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Special Called Board Meeting Authorization of new Portfolio III Bonds

Special Called Board Meeting Authorization of new Portfolio III Bonds. June 9, 2011. Agenda. Overview of Gas Authority debt - attached Results of bond pricing Board action – Authorize staff to accept proposed pricing and finalize issuance on bonds. June 9, 2011. Special Called Board Meeting.

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Special Called Board Meeting Authorization of new Portfolio III Bonds

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  1. Special Called Board MeetingAuthorization of new Portfolio III Bonds June 9, 2011

  2. Agenda • Overview of Gas Authority debt - attached • Results of bond pricing • Board action – Authorize staff to accept proposed pricing and finalize issuance on bonds June 9, 2011 Special Called Board Meeting - 2 -

  3. Components of Gas Authority Liabilities • Total Liabilities – Audited Balance Sheet at 12/31/10$ 3,219,000,000 • Less: Main Street Prepayments – Limited-recourse debt - $ 2,481,000,000 FV of Derivatives, A/P and Due to Members- $ 446,000,000 • Net Portfolio III debt and other obligations$ 292,000,000 • All ownership interests in oil and gas reserves including interests owned through participation in Public Gas Partners • Storage inventory and seasonal working capital • Other miscellaneous gas supplies (e.g. landfill prepayment, etc.) June 9, 2011 Special Called Board Meeting - 3 -

  4. Rationale for Issuance of new Bonds Portfolio III debt is comprised of • 2 commercial bank lines of credit for MGAG and 3 lines for PGP Pool 3 • 2 series of short-term Notes with one maturing every 6 months, and • 2 issues of 10-year amortizing bonds, 1 each by MGAG and PGP Issuance of new Gas Authority Bonds • Reduces reliance on bank lines of credit and market access for additional Short-term Notes • Reduces total line of credit borrowings by $40 million and ST Notes by $10 million • Takes advantage of current historically low interest rate environment • Converts variable rate obligations to fixed rates over 5-year term • Maintains reasonable cash-flow flexibility over estimated lives of gas reserves • Intermediate term allows for repayment or refinancing as required by future project development and net cash flows • Utilizes Gas Authority’s higher credit rating minimizing project interest costs June 9, 2011 Special Called Board Meeting - 4 -

  5. MGAG/PGP Debt Summary * Available working capital may be utilized in lieu of lines of credit in order to minimize project interest costs ** Balance outstanding includes unamortized premium June 9, 2011 Special Called Board Meeting - 5 -

  6. Changes to Portfolio III Debt June 9, 2011 Special Called Board Meeting - 6 -

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