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

3

4

5

6

7

8

9

10

11

12

1314

15

16

1718

19

20

21

22

23

24

25

26

27

28

29

30

31

32

3736

35

38

39

4041

33

34

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