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Slide 20 of 27

Natural Gas Demand

Natural gas demand is expected to increase about 4 percent this winter. Much of the increase is related to the assumption of a return to more normal weather patterns compared to last year when heating degree days (gas-weighted) were nearly 7 percent lower than normal. Higher demand is concentrated in Q1 1999.

Virtually all of the increase will occur in the seasonal markets; for the winter quarters (Q4 1998 and Q1 1999) the residential sector is expected to have an average increase of more than 7 percent and commercial consumption could move up an average of 9 percent.

There is no strong reason to expect significant demand growth from other sectors, particularly given the weakness in industrial gas demand so far in 1998.

Overall demand is expected to range from 4 percent lower or higher under the mild and severe weather conditions analyzed. Demand could be more than 10 percent higher than last year when comparing the severe weather case with last year’s milder than normal conditions.