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Stewards of Professional Excellence and Responsibility for the Investment Community

The CFA Society of St. Louis leads the investment profession locally by setting the highest standards of ethics, education, and professional excellence. Stewards of Professional Excellence and Responsibility for the Investment Community. America Needs Clean and Abundant Energy:

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Stewards of Professional Excellence and Responsibility for the Investment Community

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  1. The CFA Society of St. Louis leads the investment profession locally by setting the highest standards of ethics, education, and professional excellence. Stewards of Professional Excellence and Responsibility for the Investment Community

  2. America Needs Clean and Abundant Energy: America’s Natural Gas Delivers John W. Somerhalder II Chairman, American Gas Association Chairman, President and CEO, AGL Resources CFA Society of St. Louis March 17, 2011

  3. Challenges and Opportunities … Our SUPPLY picture is the brightest it has been in decades Now, more than ever, take advantage and grow DEMAND PIPELINE SAFETY remains our highest priority

  4. … And How We Will Meet Them Explore new market opportunities Emphasize direct use of natural gas to grow core residential and commercial markets Work with DOT on reauthorization of an effective, flexible and cost effective Pipeline Safety Act Work with DOT and state regulators on implementation of a sound Distribution Integrity Management Program

  5. Additional Priorities … Greater funding support for R&D Restore LIHEAP to fully appropriated $5.1 billion Ensure a level playing field in the area of codes and standards Convince DOE to use full-fuel-cycle measurement in setting energy efficiency and GHG emission standards

  6. 2010 Daily Dry Natural Gas Production(after extraction losses) Source: Bentek Energy LLC, Energy Market Fundamentals, December 31, 2010. 6

  7. Reserves and Production of Dry Natural Gas in the United States (TCF) EIA Dry Gas Year Reserves Production 1990 169 17.8 1992 165 17.8 1994 164 18.8 1996 166 18.9 1998 164 19.0 2000 177 19.2 2002 187 18.9 2004 193 18.6 2006 211 18.5 2008 245 20.4 2009 273 21.6 7

  8. U.S. Natural Gas Supply (2007 - 2010) Source: Bentek Energy LLC, Energy Market Fundamentals. 8

  9. U.S. Natural Gas Storage 9

  10. U.S. Storage Capacity Working Gas (Bcf) Working Gas (Bcf) Estimated Peak CapacityDesign Capacity April 2009 3,889 4,313 April 2010 4,049 4,364 Since 2000, the Federal Energy Regulatory Commission has certificated more than 961 Bcf of working gas capacity Source: Estimates of Peak Underground Working Gas Storage Capacity in the United States-April 2009 Update, Energy Information Administration, September 2010 10

  11. PGC Resource Assessments, 1990-2008 Total Potential Gas Resources (mean values) 11 Data source: Potential Gas Committee (2009)

  12. U.S. Shale Gas Production Source: Navigant Consulting, Inc. 12

  13. Shale Basins and the U.S. Pipeline Grid Source: American Clean Skies Foundation. 13

  14. U. S. Natural Gas Prices Source: Energy Information Administration, U.S. Department of Energy. 14

  15. Growing Demand Explore new market opportunities based on the clear supply, price, environmental, and energy efficiency advantages of the direct use of natural gas in America’s homes and businesses

  16. Priority Pathways for Residential and Commercial Natural Gas Growth

  17. The Direct Use of Natural Gas in America’s Homes and Businesses • The most efficient, cost-effective and cleanest use of energy • From source to site, electricity loses approx. 70% of its useable energy — natural gas loses only about 10% • Helps avoid building new generation capacity and transmission lines, further reducing carbon emissions and potentially saving hundreds of billions of dollars • It also drives new customer growth in our core markets 17

  18. U.S. Natural Gas Pipeline Infrastructure 18

  19. Pipeline Safety in Perspective • $7 billion spent annually on safety-related inspections and maintenance activities • Between 2000-2009, gas transmission averaged just 6 serious incidents per year, while gas distribution averaged just 35 serious incidents annually • Natural gas transportation accounted for less than 0.03% of the 43,000 U.S. transportation deaths in 2007 • Although the industry is rightly proud of its overall safety performance, any incident resulting in a loss of life is one too many 19

  20. AGA’s 2011 Pipeline Safety Priorities • Working closely with DOT and Congress to • reauthorize and implement a Pipeline Safety Act that is effective, flexible, cost-effective and ensures that the highest safety priorities are given the greatest focus and resources • Work with DOT and state pipeline safety officials to complete the implementation of the Distribution Integrity Management Program 20

  21. Consistent, long-term track record of creating shareholder value Focus on fundamentals, safety and improvement Healthy balance sheets and positive earning trends Utility Investment = Solid Value Return Priority on demand growth to fully leverage abundant supply

  22. Utilities = Consistent & Solid Dividends • Most utilities have paid dividends continuously for more than 50 years • 2-5% average annual growth rate • 15% maximum dividend tax rate extended for two years!

  23. Average Utility RatingsExceed Corporate Ratings Source: Standard & Poor’s

  24. Average Gas Utility RatingsExceed Corporate Ratings Source: Standard & Poor’s

  25. 6.00% 4.00% 2.00% 3.84% 1.41% 0.00% AGA Index DJUtili S&P 500 Average Annual Total Shareholder ReturnAGA Index vs. Dow Jones Utilities and S&P 500Jan 2001 to Jan 2011 3.72% 1 Year Return (as of 12/31/10) AGA Index 12.37% DJUtili 6.46% 25

  26. America’s Natural Gas Delivers

  27. America Needs Clean and Abundant Energy: America’s Natural Gas Delivers John W. Somerhalder II Chairman, American Gas Association Chairman, President and CEO, AGL Resources CFA Society of St. Louis March 17, 2011

  28. Please Make Plans to Join Us in May!

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