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y o u r d u e s d o l l a r s a t w o r k

AGA members earned big returns on their dues investment in 2011.

Banking on AGA

return on investment

During a year when our nation’s leaders were enmeshed in partisan gridlock on Capitol Hill, and businesses across the

country faced economic uncertainty as a result, it was critical for companies to have a voice in Washington advocating on their behalf. Each year AGA members earn a substantial return on their dues investment, and 2011 was no excep-tion. The association returned several times over the $20 million members invested in dues.

AGA is proud to be a reliable and valuable asset for its members in this turbulent econom-ic climate. Following are notable ROI achieve-ments from 2011.

success Achieved

PiPeline SaFety reauthorization. AGA’s natural gas utility members are committed to operating their systems with the utmost safety, reliability and security. Operational excellence is our indus-try’s highest priority, and we take seriously our responsibility to meet the need of our more than 65 million customers nationwide. In great part due to AGA’s engagement, December 2011 marked an important victory when both chambers of Congress passed unanimously the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011. The passage of this bill is a high achievement for AGA and is a testament to AGA’s ability to work with legislators regarding reasonable approaches to the natural gas issues critical to our members’ success. While the bill will result in increased resource investments, AGA sought to help ensure dollars spent would benefit safety. The president signed the bill into law on Jan. 3.

low income home energy aSSiStance Pro-

gram (liheaP). Due to AGA’s ongoing efforts on Capitol Hill, in the very last days of December, Congress passed and President Obama signed into law $3.5 billion in funding for LIHEAP for fiscal year (FY) 2012. While this funding amount

is lower than the FY2011 appropria-tion of $4.7 billion, it is still far better than the $2.57 billion funding level recommended by the administration.

Pcb uSe. In response to an Environmental Protection Agency (EPA) proposal to ban all detectible trace of polychlorinated biphenyls (PCBs) from all natural gas systems, AGA filed extensive comments demonstrating there is no need to change current practices, which work well to protect people and the environ-ment. As a result of AGA’s advocacy leadership on the environmental front, EPA announced that it will not pursue its proposed ban on all traces of PCBs in pipes by 2020. The proposed ban would have caused severe disruptions in natural gas service to homes, businesses, hos-pitals, schools, industry and the government, and increased risks to public health, safety and the environment. Depending on whether AGA members have residual PCBs in their systems, EPA’s decision would collectively save AGA’s members billions of dollars.

greenhouSe gaS rePorting rule. AGA filed a petition for judicial review in January and reconsideration in February, followed by suc-cessful negotiations with EPA, which resulted in the December 2011 final rule. In this final rule EPA cleared up provisions AGA found confus-ing, provided additional flexibility and allowed natural gas utilities to spread the required leak surveys over a five-year rolling period, which effectively allows an 80 percent reduction in the number of stations to be leak-surveyed each year and reduces annual leak survey costs by 80 per-cent compared with EPA’s proposed rule. AGA’s advocacy efforts on this issue should save AGA members collectively approximately $10 million.

over-the-counter (otc) DerivativeS. The Dodd-Frank and Consumer Protection Act was

lydIa MeIGs is aGa communications specialist.

18 February 2012 AmericAn GAs

signed into law in July 2010. As part of an energy coalition, AGA secured an exclusion from the requirement to clear transactions on an exchange or clearinghouse for bona fide commercial end users of OTC derivatives who hedge against price volatility. For mid-sized utilities, this eliminates the requirement to post tens of millions of dol-lars in additional margin requirements to hedge their portfolio. In addition, AGA remains closely involved in ensuring that local distribution companies are treated by the Commodity Futures Exchange Commission’s regulations implement-ing Dodd-Frank as “end users” exempt from the commission’s rules regulating swap transac-tions, reflecting the unique nature of natural gas

forward transactions on physical markets. The ROI for AGA member companies as a result of the energy coalition’s efforts: estimated savings of up to $500 million.

PiPeline caPacity marketS. AGA successfully urged the Federal Energy Regulatory Commission (FERC) to revise its proposal to prevent entities with multiple affiliates from gaming open seasons for interstate pipeline capacity. At AGA’s request, FERC removed provisions that would have prevented utilities with multiple affili-ates from fully participating in pipeline capacity markets, potentially saving AGA members millions of dollars.

Full Fuel cycle. AGA helped convince the U.S. Department of Energy (DOE) to publish a state-ment of policy that it will use full-fuel-cycle mea-sures when evaluating energy conservation stan-dards for appliances. AGA will continue to work to achieve a favorable outcome regarding DOE’s final rule increasing the minimum efficiency standards for gas furnaces, building a consensus among stakeholders for a waiver from the standard that would help AGA members work with their custom-ers to make better appliance choices.

meaSurement StanDarDS. More than 75 percent of the meters used in the custody transfer of natu-ral gas in the United States are orifice meters. AGA Report No. 3, Part 1, which was developed through a national consensus process, deals with the equa-tions for measuring gas flow through orifice meters and was recently revised. AGA successfully argued that its implementation be mandated only for new installations, exempting existing ones, which, conservatively speaking, resulted in cost avoidance

valued at $35 million. In addition, the American Petroleum Institute (API) revised the publication (API Ch. 21.1) that applies to all flow computers for gas flow calculations. AGA successfully explained that the proposed revisions would increase the cost of the flow computer without improving the accuracy of its calculations. AGA argued that users should be able to choose between this new method and the current methods, depending on operational conditions. These combined efforts translated into a savings of about $55 million.

ongoing member Benefits

workShoPS, conFerenceS anD ForumS. AGA prides itself on delivering critical information and value to its members through the various events it conducts each year. The value is at-tributed primarily to the knowledge gleaned by participants, who are then able to perform their jobs more effectively by implementing strategies and practices that promote safety, cost savings and efficiency. Major events hosted annually by AGA include the Operations Conference, Execu-tive Leadership Safety Summit, Financial Forum and committee meetings.

SoS Program. The SOS service marshals the expertise of industry professionals for the ben-efit of association members needing immediate assistance with, or information on, natural gas utility business functions.

The SOS cycle begins when a member com-pany sends an email to AGA regarding an issue or business process. AGA shares the query with members of the pertinent committee for re-sponses. An SOS may generate dozens of replies within half a day to up to two weeks, depending on the complexity of the issue, providing mem-bers with information that can help improve safety, reliability and all aspects of business operations. In 2011, the SOS program handled 245-plus queries, potentially avoiding significant dollars spent on outside consultants.

beSt PracticeS Program. Year after year, AGA member companies benefit from the informa-tion and value derived from the Best Practices Program. This program begins each year with a benchmarking exercise and culminates in roundtables at which companies identified as employing leading practices share their tech-niques with other program participants. Pro-gram participants avoid consultant fees for gathering and analyzing industry data.

each year aga members earn a substantial return on their dues investment, and 2011 was no excep-tion. The association returned several times over the $20 million members invested in dues. aga is proud to be a reliable and valuable asset for its members in this turbulent economic climate.

r e t u r n o n I n v e s t M e n t

AmericAn GAs February 2012 19

gaS tranSmiSSion integrity management.

This past year, AGA advocated on many pipeline safety issues, and one that brought tangible sav-ings to members was the work to amend the ad-vance notice of proposed rulemaking (ANPRM) for the gas transmission integrity management regulation. The ANPRM addressed issues raised in the proposed pipeline safety legisla-tion, the National Transportation Safety Board investigation of the San Bruno, Calif., incident and Pipeline and Haz-ardous Materials Safety Administration initiatives. The proposed amendments, which include testing pre-1970 pipes that have not had a post-construction pressure test, will be at least as chal-lenging as the original regulation, if not more so. This is only one of several rulemakings anticipated next year and to ensure we are well positioned to ad-dress concerns about safety, AGA will be focused on implementing the board-approved safety enhancement plan.

emPloyee SaFety. Since the forma-tion of the Board Safety Committee in 2006, AGA has taken a more active role in helping members improve employee safety. Through forums such as the AGA Executive Leadership Safety Summit and the Safety Information Resource Center on www.aga.org, AGA has played a key part in identifying the leading prac-tices and innovative work techniques that have assisted member utilities in strengthening their safety programs and reducing employee injuries.

A Continuing value

The year 2011 was a landmark year for AGA: The association forged new ground under the new leadership of President and CEO Dave McCurdy, overcame the challenging stalemate congres-sional environment to win successes for its members, and, once again, provided quantifiable financial value, which far exceeds the dues in-vestment in AGA. The initiatives cited earlier give just a snapshot of the ongoing value AGA pro-vides to its members. At a time when companies are cutting back on spending, AGA’s membership has stayed committed and even grown because of the substantial returns utilities continue to earn on their annual dues investment.

areas of the country, including Boulder, Colo., Washington, D.C., and Toledo, Ohio. Overall key drivers for the housing market historically have been household growth and demograph-ics. Currently, household formation is on the rise and is now exceeding household starts, according to Hanley Wood. In addition, it is es-timated that the U.S. population will expand 5 percent this decade without immigration. With immigration, growth could reach 9.7 percent.

Fueling Future Demand

The new construction market has seen many ups and downs over the years. AGA and the natural gas industry have supported construc-tion professionals no matter the market condi-tions, understanding the importance of always providing construction professionals with the information they need. From the earliest days at IBS, consistently participating in government af-fairs and construction codes and standards, AGA messages and the natural gas brand have been front and center with construction professionals.

Moving forward, AGA will continue to help construction professionals by providing the in-formation and tools they need as they reassess and prepare their businesses to grow while the housing market recovers. Construction profes-sionals want to be more knowledgeable about energy and the appliances that use energy in the home. They want to be able to answer cus-tomers’ questions and help them make deci-sions about their home. For example, builders are often called upon to explain to home buy-ers how the now-popular tankless water heater saves energy or the energy-saving benefits of the direct use of natural gas. Builders also can educate consumers about how the direct use of natural gas throughout the home can lower greenhouse gas emissions by about one-third compared with an all-electric home.

Now is the time to work with these influ-ential construction professionals to commu-nicate the long-term benefits of using natu-ral gas to heat the home, for water heating, clothes drying, cooking and standby power. AGA strives to be regarded as the construction professional’s energy resource.

Just like during the Great Depression, con-sumers are looking for the best deal. Today, and for the foreseeable future, that is natural gas.

in Demand continued From pAGe 16