1. Expand natural gas service to unserved & underserved areas of North Dakota Natural Gas Infrastructure in ND

2. North Dakota Natural Gas Pipelines Map provided by North Dakota Pipeline Authority

3. Communities Overview 89 Communities Served with natural gas – 130,000 residential natural gas customers – 20,000 estimated underserved households 368 Communities unserved (46,038 homes) 21 - over 1,000 population (16,630 homes) 29 - 500-999 population (10,347 homes) 110 – 100-500 population (13,954 homes) 208 – under 100 population (5,107 homes)

5. Define alternative methods or mechanisms that are available to expand service to unserved/underserved areas that cannot currently be cost-effectively served with natural gas Study Purpose

6. Policy Objectives Economic Development Grow market for natural gas in North Dakota Energy security and convenience Lower heating cost for more ND homes and businesses

7. Barriers Distance from existing pipeline and/or interconnection costs No large “anchor” customer(s) Low population density Low conversion rate Conversion costs Distribution infrastructure in establish areas Cost of extension to customers

8. Infrastructure Cost Ranges Infrastructure HD PE lateral pipeline Steel lateral pipeline Pipeline Interconnection Town Border Stations (TBS) Cost $400k - $500k per mile $800k - $1 Million per mile $200k - $3.5 Million $500k - $750k

9. Existing incentives Natural Gas incentives: sales and use tax exemptions for materials used in compressing, processing, gathering, or refining gas. Liquefied Gas incentives: sales and use tax exemptions for materials used to expand or construct LNG processing plants. Comparable tax incentives: telecommunications infrastructure sales and use tax exemptions; income tax credits for geothermal; new or expanding business property or income tax exemptions.

10. Xcel Energy Case Study Natural Gas Infrastructure in ND

11. Why Natural Gas Conversion? Stability in Natural Gas Prices – Advances in production support stable pricing – Resource base has increased 30% over last 5 years Propane/Fuel Oil Costs More than Natural Gas – LPG is a crude oil derivative (approximately 50% of LPG supply stream comes from crude) – crude oil price swings translate to LPG price swings – MN/ND Fuel Oil prices have averaged 2.5X higher than natural gas over the last 3 years

12. *Average Cost per therm past 3 years: – $0.47/therm x avg. annual use per customer = 1000 therms Estimated annual residential cost $979.64 $979.64 / 1000 therms per year = $0.9796/therm – Equivalent cost of propane = $0.8964/gallon Residential Example *Estimates based on Average Customer UseMonthlyAnnual * New Area Surcharge$23.99$287.88 ND Residential Service Customer Charge$18.48$221.76 *Est. Cost of Gas (1000 Therms/year)Use/month$470.00 Annual Sub-Total $979.64 * New Area Surcharge may not apply to all installs *Based on 1000 therms average annual use; plus any applicable taxes or tariff fees

13. Small Commercial Example *Average Cost per Therm past 3 years: – $0.58/Therm x avg. annual use per customer = 3,200 Therms Estimated annual small commercial cost is $2,636 – $2,636 / 3,200 Therms per year or $0.824/Therm – Equivalent cost per gallon of propane = $0.754/gallon *Based on 3200 Therms average annual use; plus any applicable taxes or tariff fees *Estimates based on Average Customer UseMonthlyAnnual Local Distribution NAS or Extension Charge$34.99$419.88 Small Commercial Service Charge$30.00$360.00 *Cost of Gas (3,200 Therms/yr)Use/Month$1856.00 Annual Sub-Total $2,635.88

15. Get a quote for natural gas service Sign agreement – Pay for any unusual construction Xcel Energy service design will schedule install Once you have a natural gas “on” door tag, notify your heating dealer Discuss rebate opportunities for installing energy efficient equipment Have a licensed professional pipe/convert appliances to natural gas Enjoy all the savings, comfort, and convenience Process to get natural gas service?

16. Heating Rebates ApplianceEfficiency Existing Home Rebate Furnace 90-93.9% AFUE 94% AFUE $75 $100 ECM Electronically Commutated Motor $100 Boiler84% AFUE$100

17. Natural Gas Water Heater Rebates ApplianceEnergy Efficiency Level Rebate Amount Standard tank water heater.62 EF.64 EF $40 $60 Tankless water heater.80 EF$100

18. Questions? Contact Info: NaturalGasMN@xcelenergy.com or 800-894-3368 Mark NisbetKim Hoeschen ND Principal ManagerSr Gas Territory Representative 701-241-8607701-241-8604