National and State Trends for Natural Gas and Electricity Prices

Talina R. MathewsDepartment for Energy Development

and Independence

Electricity

• EIA forecasts that the average retail price of electricity across the US (adjusted for inflation) will remain nearly constant through 2035

• There are key uncertainties when extrapolating this forecast to KY average retail electricity rates

• Age of plants• Portfolio mix• Environmental regulations (even without GHG

discussion)

US Electric Power Industry Net Generation, 2009

88

EPA actions will dramatically impact the future viability of coal generation

Ozone

PM2.5

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Beginning CAIR Phase I Seasonal NOx Cap

HAPs MACT proposed rule

Beginning CAIR Phase II Seasonal NOx Cap

Revised Ozone NAAQS

Begin CAIR Phase I Annual SO2 Cap

Beginning CAIR Phase II Annual SO2 & NOx Caps

Next PM-2.5 NAAQS Revision

Next Ozone NAAQS Revision

SO2 Primary NAAQS

SO2/NO2 Secondary NAAQS

NO2

Primary NAAQS

SO2/NO2

New PM-2.5 NAAQS Designations

CAMR & Delisting Rule vacated

Hg/HAPS

Final EPA Nonattainment Designations

PM-2.5SIPs due (‘06)

Proposed Transport Rule

HAPS MACT final rule expected

CAIR Vacated

HAPS MACT Compliance 3 yrs after final rule

CAIR Remanded

CAIR

Begin CAIR Phase I Annual NOx Cap

PM-2.5 SIPs due (‘97)

316(b) proposedrule expected

316(b) final ruleexpected

316(b) Compliance3-4 yrs after final rule

Effluent Guidelinesproposed ruleexpected

WaterEffluent GuidelinesFinal rule expected Effluent Guidelines

Compliance 3-5 yrs after final rule

Begin Compliance Requirements under Final CCR Rule (ground water monitoring, double monitors, closure, dry ash conversion)

Ash

Proposed Rule for CCRs Management

Final Rule for CCRs Mgmt

Final Transport Rule Expected

Compliance with Transport Rule

CO2

CO2 Regulation

Reconsidered Ozone NAAQS

Source: EPA/EEI/AEP

Natural Gas

• EIA estimates are decrease in price then slow rise in natural gas price in residential sector through 2035

• Key uncertainties– How much will there be an increase in demand for

natural gas generation of electricity because of increased environmental regulation of coal fired power plants?

– Will the shale gas resource development be reduced by increased regulations?

SHALE GAS RESOURCES

Conclusion

• Price trends at the state level for electricity and natural gas are not easily predicted due to massive uncertainties.