SlideShare une entreprise Scribd logo
1  sur  15
Télécharger pour lire hors ligne
Gas Industry 101

Cascade Natural Gas Corporation

      Joe Silveira, CMA
Natural Gas Facts
• Natural Gas
  (national) serves:
    - 65 million homes
    - 5 million
      businesses
    - 207,000 factories
    - 1,800 electric
      generating units
• Natural Gas
  accounts for one-
  fourth of all energy
  used in the United
  States

                           Gas Industry 101
Natural Gas Facts
• Considered the cleanest fossil fuel
• On an energy equivalent basis emits 45% less CO2 than coal;
  27% less than oil

 • Efficient:
   90% of
   natural gas
   produced is
   delivered to
   customers in
   usable
   energy
   (cycle)

                                              Gas Industry 101
Natural Gas Facts
•In 2010, 88% of natural gas consumed in
 the U.S. was produced in U.S.
•Natural gas resource base is more than 2
 trillion cubic feet, considered to be a 100-
 year supply
•Roughly 40 percent of consumption in the
 U.S. occurs between December and March




                                   Gas Industry 101
Natural Gas Facts
      • There are nearly 2.4
        million miles of pipeline
        that transport natural gas
        in the U.S.
      • According to NTSB,
        pipelines are the safest
        form of energy
        transportation.
      • Natural gas companies
        spend about $7 billion a
        year on safety programs.
                      Gas Industry 101
Cascade Natural Gas




                Gas Industry 101
Natural Gas Facts




               Gas Industry 101
Cascade Natural Gas
• Company started in 1953
   • Acquired by MDU Resources Group in 2007
   • Moved headquarters from Seattle to Kennewick in 2010
• Investor Owned Utility (IOU)
   • vs.. Public Utility District (PUD)
       • Both have the same ‘public’ service responsibility
       • PUD Independent of city/county gov’t
       • IOU have Income/Property/Corporate/Franchise taxes; PUD have payments in lieu
         of taxes
• Gas Purchases
   • Long term pipeline capacity contracts.
   • Purchase core demand covering a 3 year period. (90/60/30)
       • We set contract terms and send out for bid
       • Cover additional demand needs with spot or first of the month purchases.



                                                                     Gas Industry 101
Cascade Natural Gas
             100%
             90%
             80%
             70%
             60%
             50%             Non-Core
             40%
                             Industrial
             30%
                             Commercial
             20%
                             Residential
             10%
              0%




                    Gas Industry 101
General Factors
• Safety and Reliability Service Standards
• No formal industry specific accounting education (OJT)
• Obligation to serve
   – All willing customers (i.e. willing to follow tariff)
   – Special provisions apply to low income customers

• Complex long range planning
   – IRP (Integrated Resource Plan) 20 YR Horizon
        • Estimate demand and plant construction plans
        • Factor weather, economy, demographics, etc.
        • Provide service on demand and contract for capacity and gas so estimates
          must be reliable


                                                                Gas Industry 101
General Factors
• Capital Intensive
   – Roughly: $2 capital investment             $1 revenue
       • Compared to typical manufacturing of $.10- $.15 investment    $1 revenue

• High Proportion of fixed costs
   – Depreciation, property taxes, interest on debt

• Regulatory Lag
   – Deferred items (i.e. gas cost recovery) are collected in the
     following PGA year
   – Difficult to adjust quickly to changing conditions (Rate Case)

• 4 sets of Books!
   – FERC, GAAP, Tax, Managerial
                                                               Gas Industry 101
Accounting & Regulation
• Federal Energy Regulatory Commission (FERC)
   – Uniform System of Accounts
   – AFUDC debt and equity
   – Above and Below the line

• Rate regulation
   – State Commissions (WUTC, OPUC)
       • Serve as a substitute for competition
       • Guided by the concepts of fairness and equity (ratepayer and utility)
       • Each may have different drivers for rate design (i.e. conservation)
       • Determine the earnings level of the utility in their respective jurisdiction

   – Rate regulation requires accounting data (tool for regulators)
       • Regulatory commissions require uniformity of accounting (FERC accounts)

                                                                       Gas Industry 101
Accounting & Regulation
• Rate design considerations
  – Once the revenue requirement is set, rates need to be designed to
    allocate the revenue across the customer classes.
     • Cost of service study (rate spread)
     • Fixed/Variable combination has a service charge component as well as
       volumetric (usage) charges (rate design)
     • Equitable and Fair (avoid ‘rate shock’)
     • Earnings stability
     • Consultants!!!

  – Incentives
     • Earnings sharing
     • Decoupling


                                                            Gas Industry 101
Accounting & Regulation
• Cannot make money on fuel
  – Natural gas cost a straight pass through - Purchased Gas
    Adjustment (PGA)

• Revenue
  – Regulated: Operating Expenses + (Rate Base*Allowed Return)
  – Non-regulated projects (i.e. pipeline work)

• Rate base
  – Consists primarily of Plant in Service (PIS) and a portion of working
    capital.
  – Utilities are regulated on how much they can earn on rate base
    each year, generally 9-12%
      • This is what they are allowed to earn, NOT guaranteed!

                                                                 Gas Industry 101
Questions and Discussion
       joe.silveira@cngc.com



       Gas Industry 101

   Cascade Natural Gas Corporation
         Joe Silveira, CMA

Contenu connexe

Similaire à IMA Presentation - Natural Gas 101 2012 03 20

Government Policies and Market Analysis for Manufacturing in Canada
Government Policies and Market Analysis for Manufacturing in CanadaGovernment Policies and Market Analysis for Manufacturing in Canada
Government Policies and Market Analysis for Manufacturing in Canadapaul young cpa, cga
 
Edison International - Business Update November 2016
Edison International - Business Update November 2016Edison International - Business Update November 2016
Edison International - Business Update November 2016EdisonInternational
 
Oil shale economics_fact_sheet usa
Oil shale economics_fact_sheet usaOil shale economics_fact_sheet usa
Oil shale economics_fact_sheet usaDmitry Tseitlin
 
Syn tawa pre development loan opportunity 12.16.15
Syn tawa pre development loan opportunity 12.16.15Syn tawa pre development loan opportunity 12.16.15
Syn tawa pre development loan opportunity 12.16.15Patrick Sweeney
 
ETS Slide Presentation
ETS Slide PresentationETS Slide Presentation
ETS Slide PresentationRyan Slack
 
ETS Specialty Tax Update & Final Repair Overview
ETS Specialty Tax Update & Final Repair OverviewETS Specialty Tax Update & Final Repair Overview
ETS Specialty Tax Update & Final Repair OverviewRyan Slack
 
Introduction to Renewable Energy Credits & Carbon Offsets
Introduction to Renewable Energy Credits & Carbon OffsetsIntroduction to Renewable Energy Credits & Carbon Offsets
Introduction to Renewable Energy Credits & Carbon OffsetsRenewable Choice Energy
 
PVA Jefferies Investor Presentation 2012
PVA Jefferies Investor Presentation 2012PVA Jefferies Investor Presentation 2012
PVA Jefferies Investor Presentation 2012PennVirginiaCorp
 
So Cal Gas General Session
So Cal Gas  General  SessionSo Cal Gas  General  Session
So Cal Gas General Sessionkiakaha
 
Global CCS Institute - Day 2 - Keynote - CCUS in the United States
Global CCS Institute - Day 2 - Keynote - CCUS in the United StatesGlobal CCS Institute - Day 2 - Keynote - CCUS in the United States
Global CCS Institute - Day 2 - Keynote - CCUS in the United StatesGlobal CCS Institute
 
Global Hunter Securities GHS 100 Energy Conference
Global Hunter Securities GHS 100 Energy ConferenceGlobal Hunter Securities GHS 100 Energy Conference
Global Hunter Securities GHS 100 Energy ConferenceCompany Spotlight
 
Michael Bowen Oil & Gas Underwriting&Analyzing the Return Potential
Michael Bowen Oil & Gas Underwriting&Analyzing the Return PotentialMichael Bowen Oil & Gas Underwriting&Analyzing the Return Potential
Michael Bowen Oil & Gas Underwriting&Analyzing the Return PotentialMichael Bowen oil and gas
 
Energy Sector - Oil and Gas - Canada - June 2016
Energy Sector - Oil and Gas - Canada - June 2016Energy Sector - Oil and Gas - Canada - June 2016
Energy Sector - Oil and Gas - Canada - June 2016paul young cpa, cga
 
Island states - Renewable Energy Policy Pioneers
Island states - Renewable Energy Policy PioneersIsland states - Renewable Energy Policy Pioneers
Island states - Renewable Energy Policy PioneersLeonardo ENERGY
 
WindFarmFeasibility (1).ppt
WindFarmFeasibility (1).pptWindFarmFeasibility (1).ppt
WindFarmFeasibility (1).pptssuserfdb06f
 

Similaire à IMA Presentation - Natural Gas 101 2012 03 20 (20)

Government Policies and Market Analysis for Manufacturing in Canada
Government Policies and Market Analysis for Manufacturing in CanadaGovernment Policies and Market Analysis for Manufacturing in Canada
Government Policies and Market Analysis for Manufacturing in Canada
 
Edison International - Business Update November 2016
Edison International - Business Update November 2016Edison International - Business Update November 2016
Edison International - Business Update November 2016
 
Oil shale economics_fact_sheet usa
Oil shale economics_fact_sheet usaOil shale economics_fact_sheet usa
Oil shale economics_fact_sheet usa
 
Geo Epc Merrigan
Geo Epc MerriganGeo Epc Merrigan
Geo Epc Merrigan
 
Syn tawa pre development loan opportunity 12.16.15
Syn tawa pre development loan opportunity 12.16.15Syn tawa pre development loan opportunity 12.16.15
Syn tawa pre development loan opportunity 12.16.15
 
ETS Slide Presentation
ETS Slide PresentationETS Slide Presentation
ETS Slide Presentation
 
ETS Specialty Tax Update & Final Repair Overview
ETS Specialty Tax Update & Final Repair OverviewETS Specialty Tax Update & Final Repair Overview
ETS Specialty Tax Update & Final Repair Overview
 
Energy security
Energy securityEnergy security
Energy security
 
Introduction to Renewable Energy Credits & Carbon Offsets
Introduction to Renewable Energy Credits & Carbon OffsetsIntroduction to Renewable Energy Credits & Carbon Offsets
Introduction to Renewable Energy Credits & Carbon Offsets
 
Meec introductory presentation jan 2015 copy
Meec introductory presentation jan 2015 copyMeec introductory presentation jan 2015 copy
Meec introductory presentation jan 2015 copy
 
PVA Jefferies Investor Presentation 2012
PVA Jefferies Investor Presentation 2012PVA Jefferies Investor Presentation 2012
PVA Jefferies Investor Presentation 2012
 
Wesco case
Wesco caseWesco case
Wesco case
 
So Cal Gas General Session
So Cal Gas  General  SessionSo Cal Gas  General  Session
So Cal Gas General Session
 
Global CCS Institute - Day 2 - Keynote - CCUS in the United States
Global CCS Institute - Day 2 - Keynote - CCUS in the United StatesGlobal CCS Institute - Day 2 - Keynote - CCUS in the United States
Global CCS Institute - Day 2 - Keynote - CCUS in the United States
 
Global Hunter Securities GHS 100 Energy Conference
Global Hunter Securities GHS 100 Energy ConferenceGlobal Hunter Securities GHS 100 Energy Conference
Global Hunter Securities GHS 100 Energy Conference
 
Michael Bowen Oil & Gas Underwriting&Analyzing the Return Potential
Michael Bowen Oil & Gas Underwriting&Analyzing the Return PotentialMichael Bowen Oil & Gas Underwriting&Analyzing the Return Potential
Michael Bowen Oil & Gas Underwriting&Analyzing the Return Potential
 
Energy Sector - Oil and Gas - Canada - June 2016
Energy Sector - Oil and Gas - Canada - June 2016Energy Sector - Oil and Gas - Canada - June 2016
Energy Sector - Oil and Gas - Canada - June 2016
 
Island states - Renewable Energy Policy Pioneers
Island states - Renewable Energy Policy PioneersIsland states - Renewable Energy Policy Pioneers
Island states - Renewable Energy Policy Pioneers
 
CEE 8.pptx
CEE 8.pptxCEE 8.pptx
CEE 8.pptx
 
WindFarmFeasibility (1).ppt
WindFarmFeasibility (1).pptWindFarmFeasibility (1).ppt
WindFarmFeasibility (1).ppt
 

IMA Presentation - Natural Gas 101 2012 03 20

  • 1. Gas Industry 101 Cascade Natural Gas Corporation Joe Silveira, CMA
  • 2. Natural Gas Facts • Natural Gas (national) serves: - 65 million homes - 5 million businesses - 207,000 factories - 1,800 electric generating units • Natural Gas accounts for one- fourth of all energy used in the United States Gas Industry 101
  • 3. Natural Gas Facts • Considered the cleanest fossil fuel • On an energy equivalent basis emits 45% less CO2 than coal; 27% less than oil • Efficient: 90% of natural gas produced is delivered to customers in usable energy (cycle) Gas Industry 101
  • 4. Natural Gas Facts •In 2010, 88% of natural gas consumed in the U.S. was produced in U.S. •Natural gas resource base is more than 2 trillion cubic feet, considered to be a 100- year supply •Roughly 40 percent of consumption in the U.S. occurs between December and March Gas Industry 101
  • 5. Natural Gas Facts • There are nearly 2.4 million miles of pipeline that transport natural gas in the U.S. • According to NTSB, pipelines are the safest form of energy transportation. • Natural gas companies spend about $7 billion a year on safety programs. Gas Industry 101
  • 6. Cascade Natural Gas Gas Industry 101
  • 7. Natural Gas Facts Gas Industry 101
  • 8. Cascade Natural Gas • Company started in 1953 • Acquired by MDU Resources Group in 2007 • Moved headquarters from Seattle to Kennewick in 2010 • Investor Owned Utility (IOU) • vs.. Public Utility District (PUD) • Both have the same ‘public’ service responsibility • PUD Independent of city/county gov’t • IOU have Income/Property/Corporate/Franchise taxes; PUD have payments in lieu of taxes • Gas Purchases • Long term pipeline capacity contracts. • Purchase core demand covering a 3 year period. (90/60/30) • We set contract terms and send out for bid • Cover additional demand needs with spot or first of the month purchases. Gas Industry 101
  • 9. Cascade Natural Gas 100% 90% 80% 70% 60% 50% Non-Core 40% Industrial 30% Commercial 20% Residential 10% 0% Gas Industry 101
  • 10. General Factors • Safety and Reliability Service Standards • No formal industry specific accounting education (OJT) • Obligation to serve – All willing customers (i.e. willing to follow tariff) – Special provisions apply to low income customers • Complex long range planning – IRP (Integrated Resource Plan) 20 YR Horizon • Estimate demand and plant construction plans • Factor weather, economy, demographics, etc. • Provide service on demand and contract for capacity and gas so estimates must be reliable Gas Industry 101
  • 11. General Factors • Capital Intensive – Roughly: $2 capital investment $1 revenue • Compared to typical manufacturing of $.10- $.15 investment $1 revenue • High Proportion of fixed costs – Depreciation, property taxes, interest on debt • Regulatory Lag – Deferred items (i.e. gas cost recovery) are collected in the following PGA year – Difficult to adjust quickly to changing conditions (Rate Case) • 4 sets of Books! – FERC, GAAP, Tax, Managerial Gas Industry 101
  • 12. Accounting & Regulation • Federal Energy Regulatory Commission (FERC) – Uniform System of Accounts – AFUDC debt and equity – Above and Below the line • Rate regulation – State Commissions (WUTC, OPUC) • Serve as a substitute for competition • Guided by the concepts of fairness and equity (ratepayer and utility) • Each may have different drivers for rate design (i.e. conservation) • Determine the earnings level of the utility in their respective jurisdiction – Rate regulation requires accounting data (tool for regulators) • Regulatory commissions require uniformity of accounting (FERC accounts) Gas Industry 101
  • 13. Accounting & Regulation • Rate design considerations – Once the revenue requirement is set, rates need to be designed to allocate the revenue across the customer classes. • Cost of service study (rate spread) • Fixed/Variable combination has a service charge component as well as volumetric (usage) charges (rate design) • Equitable and Fair (avoid ‘rate shock’) • Earnings stability • Consultants!!! – Incentives • Earnings sharing • Decoupling Gas Industry 101
  • 14. Accounting & Regulation • Cannot make money on fuel – Natural gas cost a straight pass through - Purchased Gas Adjustment (PGA) • Revenue – Regulated: Operating Expenses + (Rate Base*Allowed Return) – Non-regulated projects (i.e. pipeline work) • Rate base – Consists primarily of Plant in Service (PIS) and a portion of working capital. – Utilities are regulated on how much they can earn on rate base each year, generally 9-12% • This is what they are allowed to earn, NOT guaranteed! Gas Industry 101
  • 15. Questions and Discussion joe.silveira@cngc.com Gas Industry 101 Cascade Natural Gas Corporation Joe Silveira, CMA