Expand natural gas service to unserved & underserved areas of North Dakota

Natural Gas Infrastructure in ND

North Dakota Natural Gas Pipelines

Map provided by North Dakota Pipeline Authority

Communities Overview• 89 Communities Served with natural gas– 130,000 residential natural gas customers– 20,000 estimated underserved households

• 368 Communities unserved (46,038 homes)• 21 - over 1,000 population (16,630 homes)• 29 - 500-999 population (10,347 homes)• 110 – 100-500 population (13,954 homes)• 208 – under 100 population (5,107 homes)

Define alternative methods or mechanisms that are available to expand service to unserved/underserved areas that cannot currently be cost-effectively served with natural gas

Study Purpose

Policy Objectives• Economic Development• Grow market for natural gas in North Dakota• Energy security and convenience• Lower heating cost for more ND homes and

businesses

Barriers• Distance from existing pipeline and/or

interconnection costs• No large “anchor” customer(s)• Low population density• Low conversion rate• Conversion costs• Distribution infrastructure in establish areas• Cost of extension to customers

Infrastructure Cost Ranges

Infrastructure• HD PE lateral pipeline

• Steel lateral pipeline

• Pipeline Interconnection

• Town Border Stations (TBS)

Cost$400k - $500k per mile

$800k - $1 Million per mile

$200k - $3.5 Million

$500k - $750k

Existing incentives• Natural Gas incentives: sales and use tax exemptions

for materials used in compressing, processing, gathering, or refining gas.

• Liquefied Gas incentives: sales and use tax exemptions for materials used to expand or construct LNG processing plants.

• Comparable tax incentives: telecommunications infrastructure sales and use tax exemptions; income tax credits for geothermal; new or expanding business property or income tax exemptions.

Xcel Energy Case Study

Natural Gas Infrastructure in ND

Why Natural Gas Conversion?• Stability in Natural Gas Prices– Advances in production support stable pricing– Resource base has increased 30% over last 5 years

• Propane/Fuel Oil Costs More than Natural Gas– LPG is a crude oil derivative (approximately 50% of

LPG supply stream comes from crude) – crude oil price swings translate to LPG price swings

– MN/ND Fuel Oil prices have averaged 2.5X higher than natural gas over the last 3 years

• *Average Cost per therm past 3 years: – $0.47/therm x avg. annual use per customer = 1000 therms

• Estimated annual residential cost $979.64• $979.64 / 1000 therms per year = $0.9796/therm

– Equivalent cost of propane = $0.8964/gallon

Residential Example *Estimates based on Average Customer Use Monthly Annual

* New Area Surcharge $23.99 $287.88

ND Residential Service Customer Charge $18.48 $221.76

*Est. Cost of Gas (1000 Therms/year) Use/month $470.00

 Annual Sub-Total   $979.64

*New Area Surcharge may not apply to all installs*Based on 1000 therms average annual use; plus any applicable taxes or tariff fees

Small Commercial Example

• *Average Cost per Therm past 3 years:

– $0.58/Therm x avg. annual use per customer = 3,200 Therms

• Estimated annual small commercial cost is $2,636

– $2,636 / 3,200 Therms per year or $0.824/Therm

– Equivalent cost per gallon of propane = $0.754/gallon

*Based on 3200 Therms average annual use; plus any applicable taxes or tariff fees

 *Estimates based on Average Customer Use Monthly Annual

Local Distribution NAS or Extension Charge $34.99 $419.88

Small Commercial Service Charge $30.00 $360.00

*Cost of Gas (3,200 Therms/yr) Use/Month $1856.00

 Annual Sub-Total   $2,635.88

• Get a quote for natural gas service• Sign agreement– Pay for any unusual construction

• Xcel Energy service design will schedule install• Once you have a natural gas “on” door tag, notify your heating

dealer• Discuss rebate opportunities for installing energy efficient

equipment • Have a licensed professional pipe/convert appliances to

natural gas• Enjoy all the savings, comfort, and convenience

Process to get natural gas service?

Heating Rebates

Appliance Efficiency Existing Home Rebate

Furnace 90-93.9% AFUE94% AFUE

$75$100

ECMElectronically Commutated

Motor $100

Boiler 84% AFUE $100

Natural Gas Water Heater Rebates

Appliance Energy Efficiency Level Rebate Amount

Standard tankwater heater

.62 EF

.64 EF$40$60

Tanklesswater heater .80 EF $100

Questions?

Contact Info:

NaturalGasMN@xcelenergy.com or 800-894-3368

Mark Nisbet Kim HoeschenND Principal Manager Sr Gas Territory Representative701-241-8607 701-241-8604