Southern Star Central Gas Pipeline Spring Customer Meeting

1. Southern Star Central Gas PipelineSpring Customer Meeting

2. Jerry Morris President & Chief Executive Officer

3. 2006 Accomplishments Highest customer survey results in 13 years of survey No lost time accidents since September 7, 2004 No unscheduled firm service interruptions due to pipeline failures All planned pipeline integrity work completed Ozark Trails project placed in service � 25,000 dth/d incremental service

4. Waynoka Supply lateral project Approved Two major business growth opportunities identified � Westar and Midwest Energy Worked with Front Street, BP Amoco, and NNG to attach incremental gas supplies at the BP Jayhawk Plant Successfully implemented first phase of AIM and SUCCESS initiatives Held our first SSU Leadership Conference 2006 Accomplishments Cont.

5. LONG-TERM STRATEGIES Maximize Shareholder Value Provide Exceptional Customer Service Operate Safely, Reliably and Efficiently Ensure Workforce Excellence

6. 2007 Goals Implement Navision by April 1 Achieve Financial Targets Complete Waynoka Project by July 1 Complete Westar & Midwest Goodman Laterals Implement Base Capex Plan on Time & within Budget

7. Complete HCA Integrity Testing Goal Begin Development of Gas Measurement System Provide Opportunities within SSU Evaluate SUCCESS self-nominations Implement AIM Action Items 2007 Goals Cont.

8. Bob Bahnick Senior Vice President, Operations & Technical Services

9. Operations & Technical Support Recent Organizational Changes 2007 Pipeline Activities Pipeline Integrity Projects Pipeline Replacement Projects 2007 Storage Activities KCC Storage Regulation Compliance Storage Work Plans

10. Jim Kline Director Support Services

11. 2007 Pipeline Activities Wichita District Run in-line inspection tool for Part of The Wichita 16� Line TG (13.6 miles total - 9.1 miles HCA) Replace .85 miles of 20� pipe on the Wichita 20� Line G

12. 2007 Pipeline Activities Edmond District Relocate Cement 16� Line VP launcher Relocate Cement 16� Line VP receiver to end of Line VP Chemical Cleaning of Cement 16� Line VP Run in-line inspection tool for Cement 16� Line VP covering 3.47 miles of HCA

13. 2007 Pipeline Activities Independence District Pressure Test 0.79 miles of the Neodesha 8� Line EO - 0.50 miles of HCA Replace 0.45 miles of Neodesha 8� Line YB - 0.08 miles of HCA

14. 2007 Pipeline Activities Kansas City District Replace Kansas City 16� Line DLA - 0.32 miles of HCA Run in-line inspection for Sugar Creek 16� Line XMB (34 miles covering 11.89 miles of HCA Replace � Sedalia 12� Line XT at Whiteman AFB 0.83 miles covering 0.27 miles of HCA

15. 2007 Major Pipeline Projects Replace 10 miles of the Ottawa 20� Line ES Original line installed in 1929 Constructed with acetylene welds Project scope includes 10 miles of 20� Pig launcher and receiver

16. 2007 Major Pipeline Projects Replace 0.8 miles of 24� Oklahoma City Line V Replacement will eliminate repair of multiple anomalies discovered by 2006 smart pig Relocation from existing route will allow pipeline to be in clear zone at Tinker Air Force Base.

17. Jim Neukam Manager, Storage Services

18. Southern Star CentralStorage Facilities 8 Storage Fields 514 injection and withdraw wells 53 observation wells 43BCF Storage Capacity 1.225 MM/D Deliverability

19. KCC Storage Regulations Operating Under Provisional Permits Fully Authorized Operating Permit Applications In Preparation Multi-Year Initial MIT Program (Kansas) 174 Storage Wells with Previous Tests 114 Storage Well Tests in 2004 113 Storage Well Tests in 2005 114 Storage Well Tests in 2006 Repeat MITs on 5 year Frequency

20. KCC Fully Authorized Operating Permits

21. 2007 Storage Work Plan 2007 Storage Integrity Plan � KS Fields 41 Mechanical Integrity Tests 71 Vertilogs (Alternate MITs) 2007 Storage Integrity Plan � Webb Field, Oklahoma 1 Mechanical Integrity Tests 14 Vertilogs (Alternate MITs) Storage Well Inspection & Valve Testing � 567 Wells

22. 2007 Storage Work Plan Complete Three KCC Applications for Fully Authorized Operating Permits Colony Storage Field Modifications Piqua Storage Field Modifications North Welda Field Modifications (Pending FERC Approval) South Welda Booster Expansion (FERC Filing) Storage Field Performance Evaluations

23. Scott LaMar Manager - Rates & Strategic Planning

24. FERC Order 2004 Vacated On November 25, 2003, FERC adopted standards of conduct that applied uniformly to natural gas and electric utility transmission providers. Order 2004 revised the standards of conduct from Order 497. Through Order 2004, the Commission expanded the affiliates definition to include basically any affiliate involved in the energy (gas or electric) industry. Order 497 had previously defined affiliates as only those in the marketing arena.

25. The Court of Appeals vacated Order 2004 on November 17, 2006. On Jan 9, 2007, FERC issued Interim Rules that reinstated all the standards of conduct of Order 2004 that were not at issue in the case before the Court of Appeals. FERC is currently working on a Notice Of Proposed Rulemaking (NOPR) to establish permanent rules and have given partial clarification on the Interim Rules. All indications point to an affiliate definition including only gas marketers on our system. We will continue to monitor these actions and conduct our business accordingly. FERC Order 2004 Vacated Cont.

26. Flexibility Although FERC Order 2004 has been vacated, we are still required to follow our tariff and treat all our shippers in the fairest and most equitable manner possible. FERC has been stressing in recent years that pipelines follow their tariff and backed that up this past year by penalizing some pipelines who didn�t. We realize how important flexibility is to our customers and we will continue to be as flexible as possible within the parameters of our tariff. We will also continue to explore new services to add to our tariff that will offer additional value for our customers.

27. The 2006 Fuel Filing (RP07-96-000) was filed 12/1/2006 Production Area fuel retention dropped from 1.86% to 1.18% Market Area fuel retention dropped from .71% to .51% Storage fuel retention increased from 3.08% to 6.29% Technical conference was held 2/2/07 in Washington, DC to discuss storage fuel % Responses have been provided for all data requests received

28. Storage Filings During storage field evaluations for the KCC fully authorized operating permits required by the Kansas Underground Porosity Gas Storage Act of 2002, Southern Star identified several issues that require FERC certificate amendments. FERC filings have already been made for Colony, Piqua, and North Welda. The Colony and Piqua filings have been approved by FERC orders. Additional filings are expected for the McLouth and South Welda storage fields.

29. Storage Filings These storage filings generally request the following: Expand acreage for gas storage, mineral, and pipeline easement rights Redefine the cap rock for each of the fields Construct facilities (compression and laterals) to recover gas in fields where migration from original storage reservoirs is believed to have occurred (only when required) Although costs and time are associated with these improvements, they are required by KCC regulations and increase the security and integrity of our storage fields.

30. Gary Hines Manager - Gas Management

31. Areas of Interest Weather Storage Measurement Reports 2007 Planned Maintenance Gas Quality Waivers

32. Summer Outlook

33. Kansas City HDD Chart

34. SSC EIA: 2006 vs. 2007

35. EIA � 5 Year Comparison

36. Current Storage Status 5 of 8 Fields Deadweight Tested Why Perform A �Low-Inventory� Test? GT&C Section 13.4 Spring Low Inventory ��perform the end-of-the-withdrawal-cycle shut-in pressure test on each field at the point in time when SSC reasonably believes the field is at or near its lowest inventory level that will be achieved. Fall High Inventory Visa-versa

37. Measurement Report Upgrades Initially Rolled Out Feb 9th Reverted To Existing Reports Feb 9th Current Status Validating Security Increasing Flexibility Proposed New Roll Out in May

38. 2007 Planned Maintenance Edmond Station April 3rd Expected to last 60 days Capacity cut to 105,000 dth/day Pipeline Integrity �Sugar Creek� (LS 235, East of Peculiar Sta.) �Cement Line� (LS 340, S. of Edmond) Line Segment 120, Wichita Area ILI Run Complete

39. 2007 Planned Maintenance � Cont�d April 16 � 20 Arlington Station April 16 � 25 Hoxie Station May 14 � 18 Ogallah Station May 14 � 25 Cheyenne Station September 24 � 28 Yuma Station October 15 � 19 Otis Station

40. 2007 Planned Maintenance � Cont�d Review Posted Planned Service Outages (PSO) Posted around the 15th of the month Emailed to those on the PSO email distribution list

41. Current Gas Quality Waivers April to June 2007 LS 458 (Canadian � Blackwell) CO2 up to 1.5% (see posted requirements) LS 377 & 315 (Guymon � Blackwell) HCDP for third-party storage operators Always Evaluating Others

42. Jeff Davis  Chairman, Missouri Public Service Commission

43. Natural Gas Purchasing & Planning: A Commissioner�s PerspectiveSouthern Star Central Gas Pipeline Spring MeetingApril 19, 2007

44. Disclaimer The opinions expressed here today are the opinions/impressions of one Commissioner. Nothing in this presentation should be attributed to any position in any particular case or to any other member of the Commission, the Commission as a whole, any member(s) of the MO PSC staff or anyone else.

45. Topics Missouri Local Distribution Company Natural Gas Procurement Responsibilities Natural Gas / Electricity Interdependability Issues Natural Gas Market Conditions

46. LDC Responsibilities The LDC is responsible for managing gas costs to consumers. They seek to: Fill their storage before winter when natural gas prices are usually lower. Storage is also necessary to maintain reliability of supply during the winter. Implement plan for purchasing natural gas in a prudent manner that insulates consumers from spikes in the price of natural gas. Enter into reliable contracts for the supply and delivery of the natural gas. I don�t think the commission is fixated on what the LDCs purchasing strategy is, but we are fixated on the fact that they should have a strategy and that they follow that strategy. Deviations from that strategy don�t concern me as long as you tell us, up front, what you�re doing and why you�re doing it. I don�t think the commission is fixated on what the LDCs purchasing strategy is, but we are fixated on the fact that they should have a strategy and that they follow that strategy. Deviations from that strategy don�t concern me as long as you tell us, up front, what you�re doing and why you�re doing it.

47. The PGA Purchased Gas Adjustment charge is the charge the LDC uses to recover its cost for natural gas. The PGA consists of two elements: The LDC�s projected cost per unit to receive natural gas for delivery to customers mixed with any known cost per unit. A factor that returns any overcollections or charges any under-collections of gas cost for the previous year (the Actual Cost Adjustment - ACA). The LDC�s cost per unit to receive natural gas typically includes the wholesale cost of the natural gas, interstate transportation charges, storage charges and fuel for compression. Although the PGA may include incentive plans, the PGA does not include a mark-up or �profit� for the LDC. This last point is important because in our last two rate cases � MGE and Atmos � we�ve adopted rate designs that include company profits inside the fixed monthly charge. Laclede Gas, our state�s largest LDC, also has a rate design that pretty much insulates it from weather variations. This last point is important because in our last two rate cases � MGE and Atmos � we�ve adopted rate designs that include company profits inside the fixed monthly charge. Laclede Gas, our state�s largest LDC, also has a rate design that pretty much insulates it from weather variations.

48. Observations Staff GW Case Observations Three General Categories of Hedging Activity 80% or More (AmerenUE & Aquila) 50% to 60% (Atmos, Laclede & MGE) Little or None (SMNG, MGU & Fidelity) Mostly Year-to-Year Planning (One Year @ a Time) Extremely Mild Weather Clearly Impacted Bill Levels and Effectiveness of Hedging Programs

49. Observations - continued Staff GW Case Observations Some Utility Hedging Plans Impacted by Hurricane Related Price Spikes & Avoidance of Entering Into Contracts @ Record Prices Higher Hedging Activity Did Not Always Result in Lower PGA Rates Lower Hedging Activity Did Not Always Result in Higher PGA Rates� We know that hedging doesn�t always produce the lowest price � what it does get you is price certainty and less volatility. If you don�t remember anything else from this presentation, remember that customers � all customers � hate volatility and they are much more tolerant of gradual increases than they are of price spikes. If you�re looking for trouble with our commission, try doubling your PGA rate � you can still have the lowest rate in the state and the data requests will still be flying. It is my belief that over time the LDCs should beat the market average, maybe not year in and year out, but over a period of years it�s my gut feeling they ought to be able to do it by some small margin. I want to be careful when I say that though because we don�t want people speculating too much. We know that hedging doesn�t always produce the lowest price � what it does get you is price certainty and less volatility. If you don�t remember anything else from this presentation, remember that customers � all customers � hate volatility and they are much more tolerant of gradual increases than they are of price spikes. If you�re looking for trouble with our commission, try doubling your PGA rate � you can still have the lowest rate in the state and the data requests will still be flying. It is my belief that over time the LDCs should beat the market average, maybe not year in and year out, but over a period of years it�s my gut feeling they ought to be able to do it by some small margin. I want to be careful when I say that though because we don�t want people speculating too much.

50. Responsibilities � Smaller LDCs Challenges Facing Smaller LDCs Access to Storage Minimum Size of Futures Contracts (10,000 MMBtu) May Limit Participation Minimum Size of Supply Contracts May Limit Multi-Year Layering of Purchases Credit Requirements Propane Competition and Need to Stay at or Near Market� Smaller utilities still have options but may be different than larger utilities.

51. Price Risk Hedging Strategy - AmerenUE Hedge Minimum of 75% of Normal Winter Demand Against Market Price Volatility Four Primary Methods to Hedge System Supply: Storage Inventory at Fixed WACOG Physical Gas Supply at Fixed Prices or �Costless Collars� Financial Swaps from OTC Markets (Morgan Stanley, Bank of America, Goldman Sachs, Deutsche Bank,�) NYMEX Futures Contracts Storage Provides Over 50% of Gas Supply During Normal Winter Financial Swaps/NYMEX to Fix Prices of Indexed Baseload Contracts While Diversifying Credit Risk At the beginning of the 2005-2006 winter heating season, Ameren definitely looked like a hero because of the excellent job they had done hedging. By the end of the winter heating season, there were two or three LDCs with lower PGAs because of the warm weather, the fact they�d done no hedging and that they were able to jump in and buy at dirt cheap prices.At the beginning of the 2005-2006 winter heating season, Ameren definitely looked like a hero because of the excellent job they had done hedging. By the end of the winter heating season, there were two or three LDCs with lower PGAs because of the warm weather, the fact they�d done no hedging and that they were able to jump in and buy at dirt cheap prices.

52. Diversified Supply Portfolio - Aquila Supply Diversification Goals Mitigate price volatility Promote price stability Provide operational flexibility Diversified Supply Portfolio Mix Monthly index price Fixed price Storage Daily index price Options

54. Next Steps Extend Timeframe Over Which LDC Purchasing & Planning Takes Place Minimum 3 Years Supply & 5 Years Capacity Spread Out Purchasing Programs Minimum Hedging Levels Regular Reporting & Updating Requirements Continue to Encourage Energy Efficiency & Conservation Continue to Expand Consumer Education Efforts Continue to Encourage Federal & State Funding of Liheap & UtiliCare

55. Methane & Megawatts- Interdependability Infrastructure Issues Facing Regulators Natural Gas Pipelines, Gas-Fired Generation & Electric Transmission Lines Coordination � Reliability of Electricity & Natural Gas How Regulators View the Market & Respond to Volatile Pricing Natural Gas & Gas-Fired Electric Generation How Natural Gas Markets Impact Electric Prices * This is just an outline slide for you to note major topics you will cover. ** This is just an outline slide for you to note major topics you will cover. *

56. Methane & Megawatts Infrastructure Issues Facing Regulators Siting considerations for gas-fired electric plants: Do you build a pipeline to the plant or do you build a plant along the pipeline? Is it easier to site natural gas pipelines or electric transmission lines? Are natural gas pipelines cheaper than electric transmission lines? What are the reasons to choose building a natural gas pipeline or electric transmission line? In Missouri our utilities generally consider distance and cost to nearest gas pipeline with capacity and distance and cost to nearest electric transmission line with capacity. Different sites are looked at and the overall lowest cost site is given strong consideration. Where gas and electric lines cross is a natural location to consider, especially when industrial facilities are located nearby appropriate �neighbors�. While gas lines tend to be less controversial, they can be much more expensive than transmission with sufficient capacity. In densely populated areas, neither infrastructure is easy to site or build. Our experience in MO is that cost should generally dictate which infrastructure you build but location near other facilities vs. nearby housing may move you away from the cheapest solution. In Missouri our utilities generally consider distance and cost to nearest gas pipeline with capacity and distance and cost to nearest electric transmission line with capacity. Different sites are looked at and the overall lowest cost site is given strong consideration. Where gas and electric lines cross is a natural location to consider, especially when industrial facilities are located nearby appropriate �neighbors�. While gas lines tend to be less controversial, they can be much more expensive than transmission with sufficient capacity. In densely populated areas, neither infrastructure is easy to site or build. Our experience in MO is that cost should generally dictate which infrastructure you build but location near other facilities vs. nearby housing may move you away from the cheapest solution.

57. Methane & Megawatts Infrastructure Issues Facing Regulators � continued One interstate pipeline capacity improvement project in our state is largely necessary to support the growing demand for natural gas-fired generation in a particular area. Much of our energy in Missouri comes from coal and nuclear power but a significant portion of our peak capacity is met by natural-gas fired units. In southwest MO, where a significant portion of our electric capacity, is gas-fired, interstate pipeline capacity (at minimum delivery pressure) has been a concern. Capacity improvement projects are underway right now. As natural gas demand grows, we anticipate more projects like this may be required. In MO much of our capacity is fueled from sources other than natural gas. We are also confronting a new problem � ethanol and biodiesel plants consume large quantities of natural gas. In Ameren UE�s recent gas case, we approved a tariff that allows Ameren to refuse service to anyone using more than 40,000 ccf for that very reason.In southwest MO, where a significant portion of our electric capacity, is gas-fired, interstate pipeline capacity (at minimum delivery pressure) has been a concern. Capacity improvement projects are underway right now. As natural gas demand grows, we anticipate more projects like this may be required. In MO much of our capacity is fueled from sources other than natural gas. We are also confronting a new problem � ethanol and biodiesel plants consume large quantities of natural gas. In Ameren UE�s recent gas case, we approved a tariff that allows Ameren to refuse service to anyone using more than 40,000 ccf for that very reason.

58. This is actually an old slide. I think about 14% of our state�s generating capacity and 3% of our actual energy comes from natural gas fired generation. On peak days, we use all 14% of that capacity. Ironically, electric generation is the fastest growing sector of natural gas consumption with 14% of the natural gas now being consumed in this state is used to generate 3% of the electricity. This is actually an old slide. I think about 14% of our state�s generating capacity and 3% of our actual energy comes from natural gas fired generation. On peak days, we use all 14% of that capacity. Ironically, electric generation is the fastest growing sector of natural gas consumption with 14% of the natural gas now being consumed in this state is used to generate 3% of the electricity.

59. Nationally, we have an even higher need for natural gas to meet energy (18.7%) and capacity needs. Nationally, we have an even higher need for natural gas to meet energy (18.7%) and capacity needs.

60. Gas Demand Outlook

61. Methane & Megawatts Reliability Natural gas and electric utility industries need to be aware of the recommendations of the NERC and NAESB Gas/Electricity Interdependency Task Force. As natural gas demand grows to support electric generation needs this coordination effort will only become more important. Some areas of the country now depend on natural gas as a primary fuel source for electric generation. Natural gas and electric interdependency is a real issue for planners to consider: In Colorado, an outage occurred on 2/18/06 in which natural gas demand for heating customers (both the natural gas LDC and electric provider) contributed to an outage to over 300,000 customers. This was investigated by the Colorado PSC in Case No. 06I-118EG. Diagram illustrating what happened on next slide. This interdependency has been the subject of several task forces. Most notably probably the NERC/NAESB Gas/Electricity Interdependency Task Force. In California ~ 9,500 MW of 58,000 MW comes from gas-fired generation. In Florida ~ 8,600 MW of 51,000 MW comes from gas-fired generation. In Texas ~ 16,000 MW of 101,000 MW comes from gas-fired generation. Natural gas and electric interdependency is a real issue for planners to consider: In Colorado, an outage occurred on 2/18/06 in which natural gas demand for heating customers (both the natural gas LDC and electric provider) contributed to an outage to over 300,000 customers. This was investigated by the Colorado PSC in Case No. 06I-118EG. Diagram illustrating what happened on next slide. This interdependency has been the subject of several task forces. Most notably probably the NERC/NAESB Gas/Electricity Interdependency Task Force. In California ~ 9,500 MW of 58,000 MW comes from gas-fired generation. In Florida ~ 8,600 MW of 51,000 MW comes from gas-fired generation. In Texas ~ 16,000 MW of 101,000 MW comes from gas-fired generation.

62. Methane & Megawatts How Regulators View the Market & Respond to Volatile Pricing Throughout the 1990s the U.S. experienced an unprecedented build up gas-fired electric generation capacity. Much of that capacity is now needed to meet capacity needs during hot, or unusually cold, weather. This has impacted summer natural gas markets which use to be influenced primarily by natural gas LDC storage demand. In total in the 1990s, approximately 190,000 MW of capacity was constructed in the U.S. that uses natural gas as a fuel. This is approximately half of the generation capacity of western Europe. It does not come as any great surprise that during hot or unusually cold weather this level of gas-fired capacity can demand a lot of natural gas. We have seen this demand impact natural gas markets. In total in the 1990s, approximately 190,000 MW of capacity was constructed in the U.S. that uses natural gas as a fuel. This is approximately half of the generation capacity of western Europe. It does not come as any great surprise that during hot or unusually cold weather this level of gas-fired capacity can demand a lot of natural gas. We have seen this demand impact natural gas markets.

63. Methane & Megawatts In the national storage inventory report from EIA, you can see how mid-summer demand for natural gas for electricity impacted storage fill rate. In the national storage inventory report from EIA, you can see how mid-summer demand for natural gas for electricity impacted storage fill rate.

64. Methane & Megawatts Natural Gas Market Impacts When natural gas storage levels are impacted by summer electricity peaking demand, we often see natural gas markets respond. Winter demand for natural gas, storage levels, and natural gas supply disruptions are still the primary drivers in market prices. Volatility is dealt with by our utilities through several different approaches � as discussed earlier. Storage inventories, if impacted significantly certainly have an impact on natural gas markets. Fortunately our storage levels have remained relatively strong this winter � thank goodness for a strong fall inventory level! As the demand levels for natural gas have closed in our total natural gas domestic supply + imports capability market volatility and the intensity of price spikes has only become more pronounced. Market volatility of natural gas is something our natural gas utilities are taking steps to mitigate. Storage inventories, if impacted significantly certainly have an impact on natural gas markets. Fortunately our storage levels have remained relatively strong this winter � thank goodness for a strong fall inventory level! As the demand levels for natural gas have closed in our total natural gas domestic supply + imports capability market volatility and the intensity of price spikes has only become more pronounced. Market volatility of natural gas is something our natural gas utilities are taking steps to mitigate.

65. Methane & Megawatts Other Market Drivers? Carbon Tax � It is widely felt by our electric utilities that a significant �carbon tax� would place upward pressure on natural gas market prices. Our electric utilities now analyze this scenario as part of their integrated resource planning. Renewables � For wind projects in particular, when capacity needs are assessed it may be determined that �back-up� gas-fired generation is prudent. In our meetings with the electric utilities related to resource planning they typically note that a $10 to $20 carbon tax would likely push natural gas prices higher. This is typically reflected in resource planning through a pricing assumption of �high� natural gas vs �expected� or �low� gas price scenarios. Some utilities have also noted that more wind capacity may result in more simple cycle gas-fired units to meet capacity needs � the back-up issue during peak periods when wind capacity may not be reliable.In our meetings with the electric utilities related to resource planning they typically note that a $10 to $20 carbon tax would likely push natural gas prices higher. This is typically reflected in resource planning through a pricing assumption of �high� natural gas vs �expected� or �low� gas price scenarios. Some utilities have also noted that more wind capacity may result in more simple cycle gas-fired units to meet capacity needs � the back-up issue during peak periods when wind capacity may not be reliable.

66. Methane & Megawatts Vertically Integrated vs Restructured Utilities In Missouri, our vertically integrated utilities have been able to receive large off-system sales profits from their coal and nuclear baseload fleet selling into a market that reflects natural gas-fired generation market prices. This revenue stream has permitted our rates to stay among the lowest in the country. Until very recently, our two largest electric utilities were able to reduce their rates several times without an increase in rates from the mid-1980s. One of the reasons this was possible was strong off-system sales. In recent years off-system profits have been helped by continued strong market price levels, partially due to higher natural gas prices. Until very recently, our two largest electric utilities were able to reduce their rates several times without an increase in rates from the mid-1980s. One of the reasons this was possible was strong off-system sales. In recent years off-system profits have been helped by continued strong market price levels, partially due to higher natural gas prices.

67. Methane & Megawatts Vertically Integrated vs Restructured Utilities Where electric restructuring has occurred and natural gas generation is the primary fuel, significant rate increases have often been observed. Retail energy providers may have more difficulty building coal or nuclear power plants and this may contribute to more natural gas demand in some regions. It should be noted that increases in the cost of coal, transportation and coal-fired environmental upgrades are narrowing the gap. Where a significant portion of capacity and energy depends on natural gas as a fuel, market prices have reflected the higher price of natural gas. This is not helped with market restructuring where price caps have ended just in time to be met with large increases in electric rates. Where a significant portion of capacity and energy depends on natural gas as a fuel, market prices have reflected the higher price of natural gas. This is not helped with market restructuring where price caps have ended just in time to be met with large increases in electric rates.

68. Methane & Megawatts Effects of Imperfect Natural Gas Pricing on Electric Consumers Where natural gas prices reflect market spikes that are not reasonable, for any number of reasons, these price spikes can quickly show up in electric markets. Other Effects? These market problems on the natural gas side can quickly spill over into the electricity market if natural gas-fired generation is setting the market clearing price in a region. These market problems on the natural gas side can quickly spill over into the electricity market if natural gas-fired generation is setting the market clearing price in a region.

69. Questions? Contact Information: Jeff Davis, Chairman Missouri Public Service Commission Phone (573) 751-3233 E-Mail: Jeff.Davis@psc.mo.gov

70. Dale Sanders Contract Administration

71. Contracts Update Agency Updates Help Desk Availability- (270) 852-5123 Password Resets

73. Contracts Update Agency Updates Help Desk Availability- (270) 852-5123 Password Resets CSI Access Request Form

75. Contracts Update Some Service Request Forms Online

79. Contracts Update Some Service Request Forms Online CSI Reports Reference List

80. Goal - Shipper/Operator Naming Consistency CSI 015 Operator Allocation-Current Operator Location Allocation Summary by Flow Date-New CSI 022 Noms vs. Actuals Daily-Current Shipper Noms vs. Actuals Daily- New

81. Contracts Update Some Service Request Forms Online CSI Reports Reference List Security Administrator Audit

84. Contracts Update Some Service Request Forms Online CSI Reports Reference List Security Administrator Audit Online CSI Tutorial

91. Contracts Reminders

92. Kevin Renshaw Supervisor, Scheduling

93. Introducing!!!David Bristow

94. Customer Services Innovations (CSI) Update

95. Customer Services Innovations (CSI) Update

96. Semi-Annual Request to Rank Nominations

97. Capacity Allocation

98. Capacity Allocation

99. Invoices

100. Philip Rullman Manager � Customer Service & Business Development

101. Provide Exceptional Customer Service Pursue Strategies Actively to Provide Enhanced Access to Gas Supply Options Grow Markets Achieve Consistently High Customer Survey Results

102. Access to Gas Supply Options As of April 13, 2007 Type I Projects Active - 7 Type I is a request for cost estimate Type II Projects Active � 5 Type II begins the process of ordering material, permitting, etc.

105. Access to Gas Supply OptionsAnadarko Waynoka Waynoka Plant Specifics Nominal processing capacity of 200,000 Mcf/d Located in Woods County, Oklahoma Constructed & placed in operation 3rd qtr 2006

106. Access to Gas Supply OptionsAnadarko Waynoka Benefits to Southern Star Customers Strategic incremental gas supply for SSC Designed to receive up to 175,000 Mcf/d Connected to line segment 377 (Straight-Blackwell) Lateral in-service early 3rd qtr 2007 Anadarko production basin is expected to grow over the next five years

107. Grow our MarketsMarket Growth Projects Midwest Energy, Inc. � Goodman Energy Center Provide natural gas service to the Midwest Energy Goodman Energy Center power generation facility, located in Ellis County Kansas. This facility will have a total generation capacity of 75 MW. Commercial in-service is targeted for June 1, 2008 Prairie Pride, Inc. (MPUA) This project will provide natural gas service to the new Prairie Pride Biodiesel facility and MPUA 15 MW cogeneration plant. Commercial in-service is targeted for June 15, 2007

108. Grow our MarketsMarket Growth Projects Westar Energy, Inc. � Emporia Energy Center Provide natural gas service to the new Westar Emporia Energy Center power generation facility, located in Lyon County Kansas, that will have initial generating capacity of up to 300 megawatts (MW), with additional capacity to be added in phases, bringing the total capacity to 600 MW. Commercial in-service is targeted for June 1, 2008 (300 MW)

109. Imbalance Services �Shippers shall maintain thermal balancing of receipts and deliveries on a daily basis to the maximum extent possible�

110. Imbalance ServicesInterruptible Storage Services - ISS Requires ISS Form of Service Agreement and is available to any shipper that has an FTS, SFT, or ITS Service Agreement. Charges are commodity plus injection & withdrawal fee Injections & withdrawals are nominated Gas Stored under ISS may be sold in place to other parties having sufficient available rate schedule FSS or ISS Storage Capacity

111. Imbalance Services Park & Loan � PLS Service Available to any PLS Shipper Interruptible service Park or Loaned Quantity May be Delivered or Received at: A Logical (non-physical point) in the P/M area At any Pool Defined in Rate Schedule PS Must be at the Same Point where PLS Shipper Tendered or Borrowed Gas from SSC PLS does not include Transportation PLS and Transportation or Pooling Agreement(s) must be Held by the Same Entity Fee �Based on Daily Commodity�

112. Imbalance ServicesImbalance Transfer - FTS, SFT, ITS Imbalance trading among Shippers in the same area Treat the imbalance as if it had been injected into or withdrawn from the Shipper's storage account to the extent Shipper has storage capacity available or Shipper's storage inventory is sufficient to cover the imbalance (applies only to those Shippers who also have storage agreements with Southern Star) Adjusting nominations for the remainder of the month

113. Imbalance Services Imbalance Transfer � TSS, FSS, ISS Gas stored under this rate schedule may be sold in place to other parties having sufficient available Rate Schedules FSS or ISS storage capacity. Parties wishing to make sales of gas in place must obtain confirmation from Southern Star 24 hours prior to the proposed effective date of such sale that the quantity proposed to be sold is available and shall notify Southern Star in writing that such sale has occurred by the effective date of the transaction.

114. Jim Harder VP, Customer Service & Business Development

115. Review of 2006 Survey Results Customer Type

116. Review of 2006 Survey Results Management Level

117. Review of 2006 Survey Results Performance Average Performance of 8.4% (HIGHEST EVER) Performance Improvement on 14 of 19 Factors Importance Average Importance: 9.2% (Increase)

118. Challenges The Bar has Been Raised for 2007 Our Customers Expectations are Greater WE HAVE A PLAN!!!!!!

119. 2007 Customer Survey Team Debbie Hendrix Suzanne Capps Ruth Clark Stephanie Hathaway Ronnie Hensley Matt McCoy Todd Millay David Roberts Philip Rullman

120. Ensure SSC Personnel are Accessible Customer Service Managers will Develop Departmental Plans to Identify Areas for Improvement by April 1, 2007

121. Ensure that SSC Representatives Know our Business & Apply that Knowledge to Solve Customer Issues Understand SSC Business Practices Monthly Roundtables Monthly Business Topics at Business Reviews Understand our Customer�s Business Establish Customer Visit Standards and Research Senior Management will Meet Annually with their Respective Counterparts

122. Provide Appropriate Level of Operating Flexibility to Customers Gas Mgmt & Scheduling will Meet with OBA Parties to Discuss SSC Expectations on OBA Agreements �DAD� Concept Don�t say we can�t before understanding the issue Always ask why, what, how to fully understand the issue Don�t say, �they said��. Take Responsibility

123. Enhance SSC System to Ease Customer�s Ability to Conduct Day to Day Business Create Online CSI guide by May 1, 2007 Conduct Q&A Session at Customer Meeting(s) Connect New Users to CS Reps within 2 Days Review & Discuss PLS Improvements Enhancement of Pooling Process Clarify CSI Report Names Improve Timely Problem Resolution on CSI Issues