The Climate Change Issue: An Opportunity for a Bi-Lateral Approach May 23, 2007 Washington, D.C.

Transcription

1 The Climate Change Issue: An Opprtunity fr a Bi-Lateral Apprach May 23, 2007 Washingtn, D.C. Regulatry Harmnizatin and Emissins Trading David J. Manning Executive Vice President & Chief Envirnmental Officer KeySpan Crpratin

2 Views n the Envirnment* Americans place a pririty n prtecting the envirnment When a trade ff has t be made, which is mre imprtant t yu: stimulating the ecnmy r prtecting the envirnment Ecnmy 36%; Envirnment 52%; Bth 8%; N pinin 4% Which shuld be a higher pririty fr gvernment: increasing the prductin f petrleum, cal and natural gas, r encuraging peple t cnserve energy? Increasing prductin 21%; Encuraging cnservatin 68%; Bth 9%; N pinin 2% Americans are willing t make sacrifices In rder t cut dwn n energy cnsumptin and reduce glbal warming, d yu favr r ppse requiring car manufacturers t prduce cars that are mre energy efficient? Favr 92%; Oppse 6%; N pinin 2% In rder t reduce glbal warming, wuld yu be willing r nt willing t pay mre fr electricity if it were generated by renewable energy surces like slar and wind? Willing 75%; Nt willing 20%; N pinin 4% *Surce: New Yrk Times / CBS News Pll; based n natinwide telephne interviews with 1,052 adults, cnducted April 20-24,

3 Patchwrk apprach t CO 2 reductin likely t lead t ecnmic and cmpetitive inefficiencies Western Reginal Climate Actin Initiative Califrnia mtr vehicle CO 2 emissins standards (plus VT, MA, RI, CT, NJ, ME) Pwering the Plains States develping greenhuse gas registries Climate Actin Plans (includes all states in reginal prgrams except N & S Dakta) Reginal Greenhuse Gas Initiative (RGGI) RPS standards [plus VT (gal), MA, RI, CT, NJ, DE, MD, D.C.]

4 Leakage A Critical Cncern Reginal prgrams encurage greater imprts f energy int the regulated regin frm lwer cst generatrs in nn-co 2 regulated states Diminishes prgram s envirnmental effectiveness RGGI estimates that 30% f the net CO 2 reductins in the RGGI regin will re-emerge in the nn regulated upwind area. Mre if allwance prices g higher than predicted Cllateral emissins f SO 2, NO x and Mercury drift int Nrtheast Transfer f significant revenue ut f the state Ecnmic harm t higher cst, clean generatrs Slutins? Emissins prtfli standard fr lad serving entities (LSE) Establish maximum CO 2 emissin rate limit n all imprted pwer Cmprehensive, unifrm natinal prgram Prevailing winds 4

5 Messages Frm The Gvernr The Mayr The Gvernatr 5

6 Rate Regulatin / Decupling Will Encurage Energy Efficiency Traditinal regulatin: Rewards sales / encurages cnsumptin Discurages utility supprt fr efficiency Recvery f fixed csts uncertain Rate decupling: Severs link between prfit and sales Rewards safe, reliable service, public gals (the envirnment) Better aligns cnsumer, sharehlder interests Prmtes investment in least cst efficiency Assures recvery f fixed csts Reduces energy prices by reducing demand Imprves reliability less stress n energy systems NYS PSC calls fr electric and gas utilities t develp prpsals fr decupling (4/18/07) 6

7 Climate Legislatin 110 th Cngress Vluntary prgram Technlgybased apprach Intensity-based cap-and-trade Reginal capand-trade Abslute capand-trade Abslute capand-trade Abslute capand-trade Abslute capand-trade Bush Vluntary Prgram Murkwski (S. 298) Bingaman (rev. 01/07) RGGI Feinstein (S. 317) Carper (S. 1177) 1 Lieberman- McCain (S. 280) 2 Sanders-Bxer (S. 309) 3 Targets Type Vluntary; Intensity based N reductin targets, technlgy-based Mandatry; Intensity based Mandatry; Abslute reductins Mandatry; Abslute reductins Mandatry; Abslute reductins; Perf. std. Mandatry; Abslute reductins Mandatry; Abslute reductins Targets Pwer Sectr Reductins 18% in 1 st 10 yrs >500 MMTCO 2 by 2025 TBD TBD 239 mmt CO 2 in mmt CO 2 in 2015? 239 mmt CO 2 in 2010[1] 446 mmt CO 2 in 2015? 328 mmt CO 2 in 2010 (apprx.) >708 mmt CO 2 in 2010 Targets Baseline/ Timeframe %/yr. fr ; 3%/yr. fr by % belw by levels by 2011; 2001 levels by levels by 2015; 19% belw by levels by 2012; 67% belw by levels by 2020; 80% belw by 2050 [1] The mercury reductin requirements under S intrduced in 2007 make the ecnmic impacts mre significant n the pwer sectr than S. 280, even thugh the CO 2 reductins are less. 2 H.R. 620, intrduced by Reps. Olver and Gilchrest in 2007, is similar t the Lieberman-McCain prpsal. 3 H.R. 1590, intrduced by Rep. Waxman in 2007, is similar t the Sanders-Bxer prpsal. 7

8 The Gracle Calls Canada s Plan A Fraud 8

9 Disclaimer The facts and infrmatin prvided in this presentatin are fr general infrmatinal purpses nly. This infrmatin is nt intended t be and shuld nt be cnstrued in any way as part f an ffering r slicitatin f securities. This presentatin des nt cntain any advice, recmmendatins, prpsals, representatins, warranties, guarantees, prmises r bligatins f KeySpan. Althugh it is believed that the facts and infrmatin cntained in this presentatin are crrect, KeySpan des nt warrant r make any representatins as t the accuracy, validity r cmpleteness f any facts r infrmatin cntained in this presentatin. This presentatin may include frward-lking statements which reflect numerus assumptins and estimates and invlve a number f risks and uncertainties. Fr these statements, KeySpan claims the prtectin f the safe harbr fr frward-lking statements prvided by the Private Securities Litigatin Refrm Act f There are pssible develpments that culd cause KeySpan s actual results t differ materially frm thse frecast r implied in the frwardlking statements, which are current nly as f the date f this presentatin. KeySpan disclaims any intentin r bligatin t update r revise any frward-lking statements, whether as a result f new infrmatin, future events r therwise. Amng the factrs that culd cause actual results t differ materially are: general ecnmic cnditins, especially in the Nrtheast United States; available surces and csts f fuel; vlatility f energy prices in a deregulated market envirnment as well as in the surce f natural gas and fuel used t generate electricity; ptential write-dwn f KeySpan s investment in natural gas prperties when natural gas prices are depressed r if KeySpan has significant dwnward revisins in its estimated prved gas reserves; federal and state regulatry initiatives that increase cmpetitin, threaten cst and investment recvery and impact rate structure; KeySpan s ability t successfully reduce its cst structures; the exercise by LIPA f its right t acquire KeySpan s Lng Island generatin peratins and the deplyment f the prceeds received in cnnectin therewith; implementatin f new accunting standards; the successful integratin f KeySpan s subsidiaries, including Eastern, EnergyNrth and their subsidiaries; the degree t which KeySpan develps unregulated business ventures, as well as federal and state regulatry plicies affecting KeySpan s ability t retain and perate thse business ventures; KeySpan s ability t identify and make cmplementary acquisitins, as well as the successful integratin f thse acquisitins; inflatinary trends and interest rates; and risks detailed frm time t time in reprts and ther dcuments filed by KeySpan with the Securities and Exchange Cmmissin. KeySpan will nt be liable fr any claim r damage, direct r indirect, special r cnsequential, arising ut f the interpretatin, reliance upn r ther use f the infrmatin cntained in this presentatin. Unless therwise specified, n permissin t cpy, redistribute, reprduce r republish, in any frm, any 9 infrmatin in this presentatin is granted.

10 The Climate Change Issue: An Opprtunity fr a Bi-Lateral Apprach May 23, 2007 Washingtn, D.C. Regulatry Harmnizatin and Emissins Trading David J. Manning Executive Vice President & Chief Envirnmental Officer KeySpan Crpratin