Canada Energy Market Report - August 2017

Electricity Hedging Strategy: It has been a strange summer in many respects - to those of us following the electricity market in Ontario. One of the most striking trends is that energy consumption across the province is down almost 10% from June to the end of August. The system peak demand has dropped this summer compared to previous years - June 12th from 4:00 - 5:00 PM was the highest demand hour so far at 21.168 MW - this number would not have even broken top 10 last year or the year before.

The lack of demand has weighed heavily on the hourly price - June was one of the lowest prices ever for a month at $0.0059/kWh while July and August were well under $0.02/kWh at $0.0136 and $0.0173 respectively. It would seem then, that risk is off for the Ontario market at least on the demand side. The next supply-side risk to worry about are planned nuclear outages for refurbishment, which is still several months away.

Natural Gas Hedging Strategy: August on the AECO daily index was truly a storm of volatility - from a low of $0.41/GJ on August 9th to a high of $2.46 a week later on the 15th. Late summer has historically not been the best time to look at contracting, but we are not that far off the bottom from last spring - balance of 2017 contracts have collapsed below $2.00/GJ at $1.71 and 2018 is down to $2.28. 2019 is a good deal at $2.19.

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