Southern Star Central Gas Pipeline Spring Customer Meeting

1. Southern Star Central Gas PipelineSpring Customer Meeting Overland Park, Kansas April 19, 2007

2. Jerry Morris President & Chief Executive Officer

3. 2006 Accomplishments • Highest customer survey results in 13 years of survey • No lost time accidents since September 7, 2004 • No unscheduled firm service interruptions due to pipeline failures • All planned pipeline integrity work completed • Ozark Trails project placed in service – 25,000 dth/d incremental service

4. 2006 Accomplishments Cont. • Waynoka Supply lateral project Approved • Two major business growth opportunities identified – Westar and Midwest Energy • Worked with Front Street, BP Amoco, and NNG to attach incremental gas supplies at the BP Jayhawk Plant • Successfully implemented first phase of AIM and SUCCESS initiatives • Held our first SSU Leadership Conference

5. LONG-TERM STRATEGIES • Maximize Shareholder Value • Provide Exceptional Customer Service • Operate Safely, Reliably and Efficiently • Ensure Workforce Excellence

6. 2007 Goals • Implement Navision by April 1 • Achieve Financial Targets • Complete Waynoka Project by July 1 • Complete Westar & Midwest Goodman Laterals • Implement Base Capex Plan on Time & within Budget

7. 2007 Goals Cont. • Complete HCA Integrity Testing Goal • Begin Development of Gas Measurement System • Provide Opportunities within SSU • Evaluate SUCCESS self-nominations • Implement AIM Action Items

8. Bob Bahnick Senior Vice President, Operations & Technical Services

9. Operations & Technical Support • Recent Organizational Changes • 2007 Pipeline Activities • Pipeline Integrity Projects • Pipeline Replacement Projects • 2007 Storage Activities • KCC Storage Regulation Compliance • Storage Work Plans

10. Jim Kline Director Support Services

11. 2007 Pipeline Activities Wichita District Run in-line inspection tool for Part of The Wichita 16” Line TG (13.6 miles total - 9.1 miles HCA) Replace .85 miles of 20” pipe on the Wichita 20” Line G

12. 2007 Pipeline Activities Edmond District Relocate Cement 16” Line VP launcher Relocate Cement 16” Line VP receiver to end of Line VP Chemical Cleaning of Cement 16” Line VP Run in-line inspection tool for Cement 16” Line VP covering 3.47 miles of HCA

13. 2007 Pipeline Activities Independence District Pressure Test 0.79 miles of the Neodesha 8” Line EO - 0.50 miles of HCA Replace 0.45 miles of Neodesha 8” Line YB - 0.08 miles of HCA

14. 2007 Pipeline Activities Kansas City District Replace Kansas City 16” Line DLA - 0.32 miles of HCA Run in-line inspection for Sugar Creek 16” Line XMB (34 miles covering 11.89 miles of HCA Replace – Sedalia 12” Line XT at Whiteman AFB 0.83 miles covering 0.27 miles of HCA

15. 2007 Major Pipeline Projects Replace 10 miles of the Ottawa 20” Line ES Original line installed in 1929 Constructed with acetylene welds Project scope includes 10 miles of 20” Pig launcher and receiver

16. 2007 Major Pipeline Projects Replace 0.8 miles of 24” Oklahoma City Line V Replacement will eliminate repair of multiple anomalies discovered by 2006 smart pig Relocation from existing route will allow pipeline to be in clear zone at Tinker Air Force Base.

17. Jim Neukam Manager, Storage Services

18. Southern Star CentralStorage Facilities • 8 Storage Fields • 514 injection and withdraw wells • 53 observation wells • 43BCF Storage Capacity • 1.225 MM/D Deliverability

19. KCC Storage Regulations • Operating Under Provisional Permits • Fully Authorized Operating Permit Applications In Preparation • Multi-Year Initial MIT Program (Kansas) • 174 Storage Wells with Previous Tests • 114 Storage Well Tests in 2004 • 113 Storage Well Tests in 2005 • 114 Storage Well Tests in 2006 • Repeat MITs on 5 year Frequency

20. KCC Fully Authorized Operating Permits

21. 2007 Storage Work Plan • 2007 Storage Integrity Plan – KS Fields • 41 Mechanical Integrity Tests • 71 Vertilogs (Alternate MITs) • 2007 Storage Integrity Plan – Webb Field, Oklahoma • 1 Mechanical Integrity Tests • 14 Vertilogs (Alternate MITs) • Storage Well Inspection & Valve Testing – 567 Wells

22. 2007 Storage Work Plan • Complete Three KCC Applications for Fully Authorized Operating Permits • Colony Storage Field Modifications • Piqua Storage Field Modifications • North Welda Field Modifications (Pending FERC Approval) • South Welda Booster Expansion (FERC Filing) • Storage Field Performance Evaluations

23. Scott LaMar Manager - Rates & Strategic Planning

24. FERC Order 2004 Vacated On November 25, 2003, FERC adopted standards of conduct that applied uniformly to natural gas and electric utility transmission providers. Order 2004 revised the standards of conduct from Order 497. Through Order 2004, the Commission expanded the affiliates definition to include basically any affiliate involved in the energy (gas or electric) industry. Order 497 had previously defined affiliates as only those in the marketing arena.

25. FERC Order 2004 Vacated Cont. The Court of Appeals vacated Order 2004 on November 17, 2006. On Jan 9, 2007, FERC issued Interim Rules that reinstated all the standards of conduct of Order 2004 that were not at issue in the case before the Court of Appeals. FERC is currently working on a Notice Of Proposed Rulemaking (NOPR) to establish permanent rules and have given partial clarification on the Interim Rules. All indications point to an affiliate definition including only gas marketers on our system. We will continue to monitor these actions and conduct our business accordingly.

26. Flexibility Although FERC Order 2004 has been vacated, we are still required to follow our tariff and treat all our shippers in the fairest and most equitable manner possible. FERC has been stressing in recent years that pipelines follow their tariff and backed that up this past year by penalizing some pipelines who didn’t. We realize how important flexibility is to our customers and we will continue to be as flexible as possible within the parameters of our tariff. We will also continue to explore new services to add to our tariff that will offer additional value for our customers.

27. 2006 Fuel Filing • The 2006 Fuel Filing (RP07-96-000) was filed 12/1/2006 • Production Area fuel retention dropped from 1.86% to 1.18% • Market Area fuel retention dropped from .71% to .51% • Storage fuel retention increased from 3.08% to 6.29% • Technical conference was held 2/2/07 in Washington, DC to discuss storage fuel % • Responses have been provided for all data requests received

28. Storage Filings During storage field evaluations for the KCC fully authorized operating permits required by the Kansas Underground Porosity Gas Storage Act of 2002, Southern Star identified several issues that require FERC certificate amendments. FERC filings have already been made for Colony, Piqua, and North Welda. The Colony and Piqua filings have been approved by FERC orders. Additional filings are expected for the McLouth and South Welda storage fields.

29. Storage Filings These storage filings generally request the following: • Expand acreage for gas storage, mineral, and pipeline easement rights • Redefine the cap rock for each of the fields • Construct facilities (compression and laterals) to recover gas in fields where migration from original storage reservoirs is believed to have occurred (only when required) Although costs and time are associated with these improvements, they are required by KCC regulations and increase the security and integrity of our storage fields.

30. Gary Hines Manager - Gas Management

31. Areas of Interest Weather Storage Measurement Reports 2007 Planned Maintenance Gas Quality Waivers

32. Summer Outlook

33. Kansas City HDD Chart

34. SSC EIA: 2006 vs. 2007

35. EIA – 5 Year Comparison

36. Current Storage Status • 5 of 8 Fields Deadweight Tested • Why Perform A “Low-Inventory” Test? • GT&C Section 13.4 • Spring Low Inventory • “…perform the end-of-the-withdrawal-cycle shut-in pressure test on each field at the point in time when SSC reasonably believes the field is at or near its lowest inventory level that will be achieved. • Fall High Inventory • Visa-versa

37. Measurement Report Upgrades • Initially Rolled Out Feb 9th • Reverted To Existing Reports Feb 9th • Current Status • Validating Security • Increasing Flexibility • Proposed New Roll Out in May

38. 2007 Planned Maintenance • Edmond Station • April 3rd • Expected to last 60 days • Capacity cut to 105,000 dth/day • Pipeline Integrity • “Sugar Creek” (LS 235, East of Peculiar Sta.) • “Cement Line” (LS 340, S. of Edmond) • Line Segment 120, Wichita Area • ILI Run Complete

39. 2007 Planned Maintenance – Cont’d • Rawlins Hesston • April 16 – 20 • Arlington Station • April 16 – 25 • Hoxie Station • May 14 – 18 • Ogallah Station • May 14 – 25 • Cheyenne Station • September 24 – 28 • Yuma Station • October 15 – 19 • Otis Station

40. 2007 Planned Maintenance – Cont’d • Review Posted Planned Service Outages (PSO) • Posted around the 15th of the month • Emailed to those on the PSO email distribution list

41. Current Gas Quality Waivers • April to June 2007 • LS 458 (Canadian – Blackwell) • CO2 up to 1.5% (see posted requirements) • LS 377 & 315 (Guymon – Blackwell) • HCDP for third-party storage operators • Always Evaluating Others

42. Jeff Davis Chairman, Missouri Public Service Commission

43. Natural Gas Purchasing & Planning: A Commissioner’s PerspectiveSouthern Star Central Gas Pipeline Spring MeetingApril 19, 2007

44. Disclaimer The opinions expressed here today are the opinions/impressions of one Commissioner. Nothing in this presentation should be attributed to any position in any particular case or to any other member of the Commission, the Commission as a whole, any member(s) of the MO PSC staff or anyone else.

45. Topics Missouri Local Distribution Company Natural Gas Procurement Responsibilities Natural Gas / Electricity Interdependability Issues Natural Gas Market Conditions

46. LDC Responsibilities The LDC is responsible for managing gas costs to consumers. They seek to: Fill their storage before winter when natural gas prices are usually lower. Storage is also necessary to maintain reliability of supply during the winter. Implement plan for purchasing natural gas in a prudent manner that insulates consumers from spikes in the price of natural gas. Enter into reliable contracts for the supply and delivery of the natural gas.

47. The PGA Purchased Gas Adjustment charge is the charge the LDC uses to recover its cost for natural gas. The PGA consists of two elements: The LDC’s projected cost per unit to receive natural gas for delivery to customers mixed with any known cost per unit. A factor that returns any overcollections or charges any under-collections of gas cost for the previous year (the Actual Cost Adjustment - ACA). The LDC’s cost per unit to receive natural gas typically includes the wholesale cost of the natural gas, interstate transportation charges, storage charges and fuel for compression. Although the PGA may include incentive plans, the PGA does not include a mark-up or “profit” for the LDC.

48. Observations Staff GW Case Observations Three General Categories of Hedging Activity 80% or More (AmerenUE & Aquila) 50% to 60% (Atmos, Laclede & MGE) Little or None (SMNG, MGU & Fidelity) Mostly Year-to-Year Planning (One Year @ a Time) Extremely Mild Weather Clearly Impacted Bill Levels and Effectiveness of Hedging Programs

49. Observations - continued Staff GW Case Observations Some Utility Hedging Plans Impacted by Hurricane Related Price Spikes & Avoidance of Entering Into Contracts @ Record Prices Higher Hedging Activity Did Not Always Result in Lower PGA Rates Lower Hedging Activity Did Not Always Result in Higher PGA Rates 

50. Responsibilities – Smaller LDCs Challenges Facing Smaller LDCs Access to Storage Minimum Size of Futures Contracts (10,000 MMBtu) May Limit Participation Minimum Size of Supply Contracts May Limit Multi-Year Layering of Purchases Credit Requirements Propane Competition and Need to Stay at or Near Market  Smaller utilities still have options but may be different than larger utilities.