The document discusses how abundant and affordable natural gas is driving growth in key areas like electric generation, combined heat and power (CHP), and natural gas vehicles (NGVs). While inexpensive natural gas does not significantly change how gas utilities plan investments in distribution systems, it increases the likelihood customers will choose natural gas. The expanded use of natural gas provides environmental benefits and energy efficiency programs remain important despite low natural gas prices.

1. Environmental Initiative Policy Forum
Natural Gas and Minnesota’s Energy Future –
The Gas Utility Perspective
Jeff Daugherty
Director of Regulatory Affairs
CenterPoint Energy
September 21, 2012

2. Impact on Gas Utility Planning and
Investment
• Gas utilities are different than electric utilities in that we
don’t need to plan for and build the production and
transmission components, i.e., gas production wells
and interstate pipelines
• Gas utilities typically build out their distribution systems
based on current customer needs and shorter-term
projections
• Thus, inexpensive natural gas does not significantly
change how we plan and invest in our distribution
system.
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3. Inexpensive Gas does change our
future growth potential
• Abundant, affordable natural gas makes it more likely that
customers will choose natural gas for their space heating,
water heating, and other applications
• The direct use of natural gas produces significant
environmental benefits, which is driving growth in new
natural gas applications
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4. Benefits of Natural Gas
Natural gas provides a number of benefits to U.S. consumers:
Affordable
Comfortable Abundant
Better for the
Domestic
Environment
Economic
Development/
Energy Security
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5. Key Benefits of Gas
Recent developments in the Natural Gas industry have created
compelling benefits compared to other forms of energy
Clean-burning natural gas costs less to use than any
Affordable other energy source - about half the cost of other fuels,
including electricity.
There is more than a 100-year supply of natural gas in
Abundant the United States.
98 percent of the natural gas used in the U.S. comes
Domestic from North America.
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6. Key Benefits of Gas
Recent developments in the Natural Gas industry have created
compelling benefits compared to other forms of energy
Economic The natural gas industry currently employs nearly three
Development/ million Americans and provides a huge boost to the
Energy Security American economy.
A home that uses natural gas for heating, water heating,
Better for the cooking and clothes drying leaves about half the carbon
Environment footprint of an all-electric home.
Natural gas water heaters recover twice as fast and
Comfortable natural gas furnaces deliver air at a much warmer
temperature compared to electric models.
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7. Growth areas due to abundant and
affordable natural gas
Electric Generation
• Significant switching from older coal-fired generation to newer
combined-cycle gas generation
• Natural gas generation is much cleaner than coal: 50% lower CO2;
72% less NOx; 99% less SO2; 100% less Mercury
• Note – in a recent EIA report, US CO2 emissions for the 1st quarter of
2012 were at their lowest levels since 1992, with coal to gas
switching for EG being a key reason.
• Also, while lower gas costs are driving more gas generation now,
much of the future growth in gas generation will be driven by more
stringent environmental standards (e.g., MATS, NAAQS, Regional
Haze, GHGs)
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8. Growth areas due to abundant and
affordable natural gas
Combined Heat & Power (CHP)
• An efficient way for customers to produce both electricity and useful
thermal energy (up to 80% efficiency); also significantly reduces
environmental emissions
• Examples: Engine-driven systems; combustion turbines; micro-
turbines; fuel cells
• According to a recent study, MN is currently using only 30% of its
CHP technical potential
• On August 30, President Obama issued an Executive Order setting a
national goal of a 50% increase in new CHP capacity by 2020
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9. Growth areas due to abundant and
affordable natural gas
Natural Gas Vehicles (NGVs)
• Natural gas vehicles – using natural gas in the transportation sector
instead of petroleum
• Growing customer interest in NGVs due to cost savings and
environmental benefits
• CNG retails for ~$2 gasoline gallon equivalent (~50% less)
• CNG much cleaner than gasoline or diesel (20-30% less GHGs; 85% less NOx and CO)
• Primary initial market – fleet vehicles that operate a lot of hours
(e.g., garbage trucks, buses, delivery trucks)
• Current barriers – lack of refueling infrastructure and higher initial
vehicle cost
• However, we have seen 15 new CNG stations in the last year, with
2 new stations in MN and more expected next year
• An industry expert predicts that the NGV industry will grow 25% per
year (i.e., will quadruple in next 6 years!)
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10. Background on Energy Efficiency in
MN
CIP Spending Since 1992 (in millions)
$28
Actual Spending
$25 Budget
$23
$20
$18
$15
$13
$10
$8
$5
$3
$0
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11. Background on Energy Efficiency in
MN
Historical CIP Energy Savings (MCF)
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-­‐
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12. Summary
Ø Natural gas provides a lot of benefits to US consumers
(affordable, abundant, domestic, and clean)
Ø The strong value of natural gas is driving rapid growth in new
markets, such as Electric Generation, CHP, and NGVs
Ø The expanded use of natural gas produces significant
environmental benefits
Ø Even at today’s prices, natural gas energy efficiency
programs remain cost-effective and, with prices likely to
increase in the future, should be retained
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