Near-Term Energy Issues Crisis or Opportunity? Law Seminars International Energy in Alaska Conference November 30, 2006 Presentation by: Tony Izzo, Independent Consultant tizzo@gci.net

Is there a Crisis? Industrial Plants curtailed Agrium shut-in until March 2007 for lack of gas Tesoro Refinery natural gas supply is down 50% Utility bills increasing Natural gas up 126% since 2004 Economy impacted Cost to Residential and Business consumers expected to be $285 million in 2007 compared to $119 million in 2004

Is there a Crisis? Aurora Power Resources November 2005: approx. 1,500 meters & sales of 32mmcfd November 2006: approx. 685 meters & sales of 8mmcfd Utility Supply Contract pending litigation Fairbanks Natural Gas files emergency complaint with RCA for Service Denial “Gas for Fairbanks utility could short Agrium” – Petroleum News, 10/01/06 “Availability of gas, not cost, the issue” – Petroleum News, 10/8/06

A mix of possible solutions are needed Natural Gas Storage Create incentives and design programs to target reductions in peak demand Conservation Redesign utility rates to promote conservation Develop meaningful consumer incentives for reductions in all types of energy use

A mix of possible solutions are needed Coordinated planning is critical Establish a regional integrated resource plan for procurement and ownership of future power generation & transmission infrastructure Healy Clean Coal Pebble Mine An Electrical Grid Authority should be explored to determine costs and benefits to rate payers

A mix of possible solutions are needed Understand the “purchase power” of Aggregated natural gas demand Power generation and home heating combined “might” justify a spur line Industrial consumers must be supported in ways that keep all options open LNG import and/or storage is a “tool in the toolbox” we don’t want to overlook Important to understand regional, individual utility, & consumer needs

Crisis or Opportunity? Crisis: an unstable or crucial time or state of affairs in which a decisive change is impending; especially : one with the distinct possibility of a highly undesirable outcome (Merriam-Webster) “Luck is what happens when preparation meets opportunity.” - Seneca