Degree days and number of interruption days for winter 2016-2017

Actual temperatures for October, November and December were slightly warmer than normal, as shown in the graph.
While we have experienced milder temperatures to date, below is a reminder of the number of planned and maximum interruption days, per sub-rate, for this winter. Note that as at January 18, 2017,the number of actual interruption days is 7 for component B customers, and 8 for component A customers.

    Natural gas prices

In 2016, continental gas prices rose by more than $1.00 per gigajoule. This increase was due to a decline in drilling activities, limiting growth in production in the United States and Canada alike. The surplus of natural gas accumulated during the winter 2015 El Nino episode has finally been resolved in the United States. However, Canadian storage levels are still higher than the average for the past five years.

The increase in natural gas prices was more pronounced at the Dawn hub, in anticipation of moving supply from Eastern Canada’s three main natural gas distributors. Prices at Dawn have also been more volatile than elsewhere on the continent since mid-November.
However, since the beginning of 2017, there has been a significant drop in continental natural gas prices, as a result of higher temperatures in the last week of December. The market is also reacting to weather forecasts, which predict mild temperatures in January across most regions of the continent. Again, this price slump is more pronounced in the Dawn market. It is true that gas storage levels in Eastern Canada are relatively high, and January’s mild conditions will probably push down the hub’s liquidity risk premium.
That said, it is still too soon to affirm a downward trend.

Gaz Métro's position - Bill 106

The Régie de l’énergie has received from the Minister of Energy and Natural Resources a request for opinion on the measures likely to improve rate practices in the electricity and natural gas sectors. In doing so, the Régie has asked Gaz Métro to submit a report presenting its position on rate structures and on the integration of new technologies.

Rate structures: Gaz Métro submits the following position
  • The new distribution rate that will emerge from file R-3867-2013 should be a means to achieve such commercial objectives as improving the competitive position of natural gas and developing new markets or new regions, particularly through the optimal level of cross-subsidization to ensure maximal use of the distribution network.

Integration of new technologies: Gaz Métro adopts the following positions:
  • Mechanisms should be put in place to accelerate energy efficiency efforts by ensuring that certain costs related to the Global Energy Efficiency Plan (GEEP) be considered as regulatory assets incorporated in the rate base.
  • To ensure an increase in non-emitting renewable energy that can transit in the natural gas distribution system, measures should be adopted. These should include the provision of other services in addition to supply and transportation services, the adoption of a new formula to fix the renewable natural gas (RNG) purchase price and the implementation of a voluntary RNG purchasing model.
  • To step up the substitution of more polluting forms of energy and protect the future competitiveness of natural gas consumers, compressed natural gas (CNG) and liquefied natural gas (LNG) should be used on a large scale to help develop road and maritime transportation markets and serve remote areas and consumers outside the network.
  • To facilitate the energy transition sought by the 2030 Energy Policy, the regulatory framework should allow for greater diversity of services offered by gas distributors as part of their regulated activities and an increase in the type of assets that can be included in their rate base (without constituting a commercial monopoly).

Increase productivity by optimizing furnaces

Regardless of the type of furnace in your plant, there are a number of ways to improve performance. First, you will need to identify areas of heat loss:
  • combustion products – chimney;
  • furnace walls and openings – heat transfer;
  • combustion system – burner and gas train.
A mass and energy balance, including a measurement period, will establish energy consumption per unit of production. Critical measuring parameters will subsequently help assess heat loss, including the furnace pressure, wall temperature, condition of the insulation and refractory, and burner modulation capability.

Measures for generating up to 30% savings
  • It is possible to generate 30% savings by regulating the combustion system in a way that limits excess air, preheats combustion air or increases burner modulation.
  • It is also possible to generate 30% savings by recovering and using the heat in combustion products to preheat combustion air or ventilation air, or to preheat a fluid.
  • Fitting sensors to regulate the furnace temperature, or improving the insulation or refractory will generate up to 10% savings.
All these measures qualify for our financial assistance program for the implementation of energy savings measures. By demonstrating potential savings, up to $175,000 in financial assistance is available and is calculated per cubic metre of natural gas saved and according to the payback period (simple PP).

For more information, visit Major Industries website or contact your advisor.

Diversify your gas purchases: transportation from Kensington to Dawn

Direct purchase customers have had to deliver the molecule to Dawn since November 1, 2016. However, this does not mean that the acquisition of the molecule needs to be carried out directly at Dawn, since the purchase may be made freely from any supply point, such as Empress, from the moment the molecule is delivered and transported to Dawn. Thus, customers may continue to acquire the molecule at Empress and transport it to Dawn, or acquire the molecule at any other point and transport it to Dawn through an existing pipeline or future pipeline.


The Nexus pipeline developer has taken steps with Gaz Métro to carry natural gas along DTE and Vector pipelines from Kensington, Ohio to Willow Run, Minnesota, and subsequently to its final destination at Dawn. If you would like more information regarding this pipeline and the possibility of using this method of transportation, please contact:
Erika Young, Spectra Energy
713 627-4609
edyoung@spectraenergy.com

Inventory revaluation

On November 1, 2016, Gaz Métro finished moving its supply structure from Alberta to Ontario. Effective that date, the commodity price at the delivery point became the supply service reference price at Dawn, while the transportation price would in the future reflect the cost of bringing the commodity to a franchised site from the same point.

These changes were reflected in the value of Gaz Métro’s inventories. Thus, the value of the transportation inventory dropped while the value of supply inventories increased. This inventory revaluation translates into an amount to be recovered (transportation) and remitted (supply) over the next 12 months. The net result of this revaluation appears on the line “Inventory-related adjustments (Price fluctuations and costs incurred to maintain inventories)” of your bill. The inventory adjustment tariff is essentially based on your winter consumption profile – thus, the higher your heating consumption, the more you will be affected by the revaluation.
The following table shows an example where price changes affect the amounts to be recovered through the inventory adjustment tariff. Since November 1, 2016, natural gas stored in Québec includes supply and transportation, while natural gas stored in Dawn only includes supply.

It should be noted that customers who provide their own supply service without transfer of ownership, while having Gaz Métro as the transportation service supplier, are only subject to the inventory adjustment tariff related to transportation.
As the following graph illustrates, the average inventory adjustment tariffs for D1 supply and transportation services are subject to numerous variations over time. On occasions, they have exceeded the average current rate of 1.009 ¢/m³. Inventory revaluation costs are recovered over a 12-month period.