Pat Reddy, chief financial officer

Pat Reddy: I believe we're very well positioned. We took a number of steps last year to improve our financial flexibility. For example, we issued equity in order to keep our balance sheet strong. We maintained a diversified line of credit facilities that enables us to borrow efficiently. We've preserved our investment-grade credit ratings during a time of extreme volatility, all while still securing new projects that grow our earnings.

Pat Reddy, chief financial officer

Pat Reddy: Our shareholders can count on Spectra Energy to deliver results, grow the business and return value to our investors in the form of steady dividend payments. The earnings generated by our fee-based businesses are more than adequate to fund our dividend payments. And even in a difficult year for commodity prices like we saw in 2009, we still received $100 million in cash distributions from DCP Midstream, our 50/50 joint venture with ConocoPhillips. Over time, as our earnings grow, we would expect to be able to increase our dividend consistent with our stated 60 to 65 percent payout ratio.

Pat Reddy, chief financial officer

Pat Reddy: We're able to finance a good portion of our growth with cash flow generated by current operations. And our new projects will contribute additional cash returns that we can plow back into the business. We'll finance our remaining needs with long-term borrowing since we don't foresee a need to issue Spectra Energy stock to help fund our growth. And we're accomplishing all this while maintaining our investment-grade credit ratings.

Joe Ramsey, group vice president,
project execution

Joe Ramsey: The biggest impact we've seen has been on the price we are paying for high quality steel line pipe for our projects. Pipe costs have declined 35 to 40 percent from the peaks we saw two years ago, and construction contractor costs came down slightly as overall industry activity slowed in 2009.

Joe Ramsey, group vice president,
project execution

Joe Ramsey: We're doing a lot to keep our projects on track – and we adhere to exacting project development and execution standards. No one likes surprises when it comes to costs, so we've implemented required levels of contingency and escalation in project cost estimates to allow for the unexpected. We bring together all of the required project support functions, such as legal, engineering, regulatory, environmental, communications, government relations and right-of-way personnel, early in the process so we can consider all issues right from the start. Together, these and other efforts give us great confidence in our ability to complete projects on time and on budget.

Bill Yardley, group vice president,
transmission – Northeast U.S.

Bill Yardley: We've got a lot going in the Northeast, focused in two key growth areas. The first involves building infrastructure to deliver Marcellus shale gas to market, and the second involves infrastructure to move Rockies
gas to market. Our New Jersey-New York expansion project serves customers by taking advantage of our proximity to both the Marcellus shale and a major consuming region, New York City. This involves extending our Texas Eastern system by constructing a new pipeline into Manhattan. Separately, our TEAM expansion program will move Marcellus gas originating in southwest Pennsylvania to eastern markets. And when it comes to projects under way to bring Rockies gas to market, we've got two projects coming into service this year – TIME III and TEMAX. Notably, all of this infrastructure build-out is supported by firm, long-term customer contracts.

Bill Penney, vice president,
business development – Northeast U.S.

Bill Penney: New supply coming into the region is the primary driver for the unparalleled growth we are seeing on the Texas Eastern, Algonquin and Maritimes & Northeast systems. Growth entering this region also provides opportunities for our storage assets at Union Gas and our Southeast U.S. assets like the East Tennessee Natural Gas pipeline. Demand is keeping up with the new supply, thanks in part to the many advantages of natural gas. A significant driver of natural gas consumption continues to be the robust demand outlook for natural gas-fired power generation.

Bill Yardley, group vice president,
transmission – Northeast U.S.

Bill Yardley: Not at all, in fact it's been just the opposite. Three new LNG receiving terminals have been completed in the last two years in the Northeast, the first LNG terminals to be constructed on the East Coast in decades. Spectra Energy's pipelines are the only ones that directly connect to these terminals. To support these customer facilities, we've recently completed new pipeline projects totaling approximately $600 million. These projects, again all supported by long-term customer contracts, will provide good solid earnings for many years to come..

Bill Penney, vice president,
business development – Northeast U.S.

Bill Penney: Absolutely. Our customers continue to retain their capacity further back to the Gulf of Mexico – a reliance confirmed by our history of high contract renewal rates. This capacity is attractive to our customers from a reliability, diversification and cost perspective, and will provide customers with significant supply alternatives as the new supply basins mature in North America. Additionally, the capacity on the southern end of our system provides customers with access to the emerging Barnett and Haynesville shales, further diversifying their portfolios.

Doug Bloom, president,
Spectra Energy Transmission West

Doug Bloom: Very significant. While production in the Western Canadian Sedimentary Basin is declining, gas supply from the newly developing unconventional and shale plays continues to grow in British Columbia (BC). The Montney and Horn River plays are among the highest potential unconventional gas developments in North America, with combined estimates of original gas in place of anywhere between 580 and 1,200 trillion cubic feet. Canada's National Energy Board estimates that natural gas production in British Columbia will increase from 2.9 billion cubic feet per day in 2009 to 5.9 billion cubic feet per day in 2020.

Doug Bloom, president,
Spectra Energy Transmission West

Doug Bloom: We're very well situated for growth. The good news for us is that the vast majority of Spectra Energy's processing capacity and gathering pipelines in British Columbia is in proximity to the new unconventional resources. And we have 2.3 billion cubic feet per day of mainline transmission capacity to take the gas to markets in BC, the U.S. Pacific Northwest, Alberta and points east.

Duane Rae, vice president, field services,
Spectra Energy Transmission West

Duane Rae: In 2009, we invested $237 million of capital to expand our capacity to serve the BC producing community. To provide incremental gathering and processing capacity for Montney gas, we constructed the 90-kilometre South Peace gathering pipeline, retrofitted the McMahon Gas Plant and twice expanded our West Doe Gas Plant. To serve Horn River producers, we've initiated a multi-phased billion dollar expansion of our Fort Nelson area facilities, including pipeline looping, plant, gathering and compression reconfiguration, and new plant construction, supported by long-term contracts with customers for 790 million cubic feet per day. Finally, in 2009 we added compression to our eastbound transmission system to take incremental BC gas to markets in Alberta and beyond.

Susan Waller, vice president,
stakeholder outreach

Susan Waller: We begin by listening and establishing a dialogue with those who know and care for the area where we plan to work. We want to introduce Spectra Energy and inform local, regional and federal officials of our plans – an early collaboration that helps us identify specific concerns and potential mitigation opportunities. We then begin discussions with affected property owners about the proposed route and initiate our regulatory process, which includes community feedback and consideration of alternative routes and environmental sensitivities. We also benefit from our employees living and working in the communities where we operate around North America. This gives us great insight and a vested interest in serving communities well.

Susan Waller, vice president,
stakeholder outreach

Susan Waller: Absolutely. Our approach to stakeholder participation is based on the belief that those who are affected by a decision, such as those around our pipeline projects and operations, have a right to be involved in the decision-making process. Public participation for Spectra Energy includes the promise that stakeholders' contributions will be considered throughout the process.

John Bonin, manager,
government and Aboriginal affairs,
Union Gas

John Bonin: When working on projects, we begin consulting with affected Aboriginal communities as early as possible and sustain that dialogue throughout and beyond project development. When we could affect a community or traditional way of life, we work with \the Aboriginal community to accommodate its concerns.

We're intently focused on encouraging sustainable economic growth, which in turn contributes to overall quality of life and advances in other areas like education, job creation and entrepreneurism. We support Aboriginal businesses through increased procurement of goods and services, and support of initiatives that lead to economic activity. A good example is Union Gas' sponsorship of the online Aboriginal Business Directory that serves as an interactive resource to help businesses identify Aboriginal goods and services. We're encouraging our business partners and contractors to do the same and are seeing great results in increased Aboriginal procurement on projects like our 2009 Fort Frances pipeline replacement project.

Reggie Hedgebeth, general counsel

Reggie Hedgebeth: We believe natural gas must play a prominent role in a carbon-constrained economy as a reliable, domestically abundant and cleaner alternative to other fuels. So as we think about greenhouse gas (GHG) policy options, we focus on the practical: policies should be simple to administer, efficient and equitable. Given the broad scope of the climate issue, we prefer a federally crafted, economy-wide, market-driven, continental program versus an assortment of inefficient state, provincial and regional measures. As for the right policy mechanism for reducing GHG emissions, we support setting a clear, predictable price on carbon that will change behaviors and achieve environmental objectives without disrupting the economy. We believe a revenue-neutral carbon tax is a far better approach than the often promoted cap-and-trade mechanism.

A carbon tax directly and transparently assesses the true costs associated with emissions. Such a policy framework would make existing low carbon dioxide-emitting options more attractive and can drive market-based investment in low-carbon technologies and future infrastructure. Finally, a revenue-neutral carbon tax would mean little, if any, overall change in taxation for individuals or businesses. In fact, the revenue raised could go toward reducing the tax burden by lowering personal or business taxes.
 

Pete Sheffield, vice president,
energy policy and government affairs

Pete Sheffield: Natural gas consumers and industry alike have benefited from a relatively stable regulatory environment that has yielded a safe, reliable, robust and interconnected pipeline network. Our ability to execute on our growth strategy is in many ways dependent on a stable regulatory compact. In these uncertain political times, it's imperative that regulators and lawmakers remain committed to a framework for siting and permitting natural gas infrastructure that recognizes the overall benefits to society of responsible development. What's more, policies related to rate-making must encourage investment in necessary infrastructure. Our focus here is to ensure that policymakers continue to respect the linkage between capital attraction and regulatory stability.

Reggie Hedgebeth, general counsel

Reggie Hedgebeth: In the last year, we've increased our advocacy of natural gas – not just in Washington and Ottawa, but across our system. Although we've always worked to educate stakeholders on the benefits of natural gas and Spectra Energy's role in the value chain, we've sharpened our advocacy efforts to ensure public officials are working from an updated playbook when it comes to natural gas. Our objectives are clear: we want to ensure that natural gas is positioned as a major part of the solution in energy and environmental public policy debates, and recognized as a vital contributor to economic stability, growth and job creation in North America.