Asset Management Experiences in Ohio

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Asset Management Experiences in Ohio

• Presented by
• Bruce Hayes

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Asset Management - Experiences in Ohio

• Gas distribution in Ohio
• Ohio local distribution companies have robust
  residential, commercial and industrial natural
  gas transportation programs
• There are a number of interstate pipelines
  spanning the state
• The four major distribution companies have
  operations in nearby states
• There are a number of smaller local distribution
  companies, including IOU, LP and COPs

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Asset Management - Experiences in Ohio

• Example One
• Small holding company with three different LDCs
  serving less than 10,000 customers in several
  small communities
• Limited number of personnel, limited experience
  in gas supply operations and limited secondary
  market
• Problems with meeting credit requirements of
  suppliers and pipelines
• Asset manager provided purchasing expertise and
  solved the credit problem with its own lines of
  credit

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Asset Management - Experiences in Ohio

• Example Two
• Larger LDC with operations in two states, a
  deregulated affiliated marketer and a deregulated
  affiliated asset manager
• Affiliated asset manager was awarded an un-bid
  asset manager supply contract
• LDC agreed to accept a value for latent assets to
  be used by the affiliated asset manager at a
  value less than that of previous non affiliated
  asset managers
• LDC contracted for additional unneeded pipeline
  reserve capacity, resulting in additional PGA
  demand costs and additional assets for the
  affiliate asset manager to utilize

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Asset Management - Experiences in Ohio

• Example Three
• LDC awarded a bid contract to an asset manager
  that later left the business before the contract
  was completed
• The LDC holding company then had their
  deregulated affiliated gas marketing group assume
  the abandoned contract and take over the asset
  manager responsibilities
• That marketer group doing the asset management
  has since been sold to a larger non affiliated
  asset manager/gas marketing company

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Asset Management - Experiences in Ohio

• Example Four
• Ohios largest two LDCs have service corporation
  gas supply employees that act as asset managers
  for different LDC operations in multiple states
• They manage only the assets of their affiliated
  LDCs
• Creatively managed to keep much of the revenues
  generated from secondary marketing actives, such
  as off-system sales, capacity release, parks,
  loans, exchanges and capacity release in lieu of
  rate case increases or incurring pipeline
  capacity stranded costs
• There are some risks of one affiliated state LDC
  benefiting over the other, however the revenues
  do stay with the LDCs and are not shared with an
  unaffiliated asset manager company