1. Generating Resource Advisory Committee April 9, 2002

2. Proposed Forecast after First NGAC Meeting

3. Comparison to Other Forecasts

4. Medium Forecast Vs. NYMEX

5. Adding Historical: 1993-98

6. Historical Gas Price Variation in Months Since 1993

7. 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

8. West-Side Utility Natural Gas Costs – 2005 Medium Example Price ComponentsPrice Adjustments FirmInterruptible Henry Hub Price $ 2.72 Station 2 Price-.392.33 In-Kind Fuel Cost4.42 %2.43 Firm Pipeline Capacity (Incremental)$.462.89 Interruptible Pipeline Capacity$.23 2.66 Pipeline Commodity Charge$.042.932.70 Firm Supply Premium$.052.98

9. East-Side Utility Natural Gas Costs – 2005 Medium Example Price ComponentsPrice Adjustments FirmInterruptible Henry Hub Price $ 2.72 AECO Price-.442.28 In-Kind Fuel Cost2.50 %2.34 Firm Pipeline Capacity (Incremental)$.462.80 Interruptible Pipeline Capacity$.28 2.62 Pipeline Commodity Charge$.012.812.63 Firm Supply Premium$.052.86

11. Pricing Point Relationships

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

13. Oil Price Forecast Comparisons

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

15. Historical Mine-mouth Coal Prices

16. Historical Regional Coal Price Trends

17. 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 %

18. State Utility Prices Minus Western Mine-Mouth

19. Assumed State Differences in Forecast