Natural Gas Vehicles. Strategic Considerations. National Conference of State Legislatures August 11, 2013

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1 Natural Gas Vehicles Strategic Considerations National Conference of State Legislatures August 11, 2013

2 Corporate Overview Largest Natural Gas Utility Company 7 Local Distribution Utilities in 7 states 4.5 million customers Tropical Shipping

3 Price Stability of CNG Natural Gas at $2.88/Mcf Natural Gas (divide by 7.2) $0.40 Transport Costs & Fees $0.20 Electricity Costs per GGE $0.10 Maintenance per GGE $0.20 Federal and State Taxes $0.25 Fuel Card Fees per GGE $0.05 Retailer Profit Margin $0.70 CNG at the Pump $1.90 Natural Gas at $5.76/Mcf Natural Gas (divide by 7.2) $0.80 Transport Costs & Fees $0.20 Electricity Costs per GGE $0.10 Maintenance per GGE $0.20 Federal and State Taxes $0.25 Fuel Card Fees per GGE $0.05 Retailer Profit Margin $0.70 CNG at the Pump $2.30 The natural gas fuel commodity makes up a smaller portion of the overall price of the delivered fuel when compared to gasoline or diesel.

4 The Economics of Vehicle Classes Type of Vehicle Incremental Cost * Annual Use (Gals.) Annual Savings ** Simple Payback Honda Civic (consumer) $7, $ yrs. Sedan (fleet application) $10,000 1,200 $1,800 6 yrs. Pickup Truck (fleet app.) $11,000 2,000 $3,000 4 yrs. Cargo Van $14,000 2,500 $3,750 4 yrs. Step Van/Box Truck $24,000 4,000 $6,000 4 yrs. School Bus $28,000 2,600 $3,750 7 yrs. Garbage Truck $35,000 8,000 $12,000 3 yrs. Class 8 Truck $65,000 15,000 $22,500 3 yrs. * Cost assumes no grant money, rebates, tax credits, etc. available * * Savings calculated based on savings of $1.50/GGE at retail CNG station

5 The Light Duty Market Challenge $500,000+ for Centralized Fueling Stations 500 down, 160,000 to go - $50+ billion? in investment to match gasoline stations The economics work for fleets, so there will continue to be growth $100,000?+ to make a private station public accessible $8,000+ Vehicle Conversion/Replacement Premium Takes 7 years+ to recover the premium Limited vehicle selection from OEM s, especially vehicles desired by target customers Efforts around conversion, and specifically tank technologies, is ongoing $5,000 Home Refueling Appliance (HRA) product and Installation Cost An additional 4+ years to recover the HRA cost Limited fill capability, maintenance unknown (historically not good) Result: $8,000 + $5,000 = $13,000 per vehicle premium, or 11+ years payback MUST REDUCE VEHICLE CONVERSION COSTS & DEVELOP A LESS EXPENSIVE HRA

6 The Home Refueling Appliance (HRA) BRC Fuelmaker Phill is the only commercially available HRA Expensive price with installation, approximately $6,000 Limited fill capability, less than a half gallon per hour Historically has had compressor performance and maintenance issues AGL is a distributor, and installs and maintains Phill units AGL Resources is actively engaged with a team of industry leaders in the development of a less costly HRA AGLR has joined with EnCana, Questar, SoCal Gas, DTE Energy, and a large Appliance Manufacturer to evaluate options U.S. Department of Energy - Advanced Research Projects Agency- ENERGY (ARPA-E) Methane Opportunities for Vehicular Energy (MOVE) 13 projects awarded with $30 million in funding including 4 HRA designs Engineer Light-Weight Affordable Natural Gas Tanks Develop Natural Gas Compressors that can efficiently fuel a NGV at home GTI and GE have projects within this program, and AGL is actively involved

7 The LDC and HRA Advantage Natural gas is priced without a margin mark-up, therefore preserving and assuring the price differential for the customer. Utilities are buying large quantities of supply, and can achieve economies of scale, efficiency and can hedge in their fuel purchasing. Most markets still provide options that allow for direct purchase from marketers, providing customers the opportunity to fix the price of natural gas for a period of time. Some Utilities have established rate tariffs that incentivize customers to convert to natural gas vehicles. The utility provides a skilled network of field service technicians that can assure safety is maintained as the market grows. Highly reliable, safe, accurately measured delivery of the natural gas provides a trusted existing and solid foundation for growth.

) Provide CNG maintenance services to 30+ other commercial customers who own their own equipment Department of 6 full time, 24 hour

8 AGL s Experience In the NGV/CNG business since the 1970 s Owns and maintains eight CNG refueling stations on customer premises for fleet vehicles in Georgia (city/county maintenance vehicles, forklifts, etc.) Provide CNG maintenance services to 30+ other commercial customers who own their own equipment Department of 6 full time, 24 hour emergency dispatched, professionally trained CNG technicians Developed the MARTA CNG transit bus program in 1996 Contracted with Alagasco in 2012 to maintain existing and construct new stations

9 AGL Resources Activities Key 2013 Initiative - AGL Resources is in the process of finalizing an enterprise-wide fleet conversion plan, including the associated CNG infrastructure development. Georgia Atlanta Gas Light Investing $11.57 million of USF to support development of publicly accessible CNG stations throughout its service territory in Georgia 6 contracts have been executed, with construction commencing in 2013 AGL will be planning, constructing and maintaining these CNG filling stations USF backed Home Refueling Appliance leasing program has been implemented Reviewing additional upgrades and installation at AGLC service centers

10 AGL Resources Activities Illinois Nicor Gas Favorable government programs support NGV efforts (i.e. $4,000 state rebate). 17 CNG stations already attached to the distribution system. Tennessee Chattanooga Gas Established a new tariff for construction of CNG stations for customers. Discussing a new station in 2014, with possible City of Chattanooga support. Virginia Virginia Natural Gas 3 existing public access CNG stations station upgrades underway in Qualified CNG technician on staff to provide service and maintenance Florida Florida City Gas Filed a new tariff for CNG station construction Actively engaged in draft legislation providing incentives for vehicle purchases 5 year tax holiday on fuel tax, HRA tax exemption, $6 million a year for 5 years toward incremental vehicle cost ($250,000 cap per entity/$25,000 per vehicle) New Jersey Elizabethtown Gas Planning a replacement of an existing station with a significant station for ETG fleet usage, as well as local fleet and public access. Working with the Port of Elizabeth on a number of opportunities requiring station construction and maintenance. Expecting to file new CNG tariffs in the next 60 days.

11 Natural Gas Fueling our Future

Natural Gas Passenger Vehicles: Availability, Cost, and Performance

Natural Gas Passenger Vehicles: Availability, Cost, and Performance Brent D. Yacobucci Specialist in Energy and Environmental Policy February 3, 2010 Congressional Research Service CRS Report for Congress