Natural gas price outlook

This time last year, the financial markets were showing some concern about the evolution of natural gas prices. A warmer summer in 2018 created higher demand for natural gas to meet the air conditioning needs of our neighbours to the south, which helped drive up the prices and substantially reduce the growth of natural gas storage levels in the United States. Yet, high levels of storage are needed during winter times when natural gas demand exceeds the supply. Given this situation, the futures prices for the winter months gradually increased as winter drew closer.
And then came a particularly cold November 2018, which drove natural gas prices up to levels rarely recorded for early winter. In November and December 2018, the average natural gas spot price was around $5.08/GJ, or $1.46/GJ more than in November and December 2017.
We, of course, know what happened next. With the exception of a few spikes in late January and early March, the temperatures returned to near normal levels and the prices ranged between $3 and $4/GJ.

When winter ended, natural gas prices trended downward, settling at around $2.57/GJ, compared with $3.74/GJ for the same period in 2018. This is a significant difference caused by cooler summer temperatures and 14% higher storage levels, all against a backdrop of continued strong and growing natural gas production.
The price outlook for winter 2019–2020 is now developing in what might be considered a more optimistic environment than at the end of summer 2018. With the commissioning in the second half of 2018 of the Nexus and Rover pipelines connecting the Appalachian gas fields to Michigan, natural gas is more abundant in that region and in Southern Ontario where the Dawn hub is located.

Given this context, and based on a scenario of normal temperatures, the markets are expecting natural gas prices to stay below $4/GJ at the Dawn hub for winter 2019–2020.

Update on the Régie de l'énergie RNG filing

Last September, the Régie de l’énergie rendered a decision concerning the provisional application of a tariff for renewable natural gas (RNG) consumption. With this decision, it approved the application of a provisional RNG tariff effective June 19, 2019. As for the definitive application of the tariff, it should be discussed this fall with the various stakeholders in the filing and the Régie de l’énergie, with final approval anticipated for spring 2020.

Considering the actual limited offer in RNG, a request list is being created to accept new provisional tariff customers according to certain conditions. The list will be based on the principle of first come, first served. Therefore, if you are interested in RNG, do not hesitate to contact your advisor in order to fill out the form as soon as possible. Énergir will get in touch with you as soon as volumes are available to meet your needs.

Lastly, Énergir reminds its customers that they also have the option of purchasing RNG directly from a supplier or producer to procure RNG voluntarily.

Update on the 2019-2020 rate case

In the May 2019 bulletin, we provided information on the 2019–2020 rate case filed with the Régie de l’énergie. So far, nothing has changed or been confirmed, but we will update you as soon as there is anything to report.

The latest on our energy efficiency programs

In order to continue helping you optimize your natural gas consumption, we have introduced a number of enhancements to our energy efficiency programs, effective October 1, 2019:
  • A more generous grant for feasibility subsidies 
    The maximum financial assistance available for a feasibility study has increased from $20,000 to $50,000. However, this amount, which helps cover the costs of a study to identify the opportunities for improving the energy efficiency of a building or process, cannot exceed 50% of the total study costs. 
  • Did you know we also offer a grant for smart thermostats?
    You could receive a grant of up to $100 for each smart thermostat you install in your offices. Talk to your advisor if you are interested in this grant.

Coming soon: An energy management system (EMS) grant

Énergir is currently developing a grant for industrial customers implementing an EMS. This type of system allows an organization to continuously improve its energy performance through long-term energy and cost savings.

The grant, which will be available before year end, will be up to $350,000, divided into four distinct steps.

For more information about the EMS grant or to indicate your interest, contact your advisor or fill out our form.

Changes in C&T prices over the last three months

From June through September, the price of emission units on the market initially increased significantly, climbing from US$17.10 on June 18 to a high of US$17.84 on July 3. It then trended generally downward, reaching US$17.02 on September 19.

The third auction of emission units for the year was held on August 20. The final selling price of current vintage emission units was set at US$17.16 (CAN$22.82), while that of future vintage emission units was set at US$16.85 (CAN$22.41). The selling prices were relatively in line with the consensus among analysts, and so the market did not experience any particular volatility when the results of the auction were made public.