Nicor Gas Supply and Storage Overview
Nicor Gas provides gas supply and storage services effective May 2018 in a service territory covering over 17,000 square miles and serving 640 communities with 2.2 million customers. The gas supply and storage network includes major cities like Rockford, Chicago, and Naperville, serviced by underground gas storage fields and interstate pipeline transporters. Suppliers have control over delivery volumes and storage injections and withdrawals, ensuring a reliable supply for customers within specified ranges. The glossary of terms includes definitions for key factors like base factors, heat factors, and storage capacity, along with monthly storage inventory targets.
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Customer Select Supply/Storage Effective May 2018
Service Territory Crystal Lake Rockford Schaumburg DeKalb Nicor Gas Territory Oak Brook Naperville Area: 17,000 square miles Population: 5.7 million (est.) Communities Served: 640 Customers: 2.2 million Joliet Kankakee Bloomington 2
Gas Supply and Storage Network Rockford Chicago Naperville Gas Distribution Joliet Nicor Gas Service Territory Major Gas Main Underground Gas Storage Field Major Cities Interstate Pipeline Transporters Peoria Natural Gas Pipeline Company of America Bloomington Northern Natural Gas Company Midwestern Gas Transmission Company Panhandle Eastern Pipe Line Company* ANR Pipeline Alliance Pipeline Springfield Northern Border Horizon *limited demand and take-away capability 3
High-Level Overview Suppliers have control over pool delivery volumes. Suppliers have flexibility in managing pool s storage injections and withdrawals within specified target ranges. Suppliers are responsible for managing their storage balances to maintain desired rights. We provide a daily delivery range for each pool along with estimated daily usage. Deliveries above or below the estimated usage will either be injected or withdrawn from storage. There are some injection rights in the winter and withdrawal rights in the summer (+/- 10% range). 4
Glossary of Terms Base Factor: The cumulative base use factors (30-day) for customers within a pool used to estimate a pool s non-heat usage, grossed up for the unaccounted-for-gas adjustment. Heat Factor: The cumulative heat sensitive factors for customers within a pool used to estimate a pool s heat usage, grossed up for the unaccounted-for-gas adjustment. Estimated Use: The combination of estimated base use and heat use for the forecast day. Delivery: Volume of gas nominated to city-gate. Critical Day Delivery Requirement: Minimum volume of gas to be nominated to city-gate when company has declared a Critical Day. Winter: November 1 through April 30 Summer: May 1 through October 31 5
Glossary of Terms (cont.) Storage Capacity: 30 times the group s MDCQ. Additional balancing capacity of 6 times the group s MDCQ will be cycled annually. The combined storage capacity of 36 times the group s MDCQ will be used for calculating the monthly storage inventory target levels and the daily storage injection capacity. Storage Inventory Target Levels (end of month): Nov: 55% - 100% of storage capacity Dec: 55% - 75% of storage capacity Jan: 35% - 60% of storage capacity Feb: 15% - 35% of storage capacity Mar: 0% - 35% of storage capacity Apr: 0% - 35% of storage capacity May: 15% - 100% of storage capacity Jun: 15% - 100% of storage capacity Jul: 45% - 100% of storage capacity Aug: 45% - 100% of storage capacity Sep: 45% - 100% of storage capacity Oct: 95% - 100% of storage capacity 6
Delivery Requirements Prior to the beginning of each month (around the 20th of the prior month), Nicor Gas communicates the group s estimated daily use based on normal weather. We will also include a forecasted delivery range a min and max delivery for each day of the month based on normal weather. (30-day forecast) The 30-day forecast considers the accounts in the supplier s pool 30 days out from the date it is created. It is assumed that all pending effective contracts are active and all pending drops are dropped for the entire month (when actually customers come into and out of the pool as they are read throughout the month). Please keep this in mind if you are adding or dropping a lot of customers. During the month, on the business day before each gas day, Nicor Gas communicates the group s estimated usage and the daily delivery range for the next five days based on the current forecast of heating degree days. (5-day forecast) A pool s estimated use and delivery range will fluctuate during the month based on customers coming into and out of the pool along with forecasted weather. Any deliveries above or below the estimated use will impact your storage. Supplier is responsible for tracking storage inventory during the month. 7
Delivery Requirements (cont.) Estimated Use: Based on the pool s cumulative heat use and base use factors. Daily Delivery Ranges: Winter Max Delivery = group s estimated use + 10%. Winter Min Delivery = group s estimated use - 10% - group s daily storage withdrawal capacity right. Summer Max Delivery = group s estimated use + 10% + group s storage injection capacity right. Summer Min Delivery = group s estimated use - 10%. 8
Delivery Requirements (cont.) Daily Storage Withdrawal Capacity: In the winter, up to 1.6% times group s 11/1 storage inventory. Reduced to 1.2% if end of month storage inventory is less than 40% of 11/1 inventory. Reduced to 0.9% if end of month storage inventory is less than 25% of 11/1 inventory. Daily Storage Injection Capacity: In the summer, 0.8% of storage capacity assigned to the group. End of Month Storage Inventory: Unknown until approx. 4-5 business days into the next month. The 11/1 inventory and/or storage withdrawal factor used in the daily delivery range calculations will change as soon as billing is complete to reflect updated information. Could cause a larger impact on delivery ranges than day-to-day changes in base and heat factors for the pools or heating degree days. 9
Daily Delivery Range Calculation November through April (Winter) Assumptions: 11/1 Inventory Daily Storage Withdrawal Capacity Pool s Estimated Daily Use 900,000 MMBtu 1.6% * 11/1 Inventory = 14,400 30,500 MMBtu Delivery Calculations: Max Delivery (est. use + 10%): Min Delivery (est. use - 10% - SWC): 30,500 * 90% - 14,400 = 13,050 30,500 * 110% = 33,550 10
Daily Delivery Range Calculation November through April (Winter with Reduced Withdrawal Rights) Assumptions: 11/1 Inventory Storage Inventory from Prior Month 350,000 MMBtu (<40% of 11/1 Inv.) Daily Storage Withdrawal Capacity 1.2% * 11/1 Inventory = 10,800 Pool s Estimated Daily Use 900,000 MMBtu 30,500 MMBtu Delivery Calculations: Max Delivery (est. use + 10%): Min Delivery (est. use - 10% - SWC): 30,500 * 110% = 33,550 30,500 * 90% - 10,800 = 16,650 11
Daily Delivery Range Calculation November through April (Winter with Reduce Withdrawal Rights) Assumptions: 11/1 Inventory Storage Inventory from Prior Month 100,000 MMBtu (<25% of 11/1 Inv.) Daily Storage Withdrawal Capacity 0.9% * 11/1 Inventory = 8,100 Pool s Estimated Daily Use 900,000 MMBtu 30,500 MMBtu Delivery Calculations: Max Delivery (est. use + 10%): Min Delivery (est. use - 10% - SWC): 30,500 * 110% = 33,550 30,500 * 90% - 8,100 = 19,350 12
Daily Delivery Range Calculation May through October (Summer) Assumptions: Storage Capacity Daily Storage Injection Capacity Pool s Estimated Daily Use 900,000 MMBtu 0.8% * Storage Capacity = 7,200 3,620 MMBtu Delivery Calculations: Max Delivery (est. use + 10% + SIC): Min Delivery (est. use - 10%): 3,620 *110% + 7,200 = 11,182 3,620 * 90% = 3,258 13
Other Considerations Pools entering or leaving the program will be treated using the same delivery requirement calculations. Pools entering the program after 11/1 will not have an 11/1 inventory balance. (minimum daily delivery will be the pool s estimated daily use during the winter months) November Forecasts: 30-Day Forecast: 11/1 inventory is unknown when the November forecasts are created (on or around 10/20) because October billing is not complete until approx. the 4th 5th business day of the month. Therefore, 11/1 inventory for the November 30-Day Forecast will be based on 95% of the pool s current capacity and the maximum withdrawal factor of 1.6% 5-Day Forecast (daily nom file): Until October billing is complete (approx. 4th-5th business day in November), a pool s 11/1 inventory will be forecast based on 95% of the pool s current capacity and the maximum withdrawal factor of 1.6%. Actual 11/1 inventory will be used as soon as October billing is complete. 14
Critical Day Requirements Critical Day delivery requirement is the greater of: Firm Supply Requirement as of Oct. 1, which is 34% of group s MDCQ (66% storage withdrawals); or 34% of group s current MDCQ. The Critical Day delivery requirement will be communicated in the 5-day forecast file. The minimum delivery volume will be the Supplier s Critical Day requirement (the minimum to avoid penalty). Suppliers can deliver more than their Critical Day requirement. The maximum delivery volume of 999,999,999 in the 5-day forecast file denotes infinite maximum delivery. 15
Operational Flow Order Requirements OFOs may be called when the operation of the system is impeded or threatened due to: Insufficient volumes Excess volumes Insufficient volumes at certain receipt points Daily delivery requirement may be adjusted to address the company s operational concerns. 16
Month-End Delivery Tolerance Winter: Supplier total deliveries for the month cannot be more than the group s total estimated daily use +5%. Suppliers can inject some during the winter (10% of use/day or 5% of monthly use). Suppliers can deliver less than the group s estimated use as long as they re within the daily range. Summer: Supplier total deliveries for the month cannot be less than the group s total estimated daily use -5%. Suppliers can withdraw some during the summer (10% of use/day or 5% of monthly use). Suppliers can deliver more than the group s estimated use as long as they re within the daily range. 17
Imbalance and Cash-Out on Monthly Pool Bill Imbalance is the difference between the group s month-end inventory and the storage inventory target level for the month. The imbalance will be 0 if the month-end inventory is within the storage inventory target level for the month. Any imbalance is cashed-out (purchased from or sold to the group). The cash-out price = then current first of month price index published in Inside F.E.R.C. s Gas Market Report for Chicago City-Gates. For example, any imbalance on the June pool bill, will be cashed out at the July FOM price. 18
Cash-Out Calculation Cash-Out Amount (Ex. 1): Month-End Storage Inventory Storage Inventory Target Level Imbalance Cash-Out Amount 5,000,000 4,850,000 - 13,000,000 0 0 Cash-Out Amount (Ex. 2): Month-End Storage Inventory Storage Inventory Target Level Imbalance Cash-Out Amount 4,000,000 4,850,000 - 13,000,000 (850,000) (850,000) Supplier buys this amount from Nicor Gas. Cash-Out Amount (Ex.3): Month-End Storage Inventory Storage Inventory Target Level Imbalance Cash-Out Amount 13,500,000 4,850,000 - 13,000,000 500,000 500,000 Nicor Gas buys this amount from Supplier. 19
Non-Performance Charges Daily Non-Performance Charges Under deliveries below the daily delivery range are sold to supplier at 110% of the high price for gas Over deliveries above the daily delivery range are bought from supplier at 90% of the low price for gas Month-End Non-Performance Charges Winter: $1 for each therm exceeding +5% of group s total adjusted estimated daily use for the month Summer: $1 for each therm less than -5% of group s total adjusted estimated use for the month Critical Day Non-Performance Charges Under deliveries are sold to supplier at sum of $6 per therm plus the higher of the GSC or the Market Price OFO Non-Performance Charges Under deliveries are sold to supplier at 200% of the high price for gas Over delivers are bought from suppliers at 50% of the low price for gas 20
Firm Supply Requirement Suppliers are required to provide annual proof, by affidavit, of firm supply to the Company s interconnection with a pipeline sufficient to provide a minimum of 34 percent of the group s maximum daily contract quantity as of October 1, for the period Nov. 1 through March 31. Firm supply requirement will be calculated on Oct. 1 of each year and communicated to the supplier shortly thereafter. Firm Supply Affidavit is due by Nov. 1 of each year. If the supplier doesn t provide the Firm Supply Affidavit by Nov. 1 of each year, the customer will be charged Nicor Gas Non- Commodity Gas Cost multiplied by the customer s usage from November 1 through March 31. 21
Nominations The daily nomination file (which gives your Daily Delivery Range) will be posted to a supplier s web site directory by 8:30 a.m. Central Time every business day. The daily nomination file name will include the date to help distinguish one day s file from another. Supplier must make all nominations electronically by using the Gas Exchange System. On non-critical day weekends or holidays, the appropriate day s estimate from the most recently received file should be used as the nomination requirement. The requirements will not change from the estimated values unless an Operational Flow Order is called or Critical Day is declared. If on any given day no nomination file is found, use the appropriate day s estimate from the most recently received nomination file as the nomination requirement. You should contact the Nicor Gas nomination desk to confirm this at 630-983-4040. 22
