the energy policy act of 2005: too little, too late?? southeastern energy society meeting, september...
TRANSCRIPT
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 2 -
Presentation Outline
Bias/Perspective
Municipal Gas Authority of Georgia
Elements of the Energy Policy Act of 2005
Where the Bill falls short
Where we go from here
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 3 -
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 4 -
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 5 -
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 6 -
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 7 -
Energy Policy Act of 2005
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 8 -
Energy Policy Act of 2005
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 9 -
Energy Policy Act of 2005
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 10 -
Energy Policy Act of 2005
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 11 -
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 )
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 12 -
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 13 -
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 14 -
Natural Gas Prices
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 15 -
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
Municipal Gas Authority of Georgia
Southeastern Energy SocietyMeeting September 19, 2005- 16 -
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