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:
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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?