Natural Gas Market Update
The big story about gas is the recent increase in prices. Between higher consumption with a return to more normal weather and early indicators that the economy is improving, there is a lot of upward pressure on prices in the market. Contract year prices are currently trading 15.8% higher than the low seen last spring. In addition, with forecasts calling for warmer than normal weather across the vast majority of the US and Canada this coming summer, there is a lot of upward momentum in the market.
The chart above shows the prices for a one-year contract from November 2011 to March 2013. As you can see, the market prices decreased significantly last spring reaching a low of $3.10/GJ at AECO and have now increased $0.28/GJ or 8.5% since the New Year.
If your firm prefers fixed prices or needs to protect a budget, it is time to lock in a fixed price to avoid the expected increases as the economy improves. Even with the recent increase, prices remain very attractive for term gas compared with historical levels.
Although natural gas producers have moved much of their drilling activity to oil, there has been a recent increase in natural gas drilling rigs, but the number of gas rigs remains low compared with historical levels. As natural gas prices increase, some of the power generation from coal will return. However, even if there is a decrease in natural gas generation during summer 2013 compared to summer 2012, natural gas generation levels are expected to remain above those seen during the summer of 2010. Natural gas prices, even with the recent increase, remain very attractive for electricity generation. The market continues to be volatile in response to weather as well as economic signals. As the final few natural gas storage reports are released, withdrawals will continue to create upward price pressure since every withdrawal will bring the storage level further below the market’s end of winter expectation of 2 Tcf.
Québec and British Columbia:
Gaz Metro’s regulated supply price decreased slightly in March compared to February. There has been no change to B.C. supply prices since the April 1, 2012 prices were implemented.
Ontario and Alberta:
Union Gas and Enbridge supply customers saw lower supply prices come into effect on April 1, 2013. Alberta prices reflect the market more closely and are subject to higher levels of volatility.
We can offer you the price solutions that suit your needs.
Whether you would like to float with the market, lock your price or a combination of both, Superior Energy offers customers the ability to choose the price arrangement that best fits their risk appetite. In addition to our custom solutions, we continue to offer the ability to manage pricing for portions of your load ranging from 10-100% of your volume. Customers who lock the price for a portion of their requirements can rest assured knowing that their price is protected to the extent they desire even if prices increase quickly in response to supply and demand issues such as hurricanes, hot humid weather or faster than expected economic recovery.
Index Price Product
Securing your price now while prices are low will protect you from future price increases. However, if you would prefer to take a “wait and see” approach, Superior offers an Index Price Product that allows you to follow the market prices daily. As an Index Price Product client, Superior allows you the option of quickly changing to another plan should market conditions change.
In addition to ensuring you are ready to quickly take advantage of pricing opportunities, the Index Price Product has outperformed the regulated gas supply prices as shown in the chart on the right. On average, the Index Price Product has outperformed the Enbridge system supply price by 2.94% and the Union Gas system supply price by 2.08% since its inception in February 2009.
Natural Gas Price Options
Superior currently offers 3 types of plans.
- Fixed Price Plans: Fixed prices are ideal for those who are budget conscious and more concerned about price volatility. Fixed price offers change each day and can be obtained by contacting our sales staff as noted on the front page.
- Variable Price Plans: Index price options are perfect for those who want to benefit from the current low spot market prices and who can manage prices that change each month. Talk to us about how to benefit from current market prices while limiting your upside price risk.
- Customized Flexible Plans: There’s no single way to run a business, so we have created many convenient and customizable plans that can be geared to fit your specific industry and business energy needs. Our sales representatives would be pleased to discuss your specific requirements with you.
Let our experienced representatives explain current and anticipated market conditions and how Superior can help you to manage the impacts of these market conditions on your business. Call us today at 1-877-784-4262.
Flexible Protection Superior Energy offers the ability to lock in fixed prices for 50%, 60%, 70%, 80%, 90% or 100% of your electricity requirements. It’s your choice. Price quotes can be obtained by contacting our staff as noted on the front page.
Time-of-Use (TOU) and Regulated Price Plan (RPP) Changes
A reminder that the seasonal TOU and RPP prices may change effective May 1, 2013. Please see the table above for the current TOU price details for business days and note that on weekends and statutory holidays, off-peak prices are in effect all day.
For customers who do not yet have a Smart Meter or who are not yet being charged using TOU prices, the RPP prices effective November 1, 2012 for non-residential customers using non-interval meters are:
First 750 kWh each month:
7.4 cents per kWh
Over 750 kWh each month:
8.7 cents per kWh
Seasonal Weather Outlook
The US National Oceanic and Atmospheric Administration (NOAA) most recent prediction calls for above average temperatures this coming summer for the entire continental US excluding the west coast.
Environment Canada is also forecasting above average temperatures for the vast majority of Canada for the coming summer.
Accuweather has not yet issued their summer 2013 forecasts.
NOAA June, July, August Temperature Prediction for the Continental US issued March 21, 2013
Environment Canada June, July, August 2013 Prediction At February 28, 2013