Florida’s Future Energy Profile Reliability, Renewable Energy, Emissions & Pricing Bradley Williams November 15, 2007 Houston, Texas Natural Gas in North America: Markets and Security

2 … and there will be a lot more people loving it in the near future We all love Florida!

3 This is the Florida of today … with a huge appetite for energy

4 Florida’s Increasing Demand for Gas - a Much Different Future - 30% Increase In GWH’s 76% Increase In Gas Use Note: Numbers included Glades and other coal plants which have subsequently been denied and/or cancelled. Source: Florida PSC 10 year Site Plan – Dec 2006

5 The PSC, Gov. Crist and others are concerned about system reliability, pollution, hurricanes and prices No new coal generation in Florida – new 5,000 MW needed that will come from gas and renewables Utilities need to be proactive to insure these customer needs are met and that prices are stabilized Climate Change and reducing emissions are priorities “Renewables” technology still in development wind, solar, bio-fuels, tides, etc. Proposed nuclear generation for 2018 – at what cost ? Will Florida ever allow offshore drilling? Gulf and/or Atlantic? Energy Landscape in Florida

6 Florida’s Power Market Runs on Gas Day Light Burn – Bad Load Factor Source: U.S. EIA Power Generation 85% Commercial 6% Residential 2% Industrial 8% 883 Billion Cubic Feet (BCF) and Growing 2006 Natural Gas Consumption

7 Southeast Gas Transmission Florida Gas Transmission (2.2 Bcf/d) Gulfstream Natural Gas (1.1 Bcf/d +) Southern Natural Gas/South Georgia (3.4 Bcf/d) LNG Cypress Pipeline SESH Pipeline from Texas Storage?

8 Florida’s Natural Gas Lifeline: Today & Tomorrow Gulfstream Pipeline (1.4 BCFD now fully subscribed) FGT Pipeline (2.2 BCFD now fully subscribed ) New Cypress Pipeline from Elba Island import terminal (0. 25 BCFD) Natural Gas from Gulf Coast suppliers New gas-fired power projects Pipelines are Now Fully Subscribed

9 Florida Will See Price Spikes Like NYC

10 Don’t Put Yourself in Harm’s Way - Florida Needs to Plan Ahead -

11 Governor Crist Wants Lower Prices, Reduced Emissions and Greater Reliability Gov. Crist signed executive orders to mandate reducing emissions Crist is keen on ethanol: a bio-fuel that can be made from sugar, corn, wood chips, switchgrass and other organic waste Bio-fuels from energy crops like switchgrass economic at approximately $50/bbl oil equivalent Issues with permitting, refining, new infrastructure Florida wants wind & solar but what is the cost, timing Florida is the largest burner of fuel oil for power in the U.S.

12 Florida Residual Fuel Oil Usage vs. Total U.S.

13 Choices for Florida Generation Cost of solar generation $5,000/kw installed (50 +KW) Cost of gas fired generation $900/kw installed (550+ MW) Cost of coal fired generation > $2,500/kw (800+ MW) Cost of wind generation $1,200/kw installed (40 MW) Cost of coal fired IGCC generation $3,000+/kw installed Cost of nuclear generation and waste disposal ??? 1,000 MW of solar capacity = $ 5.0 Billion investment 1,000 MW of gas capacity = $ 0.9 Billion investment FPL plans to build 10 MW of solar power for $50MM Very limited wind resource in Florida Very limited solar energy in Florida (night - high humidity - afternoon thunderstorms)

14 A new major gas pipeline? Permitting/timing? Where does the gas supply come from? LNG imports? Florida utilities need to be contracting for long term gas supplies, storage capacity and manage price risks DSM and renewables will have little effect, near term Price is having the largest effect on conservation Florida continues to rely on fuel oil switching to meet peak summer power needs and emergencies (pollution) Florida’s new infrastructure is going to cost consumers billions of dollars – spend it wisely Florida Runs on Gas; Where Does Florida Get Energy After 2011?

15 What Will Utilities, Gov. & Legislature Do? The Gov. wants more renewables, lower emissions & lower prices The Energy Committee is making recommendations to help provide “Energy Security” for Florida The Gov. formed the Action Committee to act on Climate Change and to reduce emissions Added peak day gas supplies would displace fuel oil burning and reduce secondary emissions and environmental impact from delivery ships and trucks What is the value of Environmental Stewardship ? What are utilities doing now, that will make a difference? What can the legislature do to help meet these goals?

16 Doing Nothing is Not the Right Answer - Make Good Decisions -

17 Conservation & Renewable Energy: wind, solar, bio-fuels/ethanol, tides System Reliability & Energy Independence Climate Change i.e. reduce emissions Energy Costs & Price Insurance with risk hedging –Value of Price Stability –Value of Reliability –Value of Environmental Stewardship –Avoiding Price Fly Ups Natural gas storage in Florida is a good tool to increase system reliability, avoid price spikes, and reduce big emissions from oil burning Florida’s Future Energy Profile

Floridian is the First Gas Storage Service in Florida Providing System Reliability, Hurricane Preparedness, Peak Day Deliverability and Environmental Benefits In-State Natural Gas Storage: A Tool for Utilities Value for Florida Consumers

19 Floridian’s Strategic Location Downstream of Pipeline Bottlenecks Florida Gas Transmission (2.2 Bcf/d) Gulfstream Natural Gas (1.1 Bcf/d +) Southern Natural Gas/South Georgia (3.4 Bcf/d) LNG Cypress Pipeline FGS SESH Pipeline

20 Floridian Natural Gas Storage Company Liquifaction, LNG Storage, Regas Indiantown Florida Project Two 4 BCF tanks on 145 acre site

21 Over 100 Similar Tank Storage Projects in U.S. Florida is the only consuming region with NO physical gas storage in state

22 September 15, 2004 Hurricane Ivan Landfall early morning Sept 16th Southern Pines Energy Center Petal Storage Mobay Storage Bay Gas Storage A Strategic Location for FGS Hurricane Ivan

23 Additional Benefits of In-State Market Area Storage 1.Adds deliverability during peak season using existing stranded pipeline capacity (already paid for) 2.Physical gas reserves strategically located at key points in heart of consuming areas 3.Allows lower fuel oil burn – reduces emissions 4.Insurance against pipeline interruptions with added safety for citizens dependent on electricity 5.Creates value from greater pipeline efficiency 6.High daily deliverability during emergencies 7.Economic development contributions to Florida: jobs, taxes, infrastructure, security 8.Hurricane preparedness and system hardening

24 Source: EIA Database of Natural Gas Consumption, Pipeline Capacities and subscriptions from FGT, Cypress, and Gulfstream websites Florida Pipeline Capacity Oversized to Accommodate Daylight Burn 321 Bcf Available Pipeline Capacity Stranded Actual Monthly Consumption 883 Bcf Total Annual Source: EIA Total Pipeline Capacity by Month 2006

25 Note: Estimated using actual 2006 Nat Gas consumption curve applied to 2011 Nat Gas forecasted usage per Florida PSC 2005 Energy Statistics publication. (Source: EIA) Forecasted Monthly Consumption 1,218 Bcf (See Note Below) Projected 2011 Pipeline Demand ( assumes P/L expansion of 280,000 Dt/day) 119 Bcf Stranded 90 Bcf Stranded Total Firm Pipeline Capacity by Month 18 Bcf Peaking Capacity Shortfall

26 Florida citizens Should NOT be at high risk Florida needs an Energy Plan Take steps now for added security, managing prices and reducing emissions The time is right for gas storage in Florida

Florida’s Future Energy Profile Reliability, Renewable Energy, Emissions & Pricing Bradley Williams November 15, 2007 Houston, Texas Natural Gas in North America: Markets and Security