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High power burn, LDC demand driving up spot gas prices on Algonquin

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Essential Energy Insights - September 17, 2020

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High power burn, LDC demand driving up spot gas prices on Algonquin

system utilization retained mixed comparisons to historical averages during theweek ended May 10, but spot natural gas prices remained elevated versus a yearago on the back of ongoing gains in gas utility and power sector demand.

Duringthe week, flows at the Millennium Mainline segment averaged 889,571 Dth/d for autilization rate of 57.4%, or lower than both the May 2015 average of 86.7% andthe prior-summer average of 81.8%. Utilization rates at the Southeast and StonyPoint compressor stations were at 57.5% and 96.4%, respectively, versus theaverage of 89.9% and 91.7% in the previous summer.

at delivery pointsalong the system during the report period that averaged at 2.22 Bcf/d were up6.1% year over year, while nominations at receipt points were 2.5% higher thanat the same time last year at an average of 2.14 Bcf/d.

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Higherdemand than in the year-ago period throughout the bulk of the week in reviewkept spot natural gas prices at Algon Gates elevated versus the prior-yearlevel. Peaking at $2.700/MMBtu on May 5, the spot gas price index at AlgonGates over the course of the report period ultimately averaged at $2.416/MMBtu,reflecting a 21.2% gain the versus the level seen in the corresponding week in2015.

Asurge in residential and commercial demand alongside an uptick in deliveries topower generators undermined a reduction in gas flows to interconnectedpipelines during the review week, encouraging a boost in total demand butdriving pipeline utilization to mixed comparisons against historical averages.

Together,deliveries to gas utilities and power generators accounted for 57.3% of theweek's overall average demand. LDC demand jumped by 74.7% from the year-agolevel to 690,807 Dth/d and power-sector demand climbed by 2.8% year on year to584,429 Dth/d, as off-system demand fell by 16.2% over the same period to947,156 Dth/d.

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At734,476 Dth/d and 180,197 Dth/d, respectively, nearly all of the week'soff-system demand flowed into interconnections with andIroquois Gas Transmission SystemLP, with Texas Eastern seeing an increase of 75,466 Dth/d in supplyfrom Algonquin versus the previous year and Iroquois Gas seeing deliveries fromAlgonquin drop by 283,486 Dth/d year over year. , asubsidiary of Columbia PipelineGroup Inc., saw flows from Algonquin during the review week averageat 23,000 Dth/d.

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LDCdemand during the week in review was predominantly higher than a year ago, withNSTAR Gas Co. seenleading the uptick.

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Only2,508 Dth/d of LNG supply found its way onto the system during the week, asinterconnections with TennesseeGas Pipeline Co., Millennium Pipeline Co. LLC, Texas Eastern and IroquoisGas met about 98.0% of the deliveries to Algonquin.

TennesseeGas saw deliveries to Algonquin climb by 151,377 Dth/d year over year to 1.08Bcf/d, as Millennium flows to Algonquin that averaged at 572,621 Dth/dreflected a 234,799 Dth/d decline from the year-ago level. Texas Easternnotched a 28,610 Dth/d year-on-year decrease in gas flows to Algonquin thatwere seen averaging at 221,117 Dth/d over the course of the review week, whileIroquois Gas deliveries to Algonquin were higher by 160,053 Dth/d than in theprevious year at an average at 215,808 Dth/d.

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Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our Commodities Pages. To view operational statistics oninterstate natural gas pipelines, go to our Pipeline Summary Page. To view natural gas operational flow datafor receipt or delivery points, go to our Operational Capacity by Point Page.