Evolving Roles and Evolving Roles and Responsibilities of Gas Utilities Responsibilities of Gas Utilities

in Today’s Marketsin Today’s Markets

Interstate Gas Supply, Inc.Interstate Gas Supply, Inc.

(IGS Energy®)(IGS Energy®)

November 13, 2007November 13, 2007

22

IGS Energy’s Role IGS Energy’s Role Evolving Natural Gas MarketEvolving Natural Gas Market

IGS Energy BackgroundIGS Energy Background

IGS Energy Participation in Choice ProgramsIGS Energy Participation in Choice Programs

Role of the Natural Gas Suppliers in Open Role of the Natural Gas Suppliers in Open MarketsMarkets

Other Products and ServicesOther Products and Services

IGS EnergyIGS Energy Background Background

44

IGS Energy BackgroundIGS Energy Background IGS Energy is a privately held company.IGS Energy is a privately held company. Dublin, Ohio based IGS Energy serves @ 670,000 Dublin, Ohio based IGS Energy serves @ 670,000

natural gas customers in Ohio, Michigan, Illinois, natural gas customers in Ohio, Michigan, Illinois, Kentucky, New York and Pennsylvania.Kentucky, New York and Pennsylvania.

IGS Energy began in 1989, founded by Marv and Scott IGS Energy began in 1989, founded by Marv and Scott White. Scott White continues today as President and White. Scott White continues today as President and CEO. CEO.

IGS began as a Commercial & Industrial Supplier. IGS began as a Commercial & Industrial Supplier. Through the development of Ohio’s Choice Program, IGS Through the development of Ohio’s Choice Program, IGS

moved into the residential and small commercial space moved into the residential and small commercial space beginning in 1999.beginning in 1999.

Today, IGS focuses on natural gas products and Today, IGS focuses on natural gas products and services, with its primary focus on residential customers. services, with its primary focus on residential customers.

55

IGS Energy TimelineIGS Energy Timeline1989

Company formed, C&I supply programs in Ohio

1999

Ohio developed Choice Program, Columbia Gas of Ohio and DEO

2000s

Ohio (COH, DEO, VECTREN, Duke)

Michigan (MichCon, Consumers)

Illinois (Nicor)

Kentucky (CKY)

Pennsylvania (CPA)

New York (National Grid, Central Hudson)

2006

Warranty Company, The Manchester Group, started

Provides utility line warranty products throughout Midwest

66

IGS Energy’s RoleIGS Energy’s Role Choice Programs Choice Programs

88

Customer is the focusCustomer is the focus

Customers are at the Customers are at the centercenter Utility, Commission Utility, Commission

and competitive and competitive suppliers all have a suppliers all have a rolerole

• Commission oversight, Commission oversight, arbiter, and final wordarbiter, and final word

• Utility focus on pipes Utility focus on pipes and system serviceand system service

• Competitive Suppliers Competitive Suppliers on commodity supply on commodity supply and customer serviceand customer service

UtilityCompetitive

Supplier

Commission

Customer

99

Competition ContinuedCompetition Continued

As competitive markets develop, customers As competitive markets develop, customers begin to drive demand which translates into a begin to drive demand which translates into a greater array of offers from competitive greater array of offers from competitive suppliers, with more diversity of offerssuppliers, with more diversity of offers Duration of the product, month to month, short term Duration of the product, month to month, short term

(typically under 6 months) longer term (12 months up (typically under 6 months) longer term (12 months up to 5 years)to 5 years)

Variety with respect to pricing, variable, fixed, Variety with respect to pricing, variable, fixed, summer, winter, guaranteed savings, caps, collars summer, winter, guaranteed savings, caps, collars and other productsand other products

1010

IGS Energy’s RoleIGS Energy’s Role

IGS believes that as competitive natural IGS believes that as competitive natural gas markets continue to develop for the gas markets continue to develop for the residential and small commercial residential and small commercial customers, involvement of competitive customers, involvement of competitive natural gas suppliers can help create a natural gas suppliers can help create a paradigm that enables customers to paradigm that enables customers to capture the benefits of open markets. capture the benefits of open markets.

IGS’ involvement is both independent and IGS’ involvement is both independent and also through group activities. also through group activities.

1111

Energy Choice GroupsEnergy Choice Groups IGS Participates in various IGS Participates in various

energy groups. Group efforts energy groups. Group efforts are most pronounced in Ohio, are most pronounced in Ohio, Illinois and New York. Illinois and New York. Purpose of a group effort is to Purpose of a group effort is to work through the regulatory work through the regulatory process to evaluate programs process to evaluate programs and offer suggestions, when and offer suggestions, when appropriate, to level the appropriate, to level the playing field between Choice playing field between Choice and Sales. Main goal is to and Sales. Main goal is to create parity between create parity between programs. With parity, programs. With parity, competitive natural gas competitive natural gas markets are successful. markets are successful.

Ohio:Ohio: Ohio Gas Marketers Ohio Gas Marketers Group (OGM)Group (OGM)

New York:New York: New York New York State Energy Marketers State Energy Marketers Coalition (NYSEMC)Coalition (NYSEMC)

Illinois:Illinois: Retail Gas Suppliers Retail Gas Suppliers (RGS)(RGS)

Michigan:Michigan: ad hoc group ad hoc group

Pennsylvania:Pennsylvania: ad hoc group, ad hoc group, active in S.E.A.R.C.H. processactive in S.E.A.R.C.H. process

1212

Choice continuedChoice continued

In Ohio for example, OGM has In Ohio for example, OGM has been involved in DEO Auction been involved in DEO Auction process, both Phase I and II, process, both Phase I and II, as well as other stakeholder as well as other stakeholder processes, regulatory processes, regulatory initiatives (including rate cases initiatives (including rate cases and MP Audits)and MP Audits)

Group involvement permits the Group involvement permits the groups to focus the Choice groups to focus the Choice issues, and provide (at times) issues, and provide (at times) cohesive feedback and cohesive feedback and positions positions

In Ohio the result has been In Ohio the result has been advancement of the advancement of the competitive market through competitive market through equity, providing increasing equity, providing increasing benefits to consumersbenefits to consumers

Ohio Gas Choice ProgramOhio Gas Choice Program

Competition is vibrant in Ohio, with Competition is vibrant in Ohio, with strong switching rates for natural gas:strong switching rates for natural gas:

DEO @ 70%DEO @ 70%COH @ 47%COH @ 47%

Vectren @ 30%Vectren @ 30%Duke @ 27% Duke @ 27%

1414

InnovationInnovation

Because of the strong competitive market Because of the strong competitive market in Ohio, IGS began looking for new and in Ohio, IGS began looking for new and unique ways to differentiate itself from the unique ways to differentiate itself from the competition and provide benefits to competition and provide benefits to customerscustomers

1515

Home Warranty ProductsHome Warranty Products

Home line warranty Home line warranty products became part products became part of the IGS product of the IGS product offering as a means offering as a means to differentiate itself to differentiate itself and add value to and add value to customerscustomers

1616

Home line warrantyHome line warranty

Additional value added feature that is only Additional value added feature that is only available from IGS as a result of the available from IGS as a result of the continuing development of competitive continuing development of competitive natural gas markets and its involvement as natural gas markets and its involvement as a choice supplier in those markets. a choice supplier in those markets.

1717

ContactsContacts

For more information contact:For more information contact:

Vincent A. ParisiVincent A. Parisi

(614) 734-2649(614) 734-2649

vparisi@igsenergy.comvparisi@igsenergy.com