SIXTH FLOOR, 900 HOWE STREET, BOX 250 TELEPHONE: (604) £60-4700 VANCOUVER, B.C. V6Z 2N3 BC TOLL FREE: 1-800-663-1385 CANADA FACSIMILE: (604) 660-1102 AN ORDER IN THE MAITER OF the Utilities Commission Act, S.B.C. 1980, c. 60, as amended and An Application by Pacific Northern Gas Ltd. Reference Price Factors for Buy/Sell Energy Supply Contracts BEFORE: M.K. Jaccard, Chairperson; and ) L.R. Barr, Deputy Chairperson ) August 24, 1995 ORDER WHEREAS: A. The Commission's July 7, 1995 Decision regarding the Review of Buy/Sell Deliveries of Natural Gas to the Core Market directed each Local Distribution Company ("LDC") to file for Commission approval its reference price calculation methodology and a preliminary price forecast as soon as possible after August 1, 1995, but not later than August 15, 1995; and B. On August 1, 1995 Pacific Northern Gas Ltd. ("PNG", "PNG-West"), filed for Commission approval its buy/sell reference price methodology and forecast of reference price factors for the 1995/96 gas contract year; and C. The PNG filing did not include the results (gains or losses) of any active gas price hedging activity in the calculation of reference prices; and D. Actual reference price factors may differ from the forecast due to the market sensitive pricing provisions included in a significant portion of PNG's system baseload contracts; and E. The Commission has reviewed the filing and finds that approval is required. NOW THEREFORE the Commission orders as follows: 1. For PNG-West, the reference price forecast and the 100 percent load factor reference price calculation methodology as set out in PNG's letter dated August 1, 1995, which is attached as Appendix A, are approved, subject to review with respect to the exclusion from the calculation of the results of active gas price hedging activities. 2. Interested parties are invited to comment and provide evidence in support of their position by September 15, 1995 regarding whether or not the results of any active price hedging should be included in PNG's reference price calculation. 3. PNG is directed to calculate actual monthly demand and commodity reference price factors at 100 percent load factor using its approved methodology and to report the factors to the Commission within 20 days after the end of each month. . . ./2
2 4. For PNG(N.E.), the Commission acknowledges the filed reference prices which are based on 1994/95 prices and directs that, in the event the utility receives a written request from an interested party to do so, PNG will file within 20 days a price forecast that is based on the expected system baseload pricing for 1995/96. DATED at the City of Vancouver, in the Province of British Columbia, this day of August 1995. BY ORDER Dr. Mark K. Jaccard Chairperson BCUCIOrderIPNG-RefPrice Factors BISel!
APPENDIX A to Order No. G-65-95 Pacific Northern Gas Ltd. Forecast of Buy/Sell Reference Prices November 1! 1995 to October 31!1996 The follov..;ng is PNG's forecast of Buy/Sell reference prices for the PNG-West and PNG(NE) systems. The forecast is for the period November 1, 1995 to October 31, 1996. PNG -West The PNG-West system extends from Prince Rupert to Summit Lake. The delivery point for core market direct purchase gas supply v..;11 be Station 2. Given the location of PNG's system on the Westcoast pipeline the Company believes that deliveries at Station 2 of buy/sell supply is the least burdensome option for AlB/M's. Methodology PNG's projected baseload gas supply portfolio for the 1995/1996 Contract Year("Contract Year") v..;11 contain 100 % variable pricing. Consequently, the Company has provided a monthly forecast of the Reference Price for the Contract Year. The forecast is based upon PNG's current projection of demand. The forecast of the reference price for each month is the weighted average cost of gas for baseload contracts. The calculation of the weighted average cost of baseload gas is the total monthly cost of baseload gas supply at Station 2 divided by total monthly purchases of baseload gas supply. The major price assumptions underpinning the forecast are presented in Attachment One. Reference Price Forecast PNG has prepared t'M> forecasts of reference prices. The first forecast(Attachment One) is based upon the forecast level of demand for the upcoming Contract Year. The expected load factor for baseload contracts in Table One is 95%. The second forecast(Attachment T\NO) of reference prices is based upon 100% load factor. PNG(NE) The PNG(NE) system distributes gas to the communities of Tumbler Ridge and DalNSon Creek. The delivery point for core market direct purchase gas supply for DalNSon Creek v..;11 be the inlet to the Peace River Transmission System. It v..;11 be necessary to transport the gas on the Westcoast pipeline to access the Peace River system. The delivery point for core market direct purchase gas supply for Tumbler Ridge v..;11 be the inlet to the PNG(NE) distribution system at Tumbler Ridge. Under current supply contracts gas supply is provided daily as needed. Neither supply contract has a DCa or minimum annual take obligations. PNG(NE) is unable to provide load balancing.
APPENDIX A to Order No. G-65-95 Consequently, PNG(NE) V¥111 be able to only to purchase core market direct purchase gas supply on the same basis as existing gas supply, day to day, as needed. The reference price forecast for PNG(NE) is presented in Table One it represents the current prices being paid by PNG(NE). The prices being paid for the gas purchased under these contracts V¥111 be negotiated later this year. PNG(NE) V¥111 update the Reference Price once negotiations have been completed and BCUC approval has been granted. Table One Forecast Buy/Sell Reference Price for PNG(NE) ·fOl'theP.eriodNovember4/95-Qctober31/9& ··~iIlit'ri~r Residential $ 1.94/GJ Commercial $ 1.90/GJ Small Industrial $ 1.80/GJ Other Matters In 2 of 3 long term gas supply contracts PNG has the right to reduce the DCQ, on a pro-rata basis, \M1en direct purchase occurs. In the remaining contract(\M1ich accounts for 80% of the firm gas that PNG pUrchases) PNG does not have that right. PNG is continuing efforts to obtain a similar provision in the remaining contract. If PNG is unable to do so and is unsuccessful in it's effort to mitigate these unabsorbed demand charges then PNG V¥111 collect these charges and bring them forward to the BCUC for disposition. This issue was addressed in the recent decision on core market direct purchase by the BCUC.
Attachment Two - PNG - West Forecast of Buy/Sell Reference Price @ 100 % Baseload Gas Supply Load Factor For the Period November 1/95 - October 31/96APPENDIX A to Order No. G-65-95
Buy/Sell Reference Price for PNG - West For the Period November/96 to October/96 Nov Dec Jan Feb Mar Reference Price 1.43 1.57 1.58 1.51 1.41 Demand Price 0.57 0.59 0.59 0.59 0.55 Commodity Price 0.87 0.99 1.00 0.92 0.85 Baseload Gas Load Factor 1.00 1.00 1.00 1.00 1.00 Portfolio CompositionfGJ's) Total Purchases 744060 768862 768862 719258 768862 Fixed Price Purchases Variable Price Purchases 744060 768862 768862 719258 768862 Variable Price CompositionfGJ's) Sumas~ 636060 657262 657262 614858 657262 NYMEX 108000 111600 111600 104400 111600 Notes: -1 - based on beginning of the month index published by Inside FERC Gas Market Report *"'Calc - please note that numbers may not add exactly due rounding in calculations. Page 1Apr May June Jul Aug Sept Oct 1.32 1.15 1.12 1.11 1.16 1.46 1.56 0.54 0.50 0.50 0.49 0.50 0.57 0.58 0.78 0.65 0.62 0.62 0.65 0.89 0.98 1.00 1.00 1.00 1.00 1.00 1.00 1.00 744060 768862 744060 768862 768862 744060 768862 744060 768862 744060 768862 768862 744060 768862 636060 657262 636060 657262 657262 636060 657262 108000 111600 108000 111600 111600 108000 111600 0:> 'i foO o..foO ro t;j 'i Z t::l ZH o X :> GJ I rt 0'0 Vl I '.I:) V1
Buy/Sell Reference Price for PNG • West Additional Information For the Period November/95 to October/96 Nov Dec Jan Feb Total Demand Costs"""l 422323 449990 451624 424584 424786 Total Commodity Costs"""l 644904 759002 766806 660566 656214 Total Costs 1067227 1208992 1218430 1085149 1081000 Index Forecast Sumas"""2 1.340 1.460 1.490 1.390 1.320 NYMEX-:l 1.638 1.770 1.820 1.783 1.738 Foreign Exchange ForecasC 4 1.363 1.363 1.345 1.345 1.345 Basis Differential Forecast-:l 0.52 0.52 0.52 0.52 Notes: **1· Total demand and commodity costs are for purchases of baseload gas **2 - Forecast of spot gas prices(US $/mmbtu) at Sumas as prepared by PNG **3· Closing prices(US $/mmbtu) of NYMEX futures contracts - July 21/95 **4 • Forecast of Canada/U.S. exchange rate the average of Scotia McLeod, Wood Gundy, RBC/Dominion **5 • Forecast of basis differential the average of BT Bank, Bank Paribas, PIRA, WGSI **Calc - please note that numbers may not add exactly due rounding in calculations. Page 2Mar Apr May June Jul Aug Sept Oct 405267 386505 375393 379497 386560 424967 448243 576930 500429 458384 474128 502897 658752 751184 982197 886934 833777 853625 889456 1083719 1199427 1.240 1.090 1.050 1.030 1.070 1.330 1.430 1.698 1.708 1.723 1.735 1.748 1.760 1.800 1.337 1.337 1.337 1.355 1.355 1.355 1.354 0.52 0.47 0.47 0.47 0.47 0.47 0.47 0.45 0>-'1 '"d CL'"d 11) t:rJ '1 Z t:I ZH o ><: o >I rt 0'0 V1 I '-D l.n
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.