New Study Outlines New England’s Need for Additional Natural Gas Capacity; $3.7 Billion Could Have Been Saved During ‘Polar Vortex’

HOUSTON–(BUSINESS WIRE)–New Englanders could have saved approximately $3.7 billion in wholesale
electricity costs during the 2013-2014 ‘Polar Vortex’ winter had the
proposed Northeast
Energy Direct Project (NED) been in service, according to an
independent study
by ICF
International, commissioned by Tennessee Gas Pipeline Company,
L.L.C. (TGP), a Kinder Morgan, Inc. (NYSE: KMI) company. The study also
concluded that the additional gas capacity that NED would provide could
generate $2.1 billion to $2.8 billion in annual savings going forward
for New England electric consumers under normal weather conditions.

The in-depth study examined the impact of TGP’s NED project on New
England’s natural gas and power markets and its need for new natural gas
supplies. Additionally, the study assessed the cost savings from the
increased natural gas capacity NED would make available to the region,
which pays some of the highest electricity costs in the United States,
in part due to inadequate gas supplies and infrastructure.

Further analysis by Kinder Morgan finds that the estimated energy cost
savings for 2013-2014 would equate to $578 if spread across each of New
England’s 6.4 million households, and average $437 per household over
the next 10 years assuming normal weather conditions.

“The ICF study supports NED’s potential contribution to reducing and
stabilizing prices, and improving reliability through increased gas
availability,” said Kimberly S. Watson, president of Kinder Morgan’s
East Region Gas Pipelines. “New England needs more natural gas capacity,
and NED would provide the region with direct access to abundant,
reasonably priced supplies of gas. Additional gas supplies will bring
down energy costs in New England and benefit consumers who now bear the
burden of paying some of the highest energy costs – if not the highest –
in the country.”

The main findings of the ICF study include:

New England’s demand for natural gas is projected to grow; current
supply is inadequate to meet regional needs during peak winter
conditions.

As coal and nuclear capacity are retired and replaced by natural
gas-fired power generation, New England power sector gas demand will
grow. Local distribution companies (LDCs) in New England project that
residential and commercial gas demand will also grow, increasing by 8
percent over the next three years, and continue rising at a steady rate
thereafter. The growing natural gas consumption for heating and electric
generation will contribute to increases in the frequency and magnitude
of daily natural gas pipeline capacity deficits over the course of a
winter season.

ICF projects that the deficit between supply and demand in both New
England’s gas-fired electric generation and residential/commercial
heating loads during normal winter weather conditions on a peak day in
2020 could approach 1.5 billion cubic feet (Bcf/d) and be as high as 1.7
Bcf/d on a “design day,” even with the several gas pipeline expansion
projects expected to be in-service by the end of 2017. ICF estimates
that the duration of such deficits for electric generation during the
winter could extend to 63 days (over 41 percent of winter days.)

During 2012-2014, TGP transported 52 percent of the total gas consumed
by New England’s natural gas-fired power generators. With the addition
of NED’s capacity, TGP will be able to transport gas supplies for the
vast majority of New England’s gas-fired generators.

NED could bring benefits for consumers – more stable gas and electric
prices, and cost savings.

Through analysis of historical gas pipeline utilization and prices, and
estimates of potential reductions in prices that might have been
realized had the NED project been in service, ICF determined that NED
capacity could have reduced New England’s wholesale electric costs by
approximately $3.7 billion had it been in service during the 2013-2014
“Polar Vortex” winter. Going forward, NED could generate $2.1
billion to $2.8 billion annual savings for New England electric
consumers under normal weather conditions.

Additionally, the study finds that spot gas prices and wholesale power
prices can be more volatile when pipeline utilization (load factor)
rises above 75 percent of installed capacity. During the 2013/2014
winter, daily load factors averaged 90 percent and frequently exceeded
95 percent, contributing to price volatility. TGP notes that this
challenge would be mitigated through NED’s additional capacity.

NED supports renewables, and improves environmental benefits.

NED provides essential support for the future of renewables. As
renewable energy programs in New England are embraced and activated,
natural gas is a favorable base to the intermittent power production
from renewables. The gas supplies NED can provide would produce
environmental benefits by reducing power sector air emissions.
Introducing new natural gas capacity would further reduce NOₓ, SO₂ and
CO₂ emissions in the region by lowering its reliance on oil and
coal-fired generation. By 2020, absent new pipeline capacity, New
England generator reliance on fuel oil to meet power demand could result
in increased NOₓ, SO₂ and CO₂ emissions, and sharply reverse previous
years of reductions.

About TGP, NED and the ICF study

TGP has been serving the New England region for more than 60 years.
Planned to be in service in late 2018, NED would connect with TGP’s
existing 200 Line and 300 Line natural gas systems that provide diverse
gas supplies to the Northeast and New England from South Texas, the Gulf
Coast and key shale play areas.

ICF International, based in Fairfax, Virginia, was engaged by Kinder
Morgan, Inc. to independently analyze the New England natural gas and
power markets and the need for new natural gas supplies and capacity to
serve the region. ICF’s study of NED’s benefits to the New England
electric market are estimated for the 10-year period after the project
is placed into service. ICF findings and conclusions integrate base case
analysis produced using its suite of proprietary natural gas and power
industry software models and data that have supported a wide array of
market studies for federal agencies, utilities, investors and financial
analysts.

As part of the study, ICF was also asked to analyze potential energy
market, reliability and other benefits that may arise from the
construction of the proposed NED Project. Its study projects natural gas
supply and demand in New England through 2035 and assesses the
supply/demand balance on a daily basis for discrete years. Emphasis is
placed on understanding the demand for capacity during the winter
season, when natural gas is in high demand as a fuel for heating and
power generation. Sensitivity analyses considered the implications for
capacity under both normal and “design” weather conditions.

Kinder Morgan, Inc. (NYSE: KMI) is the largest energy infrastructure
company in North America. It owns an interest in or operates
approximately 84,000 miles of pipelines and 165 terminals. The company’s
pipelines transport natural gas, gasoline, crude oil, CO₂ and
other products, and its terminals store petroleum products and
chemicals, and handle bulk materials like coal and petroleum coke.
Kinder Morgan is the largest midstream and third largest energy company
in North America with an enterprise value of approximately $115 billion.
For more information please visit www.kindermorgan.com.

This news release includes forward-looking statements. These
forward-looking statements are subject to risks and uncertainties and
are based on the beliefs and assumptions of management, based on
information currently available to them. Although Kinder Morgan believes
that these forward-looking statements are based on reasonable
assumptions, it can give no assurance that such assumptions will
materialize. Important factors that could cause actual results to differ
materially from those in the forward-looking statements herein include
those enumerated in Kinder Morgan’s reports filed with the Securities
and Exchange Commission. Forward-looking statements speak only as of the
date they were made, and except to the extent required by law, Kinder
Morgan undertakes no obligation to update or review any forward-looking
statement because of new information, future events or other factors.
Because of these uncertainties, readers should not place undue reliance
on these forward-looking statements.

Contacts

Kinder Morgan
Media Relations
Richard Wheatley,
(713) 420-6828
Richard_wheatley@kindermorgan.com
or
Investor
Relations
(713) 369-9490
km_ir@kindermorgan.com
www.kindermorgan.com