Challenges for LDCs in the Age of Modernization AGA Legal Forum July 10, 2017 _______ Pam Anderson

Legacy Drivers of LDC Pipeline Construction and Replacement Extend Distribution System to Serve New Subdivision or Industrial Park Convert Community or Neighborhood to Natural Gas Safety, Reliability & Conservation Cast iron and unprotected steel pipes prone to leaks

Legacy Barriers to LDC Pipeline Construction and Replacement Cost Recovery Uncertain New Construction is Expensive CIAC may be required Replacement Also Expensive Need certainty of regulatory commission approval

Modern Drivers of LDC Pipeline Construction and Replacement Distribution Integrity Management Plans 49 CFR, Part 192 Environmental Concerns Greenhouse gas emissions New Markets LNG/CNG as vehicle or vessel fuel Gas-fired electric generation

Modern Barriers to LDC Pipeline Construction and Replacement Cost Recovery (still) Uncertain Construction Delay Environmental Tribal New Markets Inconsistent with Regulated Utility Model Local Requirements

Environmental – Permitting Delay Construction Requires Wetlands Mitigation No Existing Bank Space in the Watershed Army Corp and State Agency Identified One Site Owner charging monopoly rates for credits Suggested Posting a Bond Not an option Ratepayers End Up Paying More

Environmental –RPS in Reverse State RPS Goal: 100% Renewable by 2045 “So I have reached the conclusion that Hawai`i does not need LNG in our future. It is time to focus all of our efforts on renewable energy and my administration will actively oppose the building of LNG facilities in Hawai`i.” Hawaii Governor David Ige, Aug. 2015

Tribal Issues Delay Responses to Requests to Consult on Cultural Resources May or may not have a deadline Right to consult ≠ veto Demand Exorbitant Fees for ROW Renewal DOI to determine “just compensation” Can create significant delay to resolve

Creative Approach for LNG Infrastructure Utility Proposed Multi-Use LNG Facility LDC peaking Marine fuel for container ships Sought Pre-Approval of Novel Regulatory Approach NIMBY Safety of LNG Tribal Pushback

Local Requirements Construction Emission Reductions Inconsistencies between jurisdictions Costs and timing Emission Reductions Aspirational and mandatory Potential benefits not quantifiable

Need additional information? Thank you. Questions? Need additional information? Pam Anderson 425-635-1417 pjanderson@perkinscoie.com