $118.10 NYH No. $18.02 NYH No. $22.44 Source: Platts Gas Daily

10. Longer gas interruption durations this winter compared to the last three winters NY Gas Utility Interruptions

11. Electric and Gas Price Correlation

12. Gas or dual fuel generating capacity represents 95% of NYC • The majority of gas-fired generation stations do not have firm gas service with their pipeline supplies • Dual fuel utilization allows generators to take advantage of the lowest cost fuel • Fuel oil was marginal fuel for about 10 days during January for New York City generators who had dual fuel capabilities New York City $140 Transco Z6 NY $123.81/Dt Transco Z6NY Tetco M3 $120 NYH No. 6 8 Days NYH No.2 Gas 23% $100 Tetco M3 $72.58/Dt $80 Oil 5% 2 days $60 Transco Z6 NY $56.40/Dt Gas & Oil 72% Tetco M3 $43.51/Dt Price ($/Dt) $40 NYH No. 5 NYH. No 2 $20 $0 11/1 11/11 11/21 12/1 12/11 12/21 12/31 1/10 1/20 1/30 2/9 2/19 3/1 3/11 3/21 3/31 Source: Platts Gas Daily and Argus Oil Source: New York Independent System Operator

13. Pipelines are constrained in the metropolitan New York City area, the Capital Region, and especially going into New England Current Pipeline Capacity Situation

14. Courtesy of Kinder Morgan

15. Courtesy of Spectra Energy

16. Efforts to Increase Pipeline Capacity

17. Courtesy of National Grid

18. Courtesy of Millennium Pipeline Company LLC.

19. Courtesy of Millennium Pipeline Company LLC

20. Courtesy of Millennium Pipeline Company LLC

21. Courtesy of Spectra Energy

22. Courtesy of Kinder Morgan

23. Courtesy of Spectra Energy

24. Spectra NU Partnership

26. FERC Proposing Changes to Gas Day • ISO Considering Changes Regarding Alternate Fuel Inventory requirements • DPS Staff Expected to Report to Commission at October 23rd Session Preparing for this Winter

27. Questions?