OEB Staff's 2015 Natural Gas Market Review Report Focuses on "Uncertainty"

On April 6, 2016, OEB Staff issued their 2015 Natural Gas Market Review Report (2015 NGMR Report). This Report is the culmination of the OEB's third NGMR consultation. The main finding in the 2015 NGMR Report is that Ontario's natural gas market is facing uncertainty in terms of future demand, future sources of supply and changing supply paths. In the Report's conclusion, OEB Staff indicates that this uncertainty makes it important to understand long-term market drivers and potential resulting outcomes in order to properly evaluate any proposed new long-term natural gas infrastructure commitments.

The stated goal of the NGMR process is to examine ongoing developments and related issues in the North American natural gas market and assist the OEB's consideration of any potential impacts - including regulatory implications - of such developments for Ontario's natural gas market. To assist with the 2015 NGMR, OEB Staff commissioned and filed a consultant's report on current and forecast North American and Ontario natural gas market conditions. The Report, as well as comments from interested parties, was considered during a one-day NGMR Forum in January 2016. Further comments were filed after that date. All materials are posted to the OEB's website.

The 2015 NGMR Report summarizes the information received during the 2015 NGMR process, and sets out OEB Staff's observations and conclusions. Among other things, the Report notes that gas price forecasts are now lower than in past years, while at the same time future demand projections are less robust (in part because of uncertainty around cap and trade). Stakeholder comments focused in part on how the OEB should consider new applications for long-term natural gas infrastructure in light of the uncertainty around future gas demand, and the potential that non-conventional approaches (such as CNG and LNG) may be used to meet some future customer requirements.

In the conclusion to the 2015 NGMR Report, OEB Staff appears to agree with stakeholders that it would be useful to have "a common understanding of long term market drivers and the potential range of market outcomes related to them" in order to be able to fully assess future applications for long-term natural gas infrastructure. The OEB's cover letter that accompanied the 2015 NGMR Report indicates that fostering this "common understanding" will be an objective of the next NGMR forum. The cover letter also notes that the OEB's soon-to-be-issued updates to natural gas distributor rate application filing requirements (discussed in an earlier post) are expected to include a requirement for applicants to file longer-term plans to enable a review and assessment of infrastructure investment plans over the revenue-planning term.