The Blue bulletin

As you know, Gaz Métro undertook a few years ago to move its supply structure from Empress to Dawn, with a view to ensuring security of supply and reducing overall gas supply costs. Of the various steps required for that change, one of the most important is moving the natural gas delivery point for direct purchase customers from Empress to Dawn. As has been announced, that step will be completed on November 1, 2016.

TransCanada’s King’s North construction project is definitely tied in with that move, since it will significantly increase the availability of short-distance transportation capacity for supplying the territory that Gaz Métro serves from Dawn. However, TransCanada announced in August 2016 that its construction work was slightly behind schedule, and that the additional transportation capacity made possible by the King’s North project would not be in service until the end of November 2016. That service start date still stands, based on the progress of work on that project that TransCanada indicated in its latest report to the National Energy Board.

It is important to note that this in no way changes the fact that all direct purchase customers will have to deliver their natural gas to Dawn, rather than Empress, starting November 1, 2016.

The price of natural gas in Western Canada has been rising since the spring, but at a lower pace than anywhere else on the continent and, in particular, at Dawn. The price differential between Empress and Dawn is widening, which has changed – at least temporarily – the cost savings associated with moving the Gaz Métro supply structure from Empress to Dawn.

The following graph shows seasonal changes in the price differential between Empress and Dawn. Historical prices (blue bars) correspond to the average daily spot prices. Prices for future periods (purple bars) correspond to the financial market price as at September 8, 2016.

The average historical differential between Empress and Dawn is approximately $0.85/GJ , which is below the Empress-to-Dawn transportation rate. For winter 2016-2017, the differential has been established at $1.40/GJ while for the year 2016-2017, it was at $1.20/GJ.

These observations may raise some questions, including:

• What factors could account for a possible increase to the price differential between Dawn and Empress next winter?
• Is this situation cyclical (short-term) or structural (long-term)?
• Is the move to Dawn still cost-effective?
• In the case of Gaz Métro, what could account for the apparent difference between the service rates offered and the posted market rates?
• Why do some customers feel that their bills have not gone down despite the reduction to supply structure costs?

  Download the answers (PDF)

To achieve ambitious energy efficiency objectives, technological innovation can sometimes be the best option. Gaz Métro also offers financial assistance in this area, to promote the adoption of new technologies, or the innovative use of existing technologies, that offer high potential for energy efficiency. This financial assistance can range up to $100,000. Here are a few projects that have been carried out, or are in progress:

• Pre-heating the combustion air using solar power
• Recovering heat from dryers in an industrial laundry facility
• A new oven control system
• Sub-metering and individual billing in multi-dwelling buildings

In this program, it is important to demonstrate the potential energy saving and the innovativeness of the technology. In addition, the Natural Gas Technologies Centre (NGTC) can guide you at every step of your project. Don't hesitate to get in touch with us to bring your engineering project to fruition!

In order to cover its needs in connection with the cap-and-trade system for greenhouse gas emission allowances (CATS) while reinjecting funds into Québec, Gaz Métro would like to purchase emission units from its heavy emitter customers who want to dispose of units that exceed their needs, whether they were acquired as part of previous transactions or obtained free from the Québec government. Gaz Métro is therefore issuing a new call for interest to discuss offers that could translate into short-term transactions, where applicable.

For any questions or to indicate your interest, contact Hugo Levert, Carbon Market Senior Advisor, at 514 598-3186.

Did you know?
On May 19, the Ontario government published the final regulation for the implementation of its own cap-and-trade program. The Ontario program will take effect on January 1, 2017 and will tie in with the Québec-California joint market starting January 1, 2018.