The Energy Policy Act of 2005: Too Little, Too Late?? Southeastern Energy Society Meeting, September 19, 2005 Arthur Corbin, President & CEO Municipal.

The Energy Policy Act of 2005:Too Little, Too Late??

Southeastern Energy SocietyMeeting, September 19, 2005

Arthur Corbin,President & CEO

Municipal Gas Authority of Georgia


Southeastern Energy SocietyMeeting September 19, 2005- 2 -

Presentation Outline

Bias/Perspective


Elements of the Energy Policy Act of 2005

Where the Bill falls short

Where we go from here



Gas Authority Overview

Established in 1987 by Georgia Law

Non-Profit, Joint Action Agency

Broad powers to provide full requirements gas supply to municipal distribution systems

Members elect to contract with Gas Authority

Governed by nine (9) member Board of Directors elected by the membership



1988

2005

Total Members 61 77

Total Annual Volume (MMBtu) 24,121,000 68,500,000

Total Members’ Retail Customers 131,804 229,000

Total Assets ($000) $5,544 $550,000

Total Revenues ($000) $23,961 $350,000

Gas Authority Overview

Credit Ratings:Moody’s A1Fitch IBCA A+Standard & Poors A





Energy Policy Act of 2005

Signed into law by the President on August 8th

First major energy legislation passed by Congress in 13 years Since the original Energy Policy Act of 1992

Over 1,700 pages of complex legislation

18 separate titles




Title I – Energy Efficiency (139) Extends Daylight Savings Time by a month Increases LIHEAP authorization to $5.1 billion

Title II – Renewable Energy (103) Competitive geothermal leasing program

Title III – Oil and Gas (more on this later; 209)

Title IV – Coal (71) Clean coal power initiative

Title V – Indian Energy (81) Streamlines development and permitting of Tribal projects

Title VI – Nuclear Matters (111) Construction of nuclear reactor at DOE Idaho National

Laboratory generating both power and hydrogen




Title VII – Fuels and Vehicles (91) National Highway Traffic Safety Administration explores

improvements in corporate automobile fuel efficiency standards considering safety, jobs and economy

Title VIII – Hydrogen (37) Hydrogen research program for hydrogen cars

Title IX – Research and Development (219) Methane hydrate R&D program and $150 MM for program

over 5 years

R&D program for ultra-deepwater and other unconventional natural gas

Title X – Department of Energy Management (34) Secretary of Energy to report to Congress the feasibility of

promoting collaboration on energy projects between colleges and universities




Title XI – Personnel and Training (12) Secretary of Energy to report to Congress current trends in

energy workforce and provide recommendations to meet future energy labor requirements

Title XII – Electricity (140) Repeals Public Utility Holding Company Act (PUHCA) Reliability rules for transmission grid, some open access and

no FERC standard market design

Title XIII – Energy Policy Tax Incentives (241) Includes language that addresses use of tax-exempt

financing of natural gas supply prepayments

Title XIV – Miscellaneous (18) Establishes Commission of North American Energy Freedom

to provide recommendations to secure North American energy independence by 2025




Title XV – Ethanol and Motor Fuels (135) Fuel manufacturers to use 7.5 billion gallons of ethanol in

gasoline by 2012

Title XVI – Climate Change (24) Climate technology program directing Secretary of Energy

to lead inter-agency process to develop and implement national climate technology strategy

Title XVII – Incentives for Innovative Technologies (17) Federal loan guarantee program for innovative technologies

Title XVIII – Studies (63) Secretary of Energy with National Academy of Sciences

study federal energy efficiency standards to determine if they result in total energy efficiency

Secretary of Energy report to Congress on natural gas supplies and demand



Title III – Oil and Gas

FERC authority to set rules to protect price transparency in natural gas and transportation markets

Inventory outer continental self (OCS) oil and natural gas resources

FERC, when appropriate, allow market-based rates for new gas storage facilities

Increased penalties for violations of Natural Gas Policy Act (NGPA) and Natural Gas Act (NGA)

FERC given exclusive authority to approve or deny new or expanded LNG terminal (Amends NGA )

FERC designated lead agency for environmental compliance in LNG proceedings (Amends NGA )

Any “manipulative or deceptive device or contrivance” in sale of interstate transportation is illegal (Amends NGA )



Title III – Oil and Gas

Secretary of Interior to convene 3 forums on LNG in areas where LNG facilities under consideration

Individuals engaged in manipulative practices barred from officer or director, or purchasing or selling gas or transportation

Reduce royalty rate on marginal oil and gas production

Royalty incentives for ultra deep gas wells in Gulf of Mexico shallow waters

Royalty relief for deepwater production and criteria for royalty suspension

Royalty relief for gas produced from methane hydrates

Royalty incentives for enhanced oil and gas recovery using CO2

Review federal onshore oil and gas leasing practices

Secretaries of Interior and Agriculture to develop “utility corridors” for transportation of oil, gas and electricity



Where the Bill falls short

Bill didn’t go far enough to correct the imbalance in energy and environmental policies

Encourage use of clean burning natural gas

Discourage development of domestic resource base

Greater emphasis on imported LNG over access and development of domestic resource base

Lessons from oil?

Natural Gas Cartel

Strategic Natural Gas Storage Reserve?

Supply initiatives critical to address ultra-high natural gas prices

Consumers can’t wait another 13 years for Congress to adjust policies to return natural gas prices to affordable levels



Natural Gas Prices



Natural Gas Prices

Future Pricing

$5.53

$10.52

$7.86

$4.57 $4.53 $4.52$4.88

$4.65

$5.24

$6.26 $6.23$5.85

$8.35

$9.26

$8.45

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

$11.00

$12.00

Cal05 Cal06 Cal07 Cal08 Cal09

Calendar Strip Year

Pri

ce

/Mm

btu

As of Dec-2003

As of Dec-2004

As of 9-15-2005



Where we go from here

Stand-alone Natural Gas Bill to provide consumers relief from high prices

Access to domestic resource base Open federal lands to environmentally responsible development

(horizontal drilling, small foot print) Give states incentive to open areas off their coasts by participating in

federal royalties and imposing surcharges for R&D on states that prevent access

Differentiate between oil and natural gas leasing (gas only leases)

Develop Strategic Gas Storage Reserve from excess royalty and tax revenues

Require large natural gas users to be dual-fuel capable

Fund LIHEAP at new $5.1 billion authorization level

Enhance market transparency through improved, timely supply and demand data available to all and large OTC market positions report to regulators

Monitor futures and OTC markets and, where appropriate, establish rules to eliminate undue volatility

The Energy Policy Act of 2005: Too Little, Too Late?? Southeastern Energy Society Meeting, September 19, 2005 Arthur Corbin, President & CEO Municipal.

Documents

energy efficiency

energy projects

secretary of energy

renewable energy

original energy policy

major energy legislation

hydrogen slide

economy title