Representing and Serving Our Customers

Stephen E. Ewing Chairman, The American Gas Association Vice Chairman, DTE Energy New York Society of Security Analysts January 19, 2006 New York, New York

It was the best of times, it was the worst of times.

Challenging Times - 2006

Demand for clean-burning natural gas growing Access to new sources of supply constrained Supply-demand imbalance results in rising and volatile prices Customers bearing the burden and feeling the pain Congress considering legislation to reduce demand Increased regulatory scrutiny a reality Raising capital a challenge

Representing and Serving Our Customers

Increase natural gas supply to bring prices down Work with our customers to manage their energy costs Promote innovative regulatory approaches to mitigate the effects of high and volatile natural gas prices Increase infrastructure investment to help tame price volatility

Lower-48 Dry Gas Production Vs. Dry Gas Productive Capacity

55

50

Bcfd

45

40
Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07

Gas Production

Productive Capacity

Source: Energy and Environmental Analysis, Inc.

Shut-In Federal Offshore Gulf Natural Gas Production

(EIA December 2005)
Bcf/d $/Mcf Shut In Production (left axis) Henry Hub Price * (right axis)

10 8

Forecast

20 16

12.34

12.61

12.02 9.93

6 4
2.4

12 8

2 0
8/22 9/11 10/1 10/21 11/10 11/30
* Trading on Henry Hub suspended from 9/23 10/6

1.5

1.0

4 0.7 0
Mar

Dec

Jan

Feb

Bcf/d = Billion cubic feet per day, $/Mcf = Dollars per thousand cubic feet

Supply Outlook
0.5 3.3

Expected Sources of U.S. Natural Gas Supply 2020

18.7

2.7 19

22.5 Quads
Lower 48
Canada
LNG

Sources of U.S. Natural Gas Supply

6.8 2.3

30.7 Quads
Lower 48
Canada
LNG
Alaska

Major Portions of the Gas Resource Base Are Not Accessible

21 TCF 100% 100%

346 TCF 40% 40% 31 TCF 100% 100% Restricted Percentage 43 TCF 56% 56%

Approximately 29 trillion cubic feet (TCF) of the Rockies gas resources are closed to development and 108 TCF are available with restrictions

Challenges for the Emerging LNG Market

Projected Imports BCFD
20 18 16 14 12 10 8 6 4 2 0 2000 2005 2010 2015 2020

Import Terminals

Existing Potential
Source: American Gas Foundation 8

Worldwide Natural Gas Resources Are Vast

Global LNG Supply Facilities

Existing Under Construction Proposed

Annual Global Consumption < 2% of World Proved Reserves

Source: National Petroleum Council 9

Continued Energy Efficiency Is Critical

Encourage increased efficiency and conservation through market-oriented initiatives and continued consumer education
35 30 25 TCF 20 15 10 5 0 2003 2010 2015 2020 2025
U.S. Demand Projection Projected Demand without Efficiency Gains

5 TCF

Source: National Petroleum Council

10

Helping our customers lower their natural gas bills

Educate them about weatherproofing their homes through better insulation Set up payment programs to cushion price shocks -- including budget and levelized billing Help them with purchase plans for more efficient natural gas appliances Better energy management for homes and businesses

11

Increase LIHEAP Funding Number of households applying for LIHEAP is expected to increase to 5.6 million in 2006highest level in 12 years Current funding levels provide assistance to less than 15 percent of the eligible population
$5.1 Billion in LIHEAP funding needed

12

Regulatory Strategies in a High Price Environment Decoupling Tariffs Increased use of Hedging Conservation Riders Margin Recovery Trackers Revenue Stabilization Mechanisms Diversified Supply Portfolios, including Long-term Contracts

13

Increasingly, Energy Utilities That Deliver Natural Gas are Using Hedging as a Financial Tool to Help Stabilize Prices
70% 60% 50% 40% 30% 20% 10% 0%

% of Companies

0%

1 to 49%

50 to 99%

100%

% of Winter Supply

1999-2000

2004-2005

Sources:GAO and AGA

14

Industry Investment
To meet projected natural gas demand, 255,00 miles of new distribution infrastructure must be built, costing $100 billion

More allowance of marketbased rates for new storage would increase storage projects and mitigate price volatility

15

Projected Annual Industry Capital Demands

$50

47.2
$40 $30 $20 $10 $0 LDCs Pipelines Storage LNG Supply

2.4 5.3

0.4

0.3

Costs (in $billions)

16

Energy Utilities: An Attractive Investment Opportunity Even in Challenging Times Steady Core Market Growth Transparent Business Model Improving Financial Profiles Competitive Dividend Yield Regulatory Innovation Strong Total Return Potential

17

Growth of AGA Index (vs. S&P 500 & Dow Jones Industrials)Since Dividend Tax Legislation Enacted
70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% AGA Index S&P 500 DJI

65%

37% 27%

Increase in share price from May 15, 2003 to January 9, 2006.

18

Representing and Serving Our Customers

Stephen E. Ewing Chairman, The American Gas Association Vice Chairman, DTE Energy New York Society of Security Analysts January 19, 2006 New York, New York