Current Pricing Projections -NYMEX futures currently $12.50-$13.50 -NYMEX futures do not fall below $10.97 through March 2010 -Current forecasts have $14.00+

Current Pricing Projections

- NYMEX futures currently $12.50-$13.50

- NYMEX futures do not fall below $10.97 through March 2010

- Current forecasts have $14.00+ from July through January

- Continued price volatility and price speculation

- Limited current benefit from hedging and storage injections

Upside Price Concerns

- Lower LNG imports and world supply competition

- Relatively low storage inventory

- Increasing exports to Mexico, lower imports from Canada

Potential Downside Factors

- Mild summer, moderate electric generation usage

- Continued economic slowdown

- No hurricanes in Gulf

Regulatory Actions

- LIHEAP customer eligibility and sign up

- Budget billing promotion (late for enrollment)

- Increased conservation information to customers

- Caution in TPS initiatives

- 20% to 30% Y/Y increases being filed

- Accelerated mid year increases

Long-Term Considerations

- Supply portfolio diversification, Gulf Coast, LNG imports, REX supply

- Production area vs. Market Area Storage

- Modified LDC hedging strategies