Generating Resource Advisory Committee April 9, 2002

Proposed Forecast after First NGAC Meeting

Comparison to Other Forecasts

Medium Forecast Vs. NYMEX

Adding Historical:

Historical Gas Price Variation in Months Since 1993

Why Higher Prices?  Expense of adding supply in significantly larger increments –In the 1990s demand grew at 1.6% a year; required adding 323 bcf new supply annually –EIA forecasts growth of 2% a year; would require adding 614 bcf new supply annually  US natural gas consumption exceeded 22 Tcf in 2000 for the first time since 1973  New wells generally smaller and are produced more quickly

West-Side Utility Natural Gas Costs – 2005 Medium Example Price ComponentsPrice Adjustments FirmInterruptible Henry Hub Price $ 2.72 Station 2 Price In-Kind Fuel Cost4.42 %2.43 Firm Pipeline Capacity (Incremental)$ Interruptible Pipeline Capacity$ Pipeline Commodity Charge$ Firm Supply Premium$

East-Side Utility Natural Gas Costs – 2005 Medium Example Price ComponentsPrice Adjustments FirmInterruptible Henry Hub Price $ 2.72 AECO Price In-Kind Fuel Cost2.50 %2.34 Firm Pipeline Capacity (Incremental)$ Interruptible Pipeline Capacity$ Pipeline Commodity Charge$ Firm Supply Premium$

Pricing Point Relationships

World Oil Price Forecasts Long-Term Price by Case Low$16 Medium Low $20 Medium$22 Medium High$26 High$32

Oil Price Forecast Comparisons

Coal Price Forecasts  Mine-mouth price assumptions  Delivered price differential to states  Other issues regarding coal prices and use?

Historical Mine-mouth Coal Prices

Historical Regional Coal Price Trends

Assumed Western Mine-mouth Coal Price Trends Forecast CaseAverage Annual Growth Rate Low- 2.0 % Medium Low- 1.7 % Medium- 1.5 % Medium High- 0.8 % High- 0.3 %

State Utility Prices Minus Western Mine-Mouth

Assumed State Differences in Forecast