Priorities for the 126 th Legislature Richard Levitan, - PowerPoint PPT Presentation

Maine Energy & Environmental Policy: Priorities for the 126 th Legislature Richard Levitan, rll@levitan.com March 21, 2013

Marcellus gas production skyrocketing 2.5 2.0 Trillion Cubic Feet (Tcf) 1.5 1.0 0.5 0.0 2006 2007 2008 2009 2010 2011 2012 1

New England ’ s Pipeline Infrastructure M&N PNGTS Iroquois Tennessee Algonquin 2

Key Market Trends  Shale gas boom  Deterioration in New England ’ s P/L portfolio diversity  Increased P/L congestion along Algonquin / Tennessee  Decline in production from Atlantic Canada  Inexpensive gas at the wellhead ≠ low delivered prices • Price volatility effects • Uncertainty about timing of new infrastructure 3

Insert 40 35 Henry Hub TZ6 NY Algonquin CG 30 Spot Price ($/MMBtu) 25 20 15 10 5 0 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 4

Basis in New England has skyrocketed 25 Algonquin CG minus TZ6 NY ($/MMBtu) 20 15 10 5 0 -5 -10 -15 Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- Jul- Jan- 08 08 09 09 10 10 11 11 12 12 13 5

Potential Infrastructure Additions  Algonquin Incremental Market Project • +450 MDth/d into New England from Ramapo, NY  Tennessee Northeast Exchange Project • +600 MDth/d into New England from Marcellus/Utica shales  Deep Panuke 6

The challenge for the 126 th Legislature  Support the development of new P/L capacity  Benefits include: • Reduced costs for both gas and electric customers • Reduction in uplift • Increased electric reliability • Environmental benefits • Enhanced adaptability when electric and gas side contingencies arise 7

What ’ s to be done?  Pipelines need anchor shippers  Structural changes to the Forward Capacity Market  Producers not cultivating New England market  Cost allocation and the missing money problem  State jurisdictional issues 8