ENERGY CAPITAL MARKETS REPORT Stock Performance! Sector Evaluations! Asset Sales! Mergers & Acquisitions! Securities Underwriting

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1 ENERGY CAPITAL MARKETS REPORT Stock Performance! Sector Evaluations! Asset Sales! Mergers & Acquisitions! Securities Underwriting FEBRUARY 2012 UNDERWRITING & FINANCIAL RESTRUCTURING A number of companies issued bonds during January to retire higher cost debt. A Vectren subsidiary issued $100 million of 5% notes to repay short-term borrowing and refinance long-term debt. ONEOK sold 4.25% bonds to repay a commercial paper program, and Energy Transfer Partners issued a tender offer to repurchase bonds that carry interest as high as 9.7%. MERGERS & ACQUISITIONS On the merger and acquisition front, the Connecticut state utility regulator set hearings and a review of the Northeast Utilities/NSTAR merger, saying a decision was likely by early April. Kinder Morgan Energy Partners increased its share of a marine oil terminal to be located near Houston. Energy Transfer Partners closed on the sale of its propane unit to Amerigas, and Westmoreland Coal Co. acquired a major Wyoming coal mine from Chevron. STOCKS AND COMMODITIES The Rudden Composite Index of utility stocks lost 1.15% during January while the S&P 500 Index gained 2.8% for the month. Master Limited Partnerships (MLPs) gained 1.8% in January while all other segments of the Rudden Composite posted losses. Electric-Merchant was the weakest performing segment, losing 8.7% during the month and 19.4% for the 52 weeks ending January 31. The Rudden Composite gained 10.3% for the 52 weeks, substantially outperforming the S&P which gained 2.8% for the period. Except for the above-mentioned Electric- Merchant sector, all other categories had gains for the 52 weeks. Natural Gas Transmission and Distribution- Diversified was the strongest performer with a 19.1% gain. For a further discussion, see page 10. The Dow Jones Industrial Average closed out January at 12,633, up 415 points or 3.4% from the December close of 12,218. The DJIA was up 741 points or 6.2% over the January 31, 2011, close of 11,892. The spot month gold futures contract had a final settlement for January delivery at $1, /ounce on the New York Mercantile Exchange, up by $ from the $1,562.90/ounce at the final settlement of the December contract. Copper futures prices settled for January delivery on NYMEX at $ per pound, up by 52.3 cents per pound from the December final settlement of $3.3600/pound. The light sweet crude oil futures contract for February delivery settled at $98.46/barrel. The final settlement for the February natural gas futures contract was $2.678 per million British thermal units, down 40 cents from the $3.08/mmBtu for the January delivery contract. Natural gas prices slipped further going into calendar February, dropping below the $2.50 mark. The Central Appalachian coal futures contract for February delivery settled at $61.33/ton or $2.56/mmBtu, putting it virtually at parity with natural gas. For several days during January, natural gas prices fell below coal for the first time. (See story on page 8). In this Report: ALA AQN BEP BKH CEG CHKM CPNO CVX DETP EXC KMP NGLS NST NU OKE SCG UIL VVC WLB WPZ Samuel Glasser Editor William Kemp Vice President Contact Information: Newsletters@bv.com ext 222

2 Values 01/31/12 Monthly Change from 01/03/12 Annual Change from 01/28/11 52 Week High Change from 52 Week High All-Time High Since 01/03/07 Change from All-Time High S&P 1, % 2.8% 1, (3.8%) 1, (16.1%) Rudden Composite Utility Index Master Limited Partnerships (MLPs) Natural Gas T&D (Diversified) Regulated T&D (Gas & Electric) (1.15%) 10.3% (3.1%) (12.1%) % 9.4% (2.2%) (2.2%) (0.78%) 19.1% (4.0%) (5.2%) (2.72%) 11.9% (5.0%) (5.0%) Electric (Merchant) (8.67%) (19.4%) (26.9%) (64.2%) Regulated Electric (Integrated) (0.89%) 11.7% (3.1%) (3.8%) Electric (Diversified) (2.15%) 7.4% (4.6%) (31.2%) UNDERWRITING & FINANCIAL RESTRUCTURING VVC Vectren Unit Places Bond Issues Vectren Utility Holdings, Inc., a subsidiary of Vectren Corp., issued in a private placement $100 million in principal of 5% senior guaranteed notes, due February 3, The bonds are unconditionally guaranteed by the Vectren utility units Indiana Gas Co., Inc., Southern Indiana Gas and Electric Co. and Vectren Energy Delivery of Ohio, Inc. The proceeds will repay short-term borrowings used to refinance Vectren Utility Holdings $96.2 million 5.95% senior notes due 2036, which were called at par and were retired last November, the company said. NGLS Midstream Service Provider Prices Bond Issue Targa Resources Partners LP of Houston (NYSE: NGLS) and its subsidiary Targa Resources Partners Finance Corp. priced $400 million of senior unsecured notes at 6.375%. The notes mature in August 2022 and were priced at the full principal amount to yield 6.375%. The partnership said it intends to use the proceeds to reduce borrowings under its senior secured credit facility and for general purposes, which may include redeeming or repurchasing some of its outstanding notes, working capital and acquisitions. The securities offered have not been registered under the Securities Act, or any state securities laws, the company said. Targa Resources Partners also priced an underwritten public offering of 4 million common units representing limited partner interests at $38.30 per common unit. The units were offered and sold under an effective shelf registration statement previously filed with the Securities and Exchange Commission. Targa Resources Partners is a provider of midstream natural gas and natural gas liquid services in the United States. SCG South Carolina Utility Sells Bonds; Paying off Maturing Issue SCANA Corp. (NYSE: SCG) of Caycee, S.C., sold in a negotiated offering $250 million in principal of its medium term notes due February 1, 2022, with a fixed rate of BL ACK & VEATCH 2

3 4.125%, the company said. SCANA intends to apply the proceeds together with other funds, to pay at maturity $250 million of its medium term notes that came due on February 1, D Dominion Files Shelf Registration For Debt, Equity Dominion Resources, Inc. (NYSE: D) filed a registration statement and an 8-K with the SEC for the sale of various debt and equity securities to meet the company s capital needs as they arise. The company said that it had entered into agreements with BNY Mellon Capital Markets, Merrill Lynch, and Morgan Stanley & Co., which will act as Dominion s sales agents with respect to offerings of up to $500 million in common stock. OKE ONEOK Sells 10-Year Bonds To Pay Down Debt ONEOK, Inc. (NYSE: OKE), of Tulsa, Okla., on January 26 completed an underwritten public offering of $700 million in principal of 4.25% notes due 2022, the company reported in an 8-K filing. The proceeds are intended to repay amounts outstanding under a $1.2 billion commercial paper program and for general purposes, which may include the repurchase of common stock, the purchase of additional common units of ONEOK Partners, LP, and the payment of dividends. WPZ Williams Partners Prices Public Offering of Common Units Williams Partners LP (NYSE: WPZ) priced a public offering of 7 million common units representing limitedpartner interests at $62.81 per unit, the company said on January 25. Williams plans to use the proceeds to fund capital expenditures and for other general purposes. A portion of the proceeds will likely be used to fund part of the cash consideration for Williams previously announced acquisition of the Laser Northeast Gathering System, the company said. ETP Bond Repurchase Offer Is Oversubscribed Energy Transfer Partners, LP (NYSE: ETP) announced that $1.29 billion in principal of its senior notes were tendered as of January 23 for its previously announced maximum tender offer for $458 million in aggregate principal. The tender offer expired on February 6. Since more than the maximum amount was tendered by expiration, the notes will be purchased in accordance with a certain priority level. The securities are 9.7% and 9% senior notes due 2019, 8.5% senior notes due 2014, and 6% senior notes due Energy Transfer Partners also announced that it had completed on January 17 its public offering of $1 billion in aggregate principal of 5.2% senior notes due 2022 and $1 billion of 6.5% senior notes due The proceeds will be used to fund the cash portion of its previously announced acquisition of a 50% interest in Citrus Corp. from Southern Union Co., the company said. Citrus owns 100% of the Florida Gas Transmission pipeline system. BKH Credit Line Obtained For Working Capital Black Hills Corp. (NYSE:BKH), Rapid City, S.D., closed a new $500 million, unsecured revolving credit facility that will be used to fund working capital needs and for general purposes, the company said on Feb. 1. The new facility has a five-year term expiring Feb. 1, 2017, and can be increased to $750 million. It replaces the previous $500 million revolving credit facility due April 14, The costs of borrowings under the new facility are based on the company's credit rating and are currently at a spread of 150 basis points over LIBOR, the company said. CHKM Private Placement Takes $750M In Midstream Partnership Bonds Chesapeake Midstream Partners, LP (NYSE: CHKM) of Oklahoma City said that it had sold in a private placement $750 million of senior notes due The offering was increased from a previously announced offering size of $600 million. The notes will bear interest at a rate of 6.125%. The partnership intends to use the proceeds to repay debt outstanding under its revolving credit facility and for general purposes. BEP Renewable Energy Firm Goes to the Bond Market Brookfield Renewable Energy Partners LP (TSX: BEP.UN) will sell C$400 million of medium-term notes, Series 8, due February The company discussed the issue in a short form base shelf prospectus issued on January 23 and in subsequent filings. BL ACK & VEATCH 3

4 The notes will bear interest at a rate of 4.79% per annum. The company plans to use the proceeds to refinance existing indebtedness and for general purposes. The notes have been rated at BBB by Standard & Poor's Ratings Services and at BBB-high by DBRS Ltd., Brookfield said. The partnership also filed a shelf registration statement for the potential sale of up to $2 billion of securities from time to time limited partnership units, class A preference shares and debt securities. Brookfield Renewable Energy Partners is a unit of Brookfield Asset Management Inc. Santee Cooper Offers Refunding Bond Issue Santee Cooper, the South Carolina Public Service Authority, on January 20 approved the sale of $250.9 million in refunding bonds, 2012 Refunding Series A, B and C, expected to save the utility approximately $34.8 million. The three series are tax-exempt, the company said. The bonds were issued to redeem a portion of the company's 2002 Refunding Series A and D, and 2003 Refunding Series A, and 2004 Refunding Series A bonds. The maturities will range from 2012 through UIL Conn. Utility Company Enters Revolving Credit Agreement UIL Holdings Corp s (NYSE: UIL) regulated utility subsidiary United Illuminating Co. entered into a revolving credit agreement with a group of banks headed by JPMorgan Chase Bank, N.A. that expires on July 13. The borrowing limit under the credit facility is $105 million, UIL announced on January 13. The credit facility permits borrowings at fluctuating interest rates and also permits borrowings for fixed periods of time specified by the borrower at fixed interest rates determined by the Eurodollar interbank market in London (LIBOR). outstanding as of September 30, The credit facility matures on April 9, 2014, and bears interest at a variable rate, which was approximately 3.2% as of this past September 30, the company said. The borrowings to be repaid were incurred to fund the acquisitions of the Chesapeake Acquired Properties and the Samson Acquired Properties and to fund exploration, development and other capital expenditures, Three Rivers said. WLB Westmoreland Coal Issues Senior Notes Westmoreland Coal Co. (NasdaqGM: WLB) of Englewood, Colo., and certain subsidiaries closed its offering of $125 million in aggregate principal of senior secured notes due 2018 in a private placement. The notes are additional to the already outstanding $150 million principal amount of existing 10.75% senior secured notes due 2018, the company said on January 31. The proceeds will be used primarily to finance the company s acquisition of the Kemmerer Mine from Chevron Corp. (See story on page 7). Westmoreland said it expected to use $76.5 million as cash consideration for the acquisition and approximately $24.7 million for reclamation bonding collateral for Kemmerer. The remainder will be used to fund the mine s initial working capital, to pay all estimated transaction fees and expenses incurred in connection with this offering, and for general corporate purposes. The notes were sold only to qualified institutional buyers in the United States, the company said. Westmoreland Coal is the oldest independent coal company in the United States. Coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. Exploration Company Files for IPO Three Rivers Operating Co., Inc., an Austin, Texas-based independent oil and gas exploration and production company, operating in the Permian Basin of West Texas and Southeast New Mexico, filed a registration statement with the U.S. Securities and Exchange commission for an initial public offering of common stock. The company said in the January 27 filing that it intends to use the proceeds to repay outstanding borrowings under its revolving credit facility, which had $286.5 million CPNO Copano Completes Pubic Offering Copano Energy, LLC (NASDAQ: CPNO), a midstream natural gas services company, closed its public offering of 5.75 million common units priced at $34.03 per unit on January 19. The offering was increased from the original offering size of 4.5 million common units. Copano intends to use the net proceeds of approximately $187.5 million to repay a portion of the outstanding indebtedness under its revolving credit facility. It also BL ACK & VEATCH 4

5 expects to use the increased borrowing capacity as needed for capital projects, acquisitions, hedging, working capital and general purposes. D Virginia Utility Sells Bonds At Favorable Interest Virginia Electric and Power Co., a unit of Dominion Energy (NYSE: D) entered into an underwriting agreement with Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC and UBS Securities LLC on January 9 for the sale of $450 million in aggregate principal of the company s 2012 Series A 2.95% senior notes due 2022, the company said in an 8-K filing with the SEC. The banks acted as the underwriters representative. AQN Algonquin Sets $80 Million Credit For Liberty Utilities Unit Algonquin Power & Utilities Corp. (TSX: AQN), of Oakville, Ontario, entered into an agreement for a US$80 million senior unsecured revolving credit facility with a three-year term for Liberty Utilities Co., its regulated distribution utility business, Algonquin said on January 19. According to the statement, US$25 million will immediately be available to support the operations of Liberty Utilities; the additional US$55 million will become available following the closing of the previously announced acquisition of the electricity distribution utility, Granite State Electric Co., and the natural gas distribution utility, Energy North Natural Gas Inc. Planning North America s Future in Power: A Black & Veatch Power Industry Briefing 2012 FEB 23 Thursday, February 23 Crowne Plaza Times Square Times Square Ballroom, Registration Level 1605 Broadway, New York, NY :30-5:00: Registration 5:00-5:30: Regulatory and Legislative Review 5:30-6:15: Risks & Benefits of a Natural Gas-Based Future 6:15-6:30: Q&A 6:30-8:00: Networking Reception Black & Veatch offers quarterly updates on the hottest issues facing utilities and investors through its fast-paced and informative Power Industry Briefing series. Featured topics: Energy Legislative Review Join Andy Byers, Associate Vice President for Power Generation & Environmental Services in the Black & Veatch Energy Division, as he addresses existing, proposed, and possible legislative and regulatory paths that will impede or accelerate various energy options. Weighing the Risks and Benefits of a Natural Gas-Based Future Greg Hopper, Managing Director for Natural Gas & Power Fuels, Black & Veatch Management Consulting Division, will look at how quickly changes can come at us when he examines the current natural gas picture compared to just five years ago. If gas is the game changer, how do stakeholders weigh the risks and benefits of our current course toward a natural gas-based future? To Register: Please contact Felicia Minott at MinottF@bv.com or , ext. 10 BL ACK & VEATCH 5

6 MERGERS & ACQUISITIONS NU/NST Connecticut Regulator Sets Review of Merger; April Decision Expected The Connecticut Public Utilities Regulatory Authority (PURA) established a docket and set a schedule for its review of the merger of Northeast Utilities (NYSE: NU) with NSTAR (NYSE: NST); a decision is likely by April 2, the agency said on January 20. A series of hearings are to be held in February. KMP Kinder Morgan Boosts Share In New Terminal Project Kinder Morgan Energy Partners, LP (NYSE: KMP) announced at the start of the new year the purchase of TransMontaigne Partners LP s 50% interest in the Battleground Oil Specialty Terminal Co., LLC project. KMP said it now owns 98% of the $430 million project and began construction on December 14, The remaining share will be held by a customer at the new oil terminal sited on the Houston Ship Channel. The first phase of the project includes construction of 6.6 million barrels in capacity for handling residual fuel, feedstocks, distillates and other black oils. Terminal service agreements and/or letters of intent have been executed with customers for almost all of the capacity, Kinder Morgan said. The first phase of the project is expected online in the third quarter of ALA/BKH AltaGas Grows Renewable Energy Presence in United States AltaGas Ltd. (TSX: ALA) spent $70 million to add to its renewable energy initiatives in the United States and purchase a conventional power plant in Alberta. AltaGas purchased independent power producer Decker Energy International, Inc. and a 50% interest in Black Hills Energy's Busch Ranch Wind Farm Project in southern Colorado, Altagas said on January 26. Black Hills Energy is a subsidiary of Black Hills Corp. (NYSE: BKH). The two acquisitions will add 35 megawatts (MW) of operating biomass and 14.5 MW of wind under construction to AltaGas' renewable energy portfolio. AltaGas also announced the acquisition of 25 MW of gasfired peaking generation in southern Alberta from Maxim Power Corp. EXC/CEG Exelon, Constellation, EDF Reach Agreement on U.S. Companies Merger Exelon Corp. (NYSE: EXC) and Constellation Energy (NYSE: CEG) reached an agreement with Electricite de France (EDF) under which EDF will withdraw its opposition to the Exelon-Constellation merger, they said on January 17. The terms address Constellation Energy Nuclear Group (CENG), a joint venture between Constellation and EDF that owns and operates three nuclear plants with five generating units in Maryland and New York. The agreement reaffirms the terms of the joint venture. No payment was made by either party. The Exelon-Constellation merger has received approval by the Department of Justice, the New York Public Service Commission, the Public Utility Commission of Texas and the shareholders of Exelon and Constellation. It also requires regulatory approvals by the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and the Maryland Public Service Commission. ETP Sale of Energy Transfer Propane Unit Is Completed Energy Transfer Partners, L.P. (NYSE: ETP) said on January 12 that it closed on its previously announced agreement with AmeriGas Partners, L.P. (NYSE: APU) to sell its propane operations, consisting of Heritage Operating, L.P. and Titan Energy Partners, L.P., for $2.85 billion. ETP received $1.46 billion in cash and $1.32 billion of APU common units. APU has agreed to assume $71 million of existing Heritage debt. ETP will own 34% of the APU common units and committed to hold them for at least one year. UGI Corp., through subsidiaries, will remain as the general partner of APU. BL ACK & VEATCH 6

7 AQN Algonquin Pulls Out of U.S. Wind Project Algonquin Power & Utilities Corp. (TSX: AQN) will not to proceed with its previously announced investment in First Wind Holdings, LLC's wind portfolio in the northeastern U.S., Algonquin announced on January 27. The initial joint announcement with Emera Inc. (TSX: EMA) in April 2011 had contemplated Algonquin acquiring a minority interest of approximately 12.5% in the portfolio, representing an investment of US $83 million. Algonquin cited a longer than anticipated regulatory process in Maine, along with other transactions the company has engaged since last spring for its decision. It noted that other investment agreements with Emera remain intact. WLB/CVX Westmoreland Aquires Surface Mine from Chevron Westmoreland Coal Co. (Nasdaq: WLB) completed its acquisition of Chevron Mining Inc. s Kemmerer coal mine in Lincoln County, Wyo., in the western part of the state. The transaction included a cash payment of $76.5 million and the assumption of approximately $118 million in certain liabilities, including post retirement medical, pension, black lung, and asset retirement obligation liabilities. Chevron Mining is a unit of Chevron Corp. (NYSE: CVX). Kemmerer has produces high-quality sub-bituminous coal, with output averaging 4.8 million tons per year for the last five years. The transaction includes 118 million tons of coal reserves, enough for 20 years of production; recently installed state-of-the-art coal preparation and loadout facilities; strong customer commitments; and an expansive fleet of mining equipment, the company said. Kemmerer s projected production for 2012 through 2016 is substantially all committed and priced under existing sales contracts, Westmoreland said. BL ACK & VEATCH 7

8 ENERGY MARKET REVIEW FIGURE 1 CRUDE OIL, NATURAL GAS, COAL SPOT MONTH FUTURES PRICES!"##$%&'()%'*+##+",'-./&' 0"/%1)2'3)4'5"%6'*)%1$,7#)'891:$,;)'$,<'-#$16'='>)$.1:' $28.00 $26.00 $24.00 $22.00 WTI Crude Oil Natural Gas, Henry Hub CAPP Coal Oil: Jul 14,' 08, $24.90 mmbtu, $145.18/bbl At Jul '08 peak prices, Gas:Oil approx 50% 23-&*)4& ".)"& & 5,314& (/#$6&,7& 8394&:+;& 039<9' $20.00 $18.00 $16.00 $14.00 $12.00 Jul 3, '08, nat gas, $13.58 Dec 24, 08 Gas:Oil =97.5%!)%#/('!(/#$/& 001& $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 1/2/07 3/2/07 5/2/07 7/2/07 9/2/07 11/2/07 Coal: Jul 1, '08, $5.97/mmBtu; $143.25/ton 1/2/08 3/2/08 5/2/08 7/2/08 9/2/08 11/2/08 1/2/09 3/2/09 Oil: Dec 19, '08, $33.87/bbl, $6.06/mmBtu 5/2/09 7/2/09 9/2/09 11/2/09 1/2/10 3/2/10 5/2/10 7/2/10 9/2/10 11/2/10 1/2/11 3/2/11 5/2/11 7/2/11 9/2/11 11/2/11 1/2/12!"#'.'!"#$%& &!'(#)*& &+,-& Fuel Wars Rage On A perfect storm of bearish conditions brought the price of a natural gas 12-month strip on the New York Mercantile Exchange below $2.90/million British thermal units (mmbtu) on February 1, said Dr. Ann Donnelly, director of natural gas and power fuels for Black & Veatch s management consulting business. (A strip is the simultaneous purchase, or sale, of futures positions in consecutive months. The average of the prices for the futures contracts bought, or sold, is the price level of the hedge.) While this is still technically winter, a combination of mild weather, a large storage surplus over average inventory levels, continued low economic growth, and robust gas production from drillers producing gas with more valuable liquids have been bearish for prices, she said. Gas has been on a fairly constant downward trajectory since last summer (Figure 1). Coal and gas are now direct competitors in the power sector, with NYMEX gas prices 5% lower than coal prices on a per-mmbtu basis for January 17 to 20, traditionally the heart of winter, Donnelly said (Figure 2 on next page). With utilities planning to retire coal plants to meet EPA regulations, it is unlikely that thermal coal demand will strengthen markedly soon, she said. The coalgas balancing act will have to be broken by conditions in the gas market, such as cold winter weather or very BL ACK & VEATCH 8

9 FIGURE 2!'#&$%!"#$%"&'(")'"*+',-*#%"&'.//"&"012"*',3"&4'!5678'9/3#'63*#1':$#$%-)',3*#%"0#)' '()*+%,()*+% &()*+% -()*+%.()*+% /()*+% 0()*+% 1$()*+% 11()*+% 1"()*+% 1'()*+% 1,()*+% 1&()*+% 1-()*+% 1.()*+% 1/()*+% 10()*+% "$()*+% "1()*+% ""()*+% "'()*+% ",()*+% "&()*+% "-()*+% ".()*+% "/()*+% "0()*+% '$()*+% '1()*+% 1(234% hot summer weather, increasing demand for gas-fired generation, or increasing LNG exports. Some producers such as Chesapeake Energy are already decreasing drilling for dry gas, but many have not yet changed their plans to continue exploration. For the time being, the coal-gas balancing act is here to stay, she said. The narrowing price gap between coal and natural gas was discussed in the September 2011 issue of Energy Capital Markets Report: Resources/Newsletters/EnergyCapitalMarkets/ECM% pdf Greg Hopper, managing director of the natural gas and power fuels group, noted that with the mild winter, high gas inventories and low prices, you will probably see some opportunistic moves by operators of coal-fired power plants to shut early for maintenance as they get ready for summertime power demand. In the near-term, he said there will probably a moderating trend in natural gas production a response to the low prices and an uptick in demand as gas picks up the slack from the temporarily idled coal-fired generation. In another view, Dean Rogers, a market technician with Kase & Company, Inc. of Albuquerque, N.M., noted that during the last full week of January, the prices for the March natural gas futures contract on NYMEX lost ground since they could not overcome resistance levels. He said that if prices broke through the $2.33/mmBtu mark, then they were likely on their way down to $2. The February light sweet crude oil futures contract final settlement was $98.46/barrel. Trading in the February natural gas contract terminated at $2.678 per mmbtu, and the final settlement of the February Central Appalachian coal contract was $61.33/ton, the equivalent of $2.56 per mmbtu. BL ACK & VEATCH 9

10 STOCK PERFORMANCE ''"# S"9+()*+"!T'""U# S&P 500 CMRINDEX 9'+()*+'8:#'"';C8####$8#=>#DEF:##%$;<$# GB)*A3:#+';'$H# '"$# '""# &$# &"# %$# %"#!$#!"# ()*+''#,)-+''#./-+''# (0*+''# (01+''# 23/+''# 456+''# 735+''# ()*+'8# Rudden Composite Index: Consists of 97 energy companies, which are further organized into six sub-categories as shown in the following graphs. MLPS WERE THE BRIGHT SPOT FOR UTILITY STOCKS IN JANUARY The Rudden Composite Index of utility stocks lost 1.15% during January while the S&P 500 Index gained 2.77% for the month. Master Limited Partnerships (MLPs) gained 1.80% in January while all other segments of the Rudden Composite posted losses. Gains in the MLP sector were led by Energy Transfer Partners LP (NYSE: ETP), which gained 6.70% during the month and makes up 11% of the segment, and by Enterprise Products Partners (NYSE: EPD), which gained 3.49% and is 39% of the sector. The Electric-Merchant group was the weakest performing segment of the Rudden Composite Index, losing 8.67% during the month and 19.4% for the 52 weeks ending Jan 31. Losses in this segment were led by Dynegy Inc. (NYSE: DYN), which lost 34.74% for the month and represents 3.6% of the segment and GenOn Energy Inc. (NYSE: GEN), which lost 18.39% and is 17% of the segment. DYN was working through bankruptcy proceedings it initiated in early November ETP sold its Heritage Propane subsidiary to AmeriGas Partners L.P. (NYSE: APU) for $1.5 billion in cash and $1.3 billion in APU partnership units. EPD, currently the largest MLP with 50,000 miles of pipeline, announced 10-year agreements with shippers to increase commitments by 115% to 82,500 barrels per day on its Mid-America Pipeline Rocky Mountain expansion project. Analysts cite the impacts of declining coal prices and recent injunctions against the U.S. Cross-State Air Pollution Rule on GenOn s coal and natural gas businesses for declines in GEN. Oscar Mak Black & Veatch s management consulting division BL ACK & VEATCH 10

11 REGULATED ELECTRIC INTEGRATED '"$# '""# P"9+()*+"!Q'""R# Index S&P 500 9'+()*+'8:#'"8;!$####$8#=>#DEF:###%<;9C# GB)*A3:#+";%&H# &$# &"# %$# %"#!$#!"# ()*+''#,)-+''#./-+''# (0*+''# (01+''# 23/+''# 456+''# 735+''# ()*+'8# Regulated Electric Integrated: Utilities involved in the generation, transmission and distribution of electricity and natural gas; 80% ormore of their total assets are regulated. ALLETE Inc. ALE NorthWestern Corp. NWE Alliant Energy LNT NV Energy NVE Ameren Corp. AEE PG&E Corp. PCG American Electric Power Co. AEP Pinnacle West Capital Corp. PNW Avista Corp. AVA PNM Resources Inc. PNM Central Vermont Public Service CV SCANA Corp. SCG Cleco Corp. CNL Southern Co. SO CMS Energy Corp. CMS TECO Energy Inc. TE DTE Energy Co. DTE UIL Holdings Corp. UIL El Paso Electric Co. EE UniSource Energy Corp. UNS Empire District Electric Co. EDE Vectren Corp. VVC Great Plains Energy GXP Westar Energy Inc. WR IDACORP Inc. IDA Wisconsin Energy Corp. WEC MGE Energy Inc MGEE Xcel Energy Inc. XEL BL ACK & VEATCH 11

12 ELECTRIC DIVERSIFIED '""# H1356-?5#+#7?I3-J?K3L############################################################################################## 7)?1M#N)103J#8%+()*+''#6D#9'+()*+'8################################################################################ O"9+()*+"!P'""Q# Index S&P 500 9'+()*+'8:#%B;%8####$8#<=#CDE:###!B;98# &$# &"# %$# %"#!$#!"# ()*+''#,)-+''#./-+''# (0*+''# (01+''# 23/+''# 456+''# 735+''# ()*+'8# Electric Diversified: Companies that are involved in the generation, transmission and distribution of electricity; more than 20% of total assets are unregulated. AES Corp. AES FirstEnergy Corp. FE Black Hills Corp BKH Hawaiian Electric Industries HE Constellation Energy Group Inc CEG Integrys Energy Group Inc. TEG Dominion Resources Inc. D NextEra Energy Inc. NEE Duke Energy Corp DUK OGE Energy Corp. OGE Edison International EIX Otter Tail Corp. OTTR Entergy Corp. ETR PPL Corp. PPL Exelon Corp. EXC Public Svc Enterprise Group PEG Sempra Energy SRE BL ACK & VEATCH 12

13 ELECTRIC MERCHANT L":,)*+,"%M(""N# :(,)*+,(9;#!$<&(####!9#=>#CDE;###!$<%$# FB*+A4;#,&<$%G# (""# Index S&P 500 '"# &"# %"# $"#!"# )*+,((# -*.,((# /0.,((# )1+,((# )12,((# 340,((# 567,((# 846,((# )*+,(9# Electric Merchant: Companies whose primary activity is the generation of electricity on an unregulated basis. Calpine Corp. Covanta Holding Corp. Dynegy Inc. GenOn Energy Inc NRG Energy Inc. Ormat Technologies Inc. CPN CVA DYN GEN NRG ORA BL ACK & VEATCH 13

14 REGULATED T&D (GAS & ELECTRIC) '*"# ')"# L(*.+,-.($S'((P#!"#$%& '()&*++& *'.+,-.');#''$<$$###")#=>#CDE;###'()<(&### FB,-A6;#.)<$)G# ''"# '("# &"# %"# $"#!"# +,-.''# /,0.''# 120.''# +3-.''# +34.''# 562.''# 789.''# :68.''# +,-.')# Regulated Transmission & Distribution (Gas & Electric): Companies engaged in the transmission and distribution of natural gas and electricity; 80% or more of total assets are regulated. CH Energy Group Inc. Consolidated Edison Inc. ITC Holdings Corp. Northeast Utilities NSTAR Pepco Holdings Inc. Unitil Corp. CHG ED ITC NU NST POM UTL BL ACK & VEATCH 14

15 NATURAL GAS T&D (DIVERSIFIED) H)60-)1#I)J#KL7#M7?N3-J?O3PQ######################################################################################## 7)?1R#S)103J#'$+()*+&&#6D#8&+()*+&'####################################################################### M"8+()*+"!T&""Q# 8&+()*+&'9#&&$:BB##;'#<=#CDE9###%;:B!# &'"# Index S&P 500 &&"# &""# %"# $"#!"# ()*+&&#,)-+&&#./-+&&# (0*+&&# (01+&&# 23/+&&# 456+&&# 735+&&# ()*+&'# Natural Gas Transmission & Distribution (Diversified): Primary activities are in the natural gas sector; 20% or more of assets are unregulated. AGL Resources GAS Northwest Natural Gas Co. NWN Atmos Energy Corp. ATO ONEOK Inc. OKE CenterPoint Energy Inc. CNP Piedmont Natural Gas Co. PNY Chesapeake Utilities Corp. CPK Questar Corp. STR Delta Natural Gas Co. DGAS RGC Resources Inc. RGCO El Paso Corp. EP South Jersey Industries Inc. SJI Energen Corp. EGN Southern Union Co. SUG EQT Corp. EQT Southwest Gas Corp. SWX Laclede Group Inc. LG Spectra Energy Corp SE MDU Resources Group Inc. MDU UGI Corp. UGI National Fuel Gas Co. NFG WGL Holdings Inc. WGL New Jersey Resources Corp. NJR Williams Cos. Inc. WMB NiSource Inc. NI BL ACK & VEATCH 15

16 MASTER LIMITED PARTNERSHIPS (MLPS) '""# '+"# 0-I:71#DAJA:7K#L-1:.71ICA3I#M0DLIN################################################################### ;-A5O#P-547I#)%/,-./''#:E#*'/,-./')################################################################################ M(*/,-./($Q'((N# Index S&P 500 *'/,-./')<#'*&=&)####")#>?#DEF<###''(=(%#### GC-.B7<#'=%(H# '*"# ')"# ''"# '("# &"# %"# $"#!"#,-./''# 0-1/''# 231/''#,4./''#,45/''# 673/''# 89:/''# ;79/''#,-./')# Master Limited Partnerships: Primarily owners and operators of natural gas pipeline properties with an emphasis on midstream assets. Atlas Pipeline Partners LP Boardwalk Pipeline Partners LP Chesapeake Midstream Partners Copano Energy LLC Crosstex Energy L.P. DCP Midstream Partners LP El Paso Pipeline Partners LP Energy Transfer Partners LP Enterprise Products Partners Kinder Morgan Energy Partners ONEOK Partners LP Regency Energy Partners LP Spectra Energy Partners LP APL BWP CHKM CPNO XTEX DPM EPB ETP EPD KMP OKS RGP SEP BL ACK & VEATCH 16

17 NEWS & VIEWS Smart Analytics Make Smart Utilities Smarter Black & Veatch now offers its Smart Analytics set of information technology solutions that improve utility performance, reliability and service. It helps clients make better use of the data they receive from digital networks and devices. Smart Analytics are essential for reducing costs and enhancing reliability of electric, natural gas and water utility assets, said Martin Travers, President of Black & Veatch s Telecommunications Division. With Smart Analytics, clients will have better insights into their operations, enabling them to better monitor and diagnose operating conditions. The Smart Analytics solutions are a part of Black & Veatch s comprehensive Smart Utility suite of services that are based on the company s collective knowledge from working with electric, water, wastewater, natural gas and communications systems all over the world. Engineering News-Record has ranked Black & Veatch as No. 1 in telecommunications design for the past two years. Black & Veatch was also the top ranked design company for power and among the top companies for water and wastewater design in Black & Veatch Marks Dedication Of Indonesian Power Expansion Indonesia s Tanjung Jati B Units 3 & 4 power plant was officially dedicated by Indonesia Minister of Energy and Mineral Resources Jero Wacik at a ceremony in Central Java on February 6. The 1,320 megawatt (MW) expansion provides a major boost to the reliable power supply for the country s economy. The overall capacity at the four-unit coal-fired plant is 2,640 MW. The project was led by Sumitomo Corp.; the plant is operated by PT PLN (Persero), Indonesia s state-owned power utility. PT Central Java Power, a Sumitomo subsidiary, will own the plant for 20 years before handing over to PT PLN (Persero). Black & Veatch provided engineering, procurement and commissioning services to Sumitomo, including a benchmark procurement solution, which is also being implemented at other projects around the world. Its scope included the coal handling, limestone handling, electrostatic precipitators, induced draft fans, flue gas desulfurization, fly ash handling, continuous emissions monitoring, fire protection, fuel oil supply as well as other support systems. Black & Veatch was also involved in designing Units 1 and 2 that began commercial operation in BL ACK & VEATCH 17

18 To subscribe without charge to any of the Black & Veatch newsletters, please go to: Descriptions of the free publications are given below: Energy Strategies Report Solutions Magazine ENERGY STRATEGIES REPORT Providing Valuable Strategic Insights to the Energy Industry The Energy Strategies Report is a monthly update on the topics, personalities and events in the energy industry that are (or should be) making headlines. Solutions magazine informs readers of issues relating to the infrastructure arena and promotes innovative thinking and dialogue. Each issue provides insights and answers to complex challenges in the form of solutions that Black & Veatch has implemented for our clients. Energy Capital Markets Report ENERGY CAPITAL MARKETS REPORT Stock Performance! Sector Evaluations! Asset Sales! Mergers & Acquisitions! Securities Underwriting The Energy Capital Markets Report aggregates financial activities across the energy industry with a once-a-month review of stock performance, sector evaluations, asset sales, mergers & acquisitions and securities underwriting activities. Copyright 2012, Black & Veatch Holding Company. All rights reserved worldwide. This report is prepared for general circulation and is circulated for general information only. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any security or any option, future or other derivative related to such security. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized advice about investments. Data contained here are obtained from what are considered relia ble sources; however, its accuracy, completeness or reliability cannot be guaranteed. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Black & Veatch s management consulting group is among the world s premier strategic, economic and management consulting companies specializing in energy, water, information and government matters. We encourage our professionals to publish individual commentary on key industry issues. Any opinions offered are those of the authors and not necessarily official viewpoints of the company or its other employees. Additional information is available at BL ACK & VEATCH 18