The “Basics” of the Gas Authority Member Roundtable

1. The “Basics” of the Gas AuthorityMember Roundtable 2005 Annual Membership Meeting Emerald Pointe Resort – Lake Lanier May 4 - 6, 2005

2. GAS INDUSTRY BACKGROUND

3. Gas Authority Created FERC #436   FERC #636   LDC AGL -Complete  Restructuring Unbundling & (”unbundling”) Deregulated Gas Supply Historic Overview:Regulatory Driven to Market Driven 1992/93 1999 1930's 1950's 1970's 1978 1980 1985 1987 1996 Rapid growth in  demand, regulated wellhead prices Municipal  Systems Built in South East Shortages  (Price induced) Natural Gas  Policy of 1978 Gas Bubble  (Price/Recession Induced) HISTORIC OVERVIEW:Regulatory Driven To Market Driven Gas Industry Background

4. Municipal Gas Authority of GeorgiaBackground Information • Largest non-profit, joint-action gas agency in the nation • Established in 1987 by Georgia law • Primary purpose is to provide adequate, dependable and economical supplies of natural gas to municipal distribution systems Municipal Gas Authority Background

5. Municipal Gas Authority of GeorgiaBackground Information • Long term contracts to supply Members’ full natural gas requirements • Not subject to federal (FERC) or state (PSC) jurisdiction Municipal Gas Authority Background

6. Municipal Gas Authority of GeorgiaBackground Information 1988 2004 Total Members (25 year contract) 61 71 Total Annual Volume (MMBtu) 24,121,000 35,273,000 Total Members’ Retail Customers (meters) 131,804 205,773 Total Assets ($000) $5,544 $533,700 Total Revenues ($000) $23,961 $323,500 *1989 - - Added Florida and Alabama Systems *1993 - - Added Douglas, Tifton, Nashville and Pelham Municipal Gas Authority Background

7. Municipal Gas Authority of GeorgiaBackground Information Municipal Gas Authority Background

8. Municipal Gas Authority Background

9. Largest Member Smallest Member (composite) – 34,000 retail meters – 144 retail customers – 10,400 Mcf per year – 3.4 Bcf per year – Load factor 175% – Load factor 10% Municipal Gas Authority of GeorgiaBackground Information • Serving 71 Diverse Members ........ • 62 in Georgia, 6 in Alabama, 3 in Florida • Also Serving 12 Partners • SEAGD & DC Gas – Alabama • MDG – 9 Public Systems on Texas Eastern – MS to CT • PEG 3 Public Systems – South Municipal Gas Authority Background

10. Scott Wilson City Manager, Elberton 1995 – (Chairman – 2001-2002) (Vice Chairman – 1999-2000) Terry Farmer Gas Superintendent, Lawrenceville 1998 – (Vice Chairman – 2003- ) Terry Horton City Council, Warner Robins 1998 – (Chairman – 2003- ) Eddie Harp Gas Director, Douglas 2002 – Buddy Duke City Council, Adel 2002 – OPEN SEAT Steve Sykes City Manager, Thomasville 2003 – Robert E. Knox, Jr. Mayor, Thomson 1987 – 2005 (Chairman – 1995-96) (Vice Chairman – 1993-94) Frank B. Turner City Manager, Covington 1987 – (Chairman – 1991-92) (Vice Chairman – 1989-90) Municipal Gas Authority of GeorgiaBackground Information • Governed by a Nine-Member Board of Directors • Elected at large for 3-year, staggered terms • Board consists of Elected Officials, City Managers & Operators Municipal Gas Authority Background

11. Municipal Gas Authority of GeorgiaBackground Information • Aggregation of supply, capacity, storage & risk management functions • Broad array of Member Services available • FERC legal representation The Gas Authority manages all“upstream assets” for the sole benefit of the municipalities we serve; a for-profit management firm or marketing company may or may not share a portion of the benefits with their customers. Municipal Gas Authority Background

12. “1 + 1 = 3” Municipal Gas Authority of GeorgiaBackground Information • The Gas Authority is different; We’re not just a marketing company • We work exclusively for publicly-owned gas systems • Our Members are both our “stockholders” and our “Customers” • All benefits, financial and otherwise, flow back to our Members and the municipalities we serve • Joint-action works ……… Municipal Gas Authority Background

13. Mike Frey Vice President Gas Supply/Operations & IS Tina Smith Director Gas Supply Becky Fuller Executive Secretary Ann Vincent Manager Information Systems Karen Copeland Manager Transportation & Storage Larry Bass Sr. Systems Engineer Julie Lobdell Asst. Mgr. Transport. Storage Brian Toole Supply & Capacity Sr. Planning Analyst Tara Davis Information Tech. Analyst II Will Nuckolls Volume Accounting Analyst Laurie Prisbus Supply & Capacity Planning Analyst II Vacant Business Tech. Analyst Lisa Tabakian Trans. & Storage Analyst II Sandy Calkins Technical Analyst Sally Griffin Gas Operations Assistant II Gas Supply, Operations & Information SystemsDepartment Structure Gas Supply & Operations

14. Supply Services Transportation Services Storage Management Supply & Transportation Cost Allocations & Billing Capacity & Supply Planning Satisfy Full Gas Requirements at Lowest Cost Maximize Utilization of Firm Entitlements and Release of Unused Capacity Optimize on Storage Asset Accurate Allocation of Costs, Timely Distribution Assess Short and Long-Term Supply and Capacity Needs Manage pipeline relations and provide input on regulatory filings Manage short and long-term supplier relations/contracts = 40 suppliers Manage all Partner relations/contracts – MDG, PEG, CBM, SEAGD, Mid-Georgia CoGen Gas Supply & OperationsCore Functions Gas Supply & Operations

15. Gas Supply & OperationsAssets We Manage • Members/Partners Transportation and Storage Assets: TransportationStorage • Transco 133,000/d .6 BCF • Southern Natural 128,000/d 3.2 BCF • South Georgia 35,000/d • Texas Eastern/Algonquin 32,000/d .7 Bcf • South Carolina Pipeline 15,000/d TOTAL 343,000/d 4.5 Bcf • Long-Term Supply • Southern 32,000/d (10-year contracts) • Transco 20,000/d (10-year contracts) • Florida Gas 10,000/d (10-year contract) • Black Warrior Basin, Alabama 15,000/d (Declining production) • Working & royalty interest in 750 wells Gas Supply & Operations

16. Information SystemsTechnology Services • MGAG has emphasized technology to serve its membership at a lower cost by: • Investing in technology applications that will allow our staff to serve more efficiently and effectively • Emphasizing technology training for staff • Maintaining reliable and swift voice and data communications • Providing Member/Partners access to data on web site Gas Supply & Operations

17. Member Services Member Services/Finance & IS ...and to assist them in growing their gas systems to optimize the benefits of public ownership.” Operations/Finance “To provide municipalities a reliable, economical supply of natural gas. . . Municipal Gas Member Producers Pipelines Authority of Cities Georgia - Public Gas Systems • Majors (Texaco, BP Amoco, etc.) • Independents • Top 21 Producers account for 40% of production - 23 Major Interstate Pipelines - FERC Regulated Member Services

18. Alabama Georgia Florida Three Key Service Areas • Member Support • Providing business analyses & advice • Analysts assigned to assist specific cities • Providing rate design & administration services • Large customer contract negotiations • Market Development • Providing marketing expertise (high level) • Providing targeted expertise on subscribed basis • Communications • Newsletter, web site, annual report • Member communications • Training Member Services

19. Chris Strippelhoff Vice President Member Services Eleanor Williams Receptionist Records/Admin Jerry Broxton* Market Development Representative Eric Groom Sr. Business Analyst South GA Region Bryan Smith Sr. Business Analyst North GA Region Rai Trippe Business Analyst I North GA Region Michael Mihalick* N. GA Regional Supervisor Jerry Bullard* Toccoa Mkt. Dev. Representative Rusty Hough Business Analyst South GA Region Huber Clark* Sr. Market Dev. Representative Morris Parker* Sr. Market Dev. Representative Nicole Graham Market Analyst Yolanda Santiago White Communication Coordinator Carol Vasilik Support Specialist Acc./Communications Rodney Dill Manager Market Development Scott Tolleson Manager Member Support Rachel Reaid Meeting Planner Julianne Taylor* Sr. Market Dev. Representative * Subscribed Sales Force Program Member ServicesDepartment Structure Member Services

20. Relationship Building Services Provided Today • Relationship Management • Liaison between Members and Gas Authority management • Visit each Member at least four times per year • Educate, inform and assist Members Member Services

21. Budget Services Provided Today • Budget Forecasting • Prepare & present to each Member annually • Tailored to fit Member’s fiscal year • Includes revenue from sale of gas and cost of gas • Monitor/report results • Provide analyses and advice Member Services

22. Services Provided Today Retail Aspect • Retail Rate Assistance • Prepare and present detailed retail rate studies • Regularly review Member’s retail rate structure • Prepare and present retail rate comparisons • Retail Billing Assistance • Prepare and provide monthly retail billing rates for Members using “floating” rate structures • Incorporate hedging results Member Services Member Support

23. Regulatory Representation Review pipeline regulatory filings to determine impact on Members Coordinate preparation of interventions and protests by Washington counsel Represent Members in pipeline rate and service settlement negotiations Monitor relevant activity at the Public Service Commission Regulatory Services Provided Today UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Transcontinental Gas Pipe Line Corporation Docket No. RP04-186-000 NOTICE OF TARIFF FILING (March 3, 2004) Take notice that on February 27, 2004, Transcontinental Gas Pipe Line Corporation (Transco) tendered for filing as part of its FERC Gas Tariff, Third Revised Volume No.1, the tariff sheets listed on Appendix A to the filing, with a proposed effective date of March 1, 2004. Transco states that the purpose of the instant filing is to submit an interim Great Plains Surcharge Filing (GPS) in accordance with Section 39.9 of Transco's General Terms and Conditions to its FERC Gas Tariff. Transco notes that it is revising the GPS is being revised to include the effects of the buyout and termination of the Gas Purchase Agreement with Dakota Gasification Company, and the termination of certain related firm transportation contracts. Transco further states that the instant filing is made pursuant to a letter order issued by the Commission on January 21, 2004 in Docket No. RP04-118-000, and that the revised GPS proposed in the instant filing is to be collected over the Buyout Recovery Period, March 1,2004 through February 28,2005. Transco states that Appendix B attached to the filing supports the recalculation of the revised GPS Surcharge. Transco states that copies of the filing are being mailed to affected customers and interested state commissions. Any person desiring to be heard or to protest said filing should file a motion to intervene or a protest with the Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, D.C. 20426, in accordance with Sections 385.214 or 385.211 of the I;i: Commission's Rules and Regulations. All such motions or protests must be filed in 'i accordance with Section 154.210 of the Commission's Regulations. Protests will be ~ considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Any person wishing to become a party must file a motion to intervene. This filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's website at http://www.ferc.gov using the eLibrary. Enter the docket number excluding the last three digits in the docket number field to access the document. F or assistance, Member Services Member Support

24. Services Provided Today for Key Accounts • Facilitate Relationships Between Members and Their Large Industrial Customers • Gas Price Hedging Services • Provide Technical Services to Key Customers (burner-tip expertise) • Educate and Inform Customers About New Technology; and Provide Economic Analyses • Establish and Maintain Relationships With Equipment Vendors Member Services Member Support

25. Market Development Services Provided Today • Assist Members in Marketing to New and Existing Residential, Commercial and Industrial Customers • Developing Residential and Commercial Gas Markets • Residential / Commercial Program Development (Incentive / Rebate, Financing, Warranty, New Construction) • Project Negotiation (Architects / Engineers) • System Expansion – Surveying, Financial Analysis • Training and Education Member Services Market Development

26. Market Development Services Provided Today • Maintaining Residential and Commercial Gas Markets • Commercial Energy Management Services • Collaborative National Account Efforts (GFEN, SGA, APGA, Energy Solutions Center) • Developing Gas Application Distribution Networks • Training and Education Member Services Market Development

27. Services Provided Today Through The Subscribed Sales Force Program • Subscribed Sales Force Program • Provides professionally-trained, dedicated sales personnel • Residential / Commercial Gas Load Growth (Planning, Programs, Projects) • Relationship Management (Builders, Developers, Customers) • Local Appliance Distribution Network (Retail, HVAC, Plumbing) Member Services Market Development

28. Communications • Created in 1998 • To provide public natural gas promotional materials and support to Members • To provide internal and external communications assistance to Gas Authority staff Member Services Communications

29. Public Natural Gas Communications • Help Members communicate the value of publicly-owned natural gas systems to customers and potential customers, stressing: • The impact of earnings benefiting the local community, • Quality service delivered by hometown personnel, and • System interest in community’s quality of life • Public Awareness Program • In accordance with API RP 1162 • Program under development; implementation 2005-06 Member Services Communications

30. Communications Tool Kit • Aware that not all Members/Public Systems are experienced in public relations, community relations and media relations, developed the Communications Tool Kit • A comprehensive resource manual detailing media protocol, how to write news releases, handle interviews, coordinate special events and more Member Services Communications

31. CommunicationsIn-House Assistance • Provide assistance in development of slide show presentations to broad audiences • Produces monthly newsletter: CityGate News • Produces MGAG Annual Report • Part of website development team • Supports SSFP marketing efforts, special events, production of Spring/Fall Regional Meeting materials, and training materials Member Services Communications

32. Primary Contact Budget Forecast Rate Design Retail Billing Assistance Hedge Program Administration Regulatory Representation Industrial Support Member Services “To provide municipalities a reliable, economical supply of natural gas and to assist them in growing their gas systems to optimize the benefits of public ownership.” (Gas Authority’s Mission Statement) Member Support Market Development Communications • Program Development • Subscribed Sales Force Program • Energy Management Services • Project Feasibility • National Accounts • Gas Appliance Distribution Network • Training • Newsletter, annual report, web site • Member Communications Packages • Graphic Design/ Logo Service • Public/Investment Relations • Training Member Services

33. FINANCE AND RISK MANAGEMENT Long-Term Gas Supplies Member City Financing Program Gas Price Hedging

34. Susan Reeves Chief Financial Officer Jeff Billings Manager Risk Management Rhonda Phillips Senior Accountant Molli von Essen Trade Assistant John Williams Controller Chris Howell Director Finance Ed Phillips Financial Analyst II Finance and Risk ManagementDepartment Structure Financing

35. Long-Term Gas Supplies Why Acquire and Finance Long-Term Gas Supplies? • MGAG Mission: • To provide municipalities a reliable economical supply of natural gas . . . • Use of tax-exempt financing and a mix of longer-term contracts and suppliers results in firm, discounted gas supplies for Member cities Financing

36. Long-Term Gas Supplies Long-Term Supply Acquisition Program Summary Financing

37. Member City Financing Program Program Overview • Core Member Service – Established in 1991 • Assist Members with Financing of Gas System Expansions or Improvements • MGAG Issues Debt (Bonds or Leases) • Other Related Services: • Industrial/Facilities service agreement negotiations • Project management • Marketing support Financing Member City

38. $Amount: $300,000 - $20,000,000 Term: 5 to 30 Years Financing: Commercial Bank Loan (< $5 million) Public Bonds (> $5 million) Service Providers: Local, Regional and National Bank Underwriters (Regional Investment Bankers) Trustees (National Banks) Interest Rates: Vary (Tax-Exempt to Taxable) Security/Collateral: Members General Obligation and Revenue Pledge of Gas System Bond/Lease Counsel: Alston & Bird Key Financing Terms Financing Member City

39. Member Hedge Program • Hedge Physical Supply – Member Pricing Options • Firm load up to 75% of expected firm throughput • Option 1: Float with market prices • Option 2: Defer pricing & timing to Gas Authority • Option 3: Make Independent pricing & timing decisions • Interruptible Load • Float with market prices • Member makes independent pricing & timing decisions • End-user makes independent pricing and timing decisions Financing Risk Management

40. Your Gas Authority • Our Mission … “To provide municipalities a reliable, economical supply of natural gas and to assist them in growing their gas systems to optimize the benefits of public ownership.” • Questions