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Section 3. Business Environment <br /> This section discusses the business environment in which MMPA <br /> operates. MMPA's IRP recognizes electricity market uncertainties <br /> that influence planning decisions. <br /> Energy Industry in The energy industry is going through a period of transition that <br /> Transition includes: <br /> • Decreasing cost of generation resources such as battery <br /> storage systems, solar, and wind generation that allow these <br /> generation technologies to better compete with traditional <br /> fossil fuel-fired generation; <br /> • Advances in hardware technology such as smart meters, as <br /> well as software technology such as energy management <br /> systems, that utilize artificial intelligence allowing customer <br /> access to real-time energy consumption information and <br /> providing better decision-making tools for utilities and their <br /> customers; <br /> • Evolution of customer preferences where more utility <br /> customers than ever before express increased interest in their <br /> utilities procuring energy from cleaner sources of energy; <br /> and <br /> • Scaling back of federal environmental regulations on one <br /> hand and ramping up of corporate commitment to solving <br /> environmental issues on the other. <br /> The aforementioned transition in the energy markets and the <br /> uncertainties of the future trajectory of delivering cost effective, <br /> reliable power with small or no environmental impact contribute to a <br /> challenging planning environment. <br /> Low Natural Gas Natural gas prices are low. The shale revolution continues to put <br /> Prices downward pressure on near to medium term gas prices. The U.S. <br /> became the largest producer of petroleum and natural gas in the <br /> world in 2012. The U.S. now produces nearly all the natural gas it <br /> consumes. Some studies project the share of shale in U.S. natural <br /> gas production is projected to rise to 45% by 2035. <br /> Despite the robust near-term supply of natural gas, long term prices <br /> are less certain because of factors such as coal to gas switching, <br /> increased consumption from industrial and commercial production, <br /> possible environmental regulations, and increase in LNG and oil <br /> exports. <br /> 77 <br />