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Natural Gas Market UpdateJohn Jicha, Director - Energy Supply and TradingMadison Gas and Electric Company
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Before …
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The Hurricane Triple Threat
Harvey Maria
Irma
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NYMEX Natural Gas Futures
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
$/D
th
2005 2017
Source: NYMEX
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Gulf of Mexico Production
0%
5%
10%
15%
20%
25%
30%
0
2
4
6
8
10
12
14
16
Jan-
97S
ep-9
7M
ay-9
8Ja
n-99
Sep
-99
May
-00
Jan-
01S
ep-0
1M
ay-0
2Ja
n-03
Sep
-03
May
-04
Jan-
05S
ep-0
5M
ay-0
6Ja
n-07
Sep
-07
May
-08
Jan-
09S
ep-0
9M
ay-1
0Ja
n-11
Sep
-11
May
-12
Jan-
13S
ep-1
3M
ay-1
4Ja
n-15
Sep
-15
May
-16
Jan-
17
Bcf
/day
Monthly Production % of Total Production
Gustav – Category 2Ike – Category 2
Katrina – Category 3Rita – Category 3
Ivan – Category 3
Earl – Category 1Georges – Category 3
Lili – Category 3
Source: EIA
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GOM and Texas Shale Production
0
10
20
30
40
50
60
70
80
Bcf
/d
GOM Eagle Ford (TX) Haynesville (LA & TX) All other U.S. Production
17%
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NYMEX Natural Gas Futures
$2.50
$2.75
$3.00
$3.25
$3.50
$3.75
$4.00
Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17
$/D
th
Source: NYMEX
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SUPPLY FUNDAMENTALS
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U.S. Supply
40.00
45.00
50.00
55.00
60.00
65.00
70.00
75.00
80.00
85.00
90.00
2005 2010 2011 2012 2013 2014 2015 2016 2017
Bcf
/d
Production Pipeline Imports LNG Imports
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Map of Shale Basins
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U.S. Shale Production by Basin
Source: EIA
0
5
10
15
20
25
30
35
40
45
50
Bcf
/d
Marcellus (PA,WV,OH & NY)Utica (OH, PA & WV)Haynesville (LA & TX)Eagle Ford (TX)Fayetteville (AR)Barnett (TX)Woodford (OK)Bakken (ND)Antrim (MI, IN, & OH)Rest of US 'shale'
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DEMAND FUNDAMENTALS
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U.S. Demand by Type
0
10
20
30
40
50
60
70
80
90
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Bcf
/d
Residential Commercial Other Industrial Electric Power Pipeline Exports LNG Exports
Source: EIA
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Changes in Power Generation
0
1
2
3
4
5
6
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Trill
ion
kilo
wat
t-hou
rs
Petroleum & Other/Other Nuclear Coal Renewable Natural Gas
19%35%
40%
31%
9%
15%
16%30%
50%
Source: EIA
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Liquefied Natural Gas (LNG)
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World LNG Prices
Source: FERC July 2017
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LNG Export Terminals
Source: FERC
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Mexico Expands Infrastructure
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OUTLOOK
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Last Winter - 2016-17
NOAA 2016-17 Forecast Nov-Mar, 2016-17
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Winter 2017-18 Weather Forecast
NOAA Farmers’ Almanac
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U.S. Storage
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Futures Prices Today
$2.50
$2.75
$3.00
$3.25
$3.50
$/D
th
Source: EIA
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Summary• Market impacts of hurricanes is minimal due to the shifting of supply from
the Gulf of Mexico to inland shale basins.
• Weather forecasts showing normal to warmer than normal across the country.
• Primary demand drivers are power generation and exports.
• Pipeline expansions will allow low-cost supply from the East to flow back to the Midwest market to meet the demand for power generation.
• The reduced Midwest demand for Southeast and Southwest supply will be offset by increased LNG exports and new demand in Mexico.
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Products and Services for Business CustomersMatthew Matenaer, Senior Account Manager - Commercial & Industrial Marketing Madison Gas and Electric Company
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Renewable Energy Rider• First utility in Wisconsin to offer opportunity
• Opportunity to work cooperatively with commercial customers on a renewable energy solution
• Serve business customers with renewable energy resources
• Existing and new commercial customers on Rate Schedules Cg-4, Cg-2, Cg-6, Sp-3, and Cp-1
• Participation limit of 25 MW of existing customer load
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On Demand Savings (ODS)
• 33 commercial customer sites
• “Real Time” electric consumption and demand visualization
• Alert notifications to shed load when approaching peak
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ODS - Future Integration
• CX Pilot, 2017-18
• New and existing participants
• Test new AMI meters and scalability to larger customer group
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Assessments
• MGE offers free energy assessments to business customers
• Tour the facility and provide a comprehensive analysis of the building systems
• Recommendations for energy-efficient upgrades tailored to your business and your budget
• Contact your MGE Account Manager to schedule an appointment
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Shared Savings• Energy-efficient equipment financing
• $0 capital outlay
• Energy savings created by the project help repay the project cost
• Align loan payment to match energy savings
• $5,000 minimum project loan
• Bundle with Focus on Energy incentives
• Competitive interest rates
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Transportation Electrification• MGE is helping customers plug in
to make a difference
• MGE built one of the Midwest’s largest EV charging station networks powered on 100% renewable energy produced by wind farms in Wisconsin and Iowa
• Drive Electric partnership helped double Nissan LEAF® sales in Madison area
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Transportation Electrification
"Your crews did a wonderful job restoring our power in Lutz, Fla. They worked hard all day. We're very thankful. They're pretty humble. But we really appreciate them."
• Electric forklifts – help businesses evaluate the value of electric lift trucks and charging options
Lower fuel and maintenance costs
Perform similar or better than propane trucks
Lower emissions
Options for heavy-duty and outdoor applications
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Workplace Charging • Why workplace charging?
Enables employees who commute longer distances to own EVs
Recruit and retain employees, support sustainability initiatives
• MGE educates and assists
Partners with business customers to install charging stations for employee use
Approximately ten businesses have installed stations for employees (American Family, Sub-Zero, Promega)
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Electric Buses• Partnership between MGE and the City
of Madison
• Electrify 50% of bus fleet by 2035
• MGE pledged to provide:
100% of the required local matching funds necessary for the grant
Provide technical assistance – electric and charging infrastructure
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Welcome Home
• 15 million people were without power as a result of Hurricane Irma
• MGE’s 11 Electric Operations personnel assisted in the largest power restoration efforts in nation’s history
• Assisted in Tampa and Fort Myers area
• September 10, 2017, to September 25, 2017
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Welcome Home
"Your crews did a wonderful job restoring our power in Lutz, Fla. They worked hard all day. We're very thankful. They're pretty humble. But we really appreciate them.“
- Resident