Fort Liard

Fort Nelson

Western Canadian Sedimentary Basin

Fort St. 2020 John Pacific Northwest Gas Market Outlook Natural Gas Supply, Prices, Demand Calgary

and Infrastructure Projections Vancouver Avista Utilities Cascade Natural Gas Intermountain Gas through October 2029 Victoria Sumas North Kingsgate FortisBC Energy NW Natural MONTANA Puget Sound Energy This report, compiled by the Northwest Gas Association Seattle Spokane Wenatchee FortisBC System (NWGA), provides a consensus industry perspective on Enbridge BC Pipeline TC Energy GTN the current and projected natural gas supply, prices, TC Energy NGTL Williams Northwest Pipeline demand and delivery capabilities in the Pacific Northwest Other Pipelines Portland through the 2028/29 heating year (Nov-Oct). Rocky Mountain For purposes of this report, the Pacific Northwest includes Basin

I D A H O British Columbia (BC), Idaho, Oregon and Washington. Bend Boise O R E G O N W Y O M I N G Additional information can be found at www.nwga.org. Pocatello Medford Malin Klamath Falls

Salt Lake City C A L I F O R N I A N E V A D A

U T A H NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

OVERVIEW

The Value of Natural Gas in the Pacific Northwest This Outlook contains two new What does natural gas offer to the region? sidebars exploring the timely • Warmth and comfort to 10 million people topics of RNG and carbon • Efficient and affordablespace heating, water heating, and heat for cooking and laundry (gas emissions. The RNG sidebar heat is about one-third the cost of electric heat) summarizes current regional efforts • More than half of the total energy consumed in the region – either used directly for space and to capture renewable gas sources water heat or in industrial processes, or as gas-generated electricity. (Excludes transportation from landfills, agricultural waste and wastewater treatment plants, and some of the policies helping uses.) to drive RNG project development. Our carbon • A low carbon footprint – natural gas used for space and water heat in 3.2 million homes emissions discussion takes a frank look at the natural and more than 300,000 non-industrial businesses accounts for less than 10 percent of the gas emissions stream from production to delivery, region’s total carbon emissions, according to EIA data and state and provincial emissions providing data and perspective on a hotly contested inventories issue. • 128,000 miles of installed pipeline infrastructure that safely and reliably delivers energy, This year’s report also combines the Supply and supplemented by underground and above-ground storage facilities capable of delivering Prices discussion into one Market Fundamentals up to 40 percent of required energy during the coldest days section. To ensure the Outlook provides a complete • An invaluable input to some industrial processes for which there is no suitable substitute, picture, we are continuing to provide current data including glass recycling and the manufacture of perlite (a common soil additive), steel and and narrative on supply and prices, but largely as aluminum, paper products and food processing, among many others background information because North American • An alternate fuel source for medium and heavy-duty vehicles that is both more economical natural gas supply will continue to be an ample, and cleaner than diesel engines (see sidebar on natural gas vehicles [NGVs] on p. 10) low-priced commodity for the foreseeable future. • Reliable 24/7 electricity production to replace retired coal plant generation and balance However, where the Outlook truly provides the region’s growing sources of intermittent renewable power, such as wind and solar value – aggregating and analyzing regional demand and delivery infrastructure data to inform And our source of natural gas is increasingly renewable itself – market forces and policymakers and other stakeholders throughout government policy are driving the development of renewable natural gas (RNG; see the Northwest – remains the report’s core focus. sidebar on p. 7), which transforms human and agricultural waste into useful energy. This Updated numbers and our forecast are presented provides even greater prospects for a cleaner mix of natural gas resources to contribute to our in the Demand section and an expanded Capacity energy and environmental future. section, and in the appendices. NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 1

EXECUTIVE SUMMARY

IN THIS REPORT, we examine the Supply: North American natural gas supply is projected to remain abundant Natural gas will be amply dynamics affecting Pacific for the foreseeable future, despite pressures from continuing low prices. The available for several supply basins on which the Pacific Northwest depends have demonstrated Northwest natural gas generations to come consumers. The Outlook that the resource will be amply available for several generations to come. relies primarily on external, publicly Prices: The relentless quest to drive production costs lower is Economical operations available resources allowing producers to operate economically even in a low-price allow production to for information on environment. Natural gas spot prices at Henry Hub (2017 real US$) are continue at low prices continental natural projected to remain below $5/dekatherm (Dth) until 2050.1 Higher oil gas supply prospects prices also support drilling operations in fields that contain associated and commodity prices, most natural gas supplies. notably the U.S. Energy Information Demand: The forecast growth rate for natural gas use in the region across all sectors Forecast growth in the Administration’s (EIA) 2020 Annual Energy is 1.0 percent/year, about the same as in the last Outlook (1.1 percent/yr.). Forecast residential, commercial Outlook and the Canada Energy Regulator's demand growth in the residential and commercial sectors is slightly less, while industrial and power generation Canada’s Energy Future 2019. demand growth has dropped by half (from 0.5 to 0.2 percent/yr.). Demand for natural gas to generate electricity is forecast to grow slightly, mostly when coal-fired generation sectors is comparable to Regional demand and capacity data are plants are retired in the region. last year's forecast drawn from NWGA member company planning processes, including the most Capacity: NWGA members are constantly evaluating whether there is enough Capacity is sufficient recent Integrated Resource Plans that our pipeline capacity to transport the gas from where it is produced (hundreds of miles with continued members have filed with utility commissions away) to where it is needed and whether we have enough storage capacity to serve throughout the region. loads during the coldest weather. The current answer is yes, as long as infrastructure is infrastructure operating at its maximum total capacity, and storage levels are high. At this time, organic operation at maximum regional growth doesn’t require any new capacity. However, the lead time to bring capacity infrastructure into service is approaching five years, so vigilance remains important.

1EIA AEO, January 2020. Page 2 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

REGIONAL ECONOMIC OUTLOOK Dr. Grant Forsyth, Chief Economist, Avista Corp

IN 2020 the U.S. and Canada are facing the most uncertain economic pricing in at least one, maybe two, 0.25 percent rate cuts by the end of 2020. This outlook since America’s expansion started over a decade ago. In both suggests financial markets, unlike the Fed, are less sure that the three rate cuts in 2019 countries, consumers will ultimately decide whether or not North America will be sufficient stimulus for the economy going forward. In contrast, the BOC has falls into an outright recession or continues with lower, non-recessionary held its overnight rate unchanged since October 2018, but has acknowledged growth. consumer spending and housing activity must be closely monitored in 2020. In 2019, U.S. GDP growth was 2.3 percent in the U.S. Canadian GDP More regionally, the Pacific Northwest (Idaho, Oregon, Washington, and British data through the third quarter of 2019 suggests that Canadian growth Columbia) continued to be relatively strong performers in 2019. Employment growth will be around 1.6 percent. However, given weak business investment, in ID-OR-WA combined was 1.9 percent in 2019. Although better than the U.S., it was limited fiscal stimulus, and disrupted international trade, should the slowest growth since 2012. Assuming the correlation between the U.S. and consumers falter, there would be little to stop a recession-like ID-OR-WA holds, then the combined growth of these states should be between 1 slowdown. Specifically, the emergence of the coronavirus is just percent and 1.5 percent in 2020. Thanks to the service sector, BC’s employment the type of shock that could cause both consumers and growth has been unexpectedly strong in 2019—growth was 2.6 percent. However, businesses to pull-back in 2020. the 2020 consensus forecast is for BC’s growth to drop to around 1 percent. Perhaps Averaging across forecasters, both U.S. and Canadian BC can manage another growth surprise in 2020. GDP growth in 2020 is expected to be just under 2 In addition to the coronavirus, it’s useful to consider other shocks that might percent, assuming consumer spending does not slow weaken household and business spending in 2020. One could be a sharp correction significantly. If the U.S. forecast is accurate, this will be in North American equity prices due to a worsening global trade war or a contentious the lowest growth rate for the U.S. since 2013. 2020 U.S. presidential election. A contentious election could create enough policy Inflation rates in both countries are expected to uncertainty that households and businesses pull back on spending. Finally, a hover near the 2 percent target maintained by both significant political crisis outside the U.S. could also cause a pullback in spending—for the Bank of Canada (BOC) and the Federal Reserve example, a direct intervention into Hong Kong by the Chinese military. Specific to (the Fed). Again averaging across forecasters, Canada, a protracted conflict over BC’s Coastal GasLink pipeline could also trim national employment growth in 2020 is expected to Canadian growth. In short, fallout from political and policy uncertainty is also a risk to be around 1 percent for both countries. This marks a growth in 2020. significant slowdown for both countries given U.S. and Canadian employment growth in 2019 was 1.6 percent and Sources: Bank of Canada, Bank of Montreal; B.C. Stats, Bloomberg.com; Business Council of 2.1 percent, respectively. B.C.; CBC; Chicago Mercantile Exchange; CIBC; Oregon Employment Department; Uncertainty surrounding the U.S. economy’s strength is Scotiabank, Statistics Canada; RBC; T.D. Economics; The Economist; U.S. Bureau of Labor reflected in the futures market for the federal funds rate. At the time of Statistics; and U.S. Federal Reserve; Washington Employment Security. this writing (February 2020), future contracts on the federal funds rate are NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 3

2020 GAS OUTLOOK • MARKET FUNDAMENTALS This section presents historic and future trends in North American natural gas supplies and prices, as well as the sources of supply serving the Pacific Northwest and how these provide supply and pricing options for regional consumers.

The technological renaissance that unlocked gas Figure S1. North American Gas Plays and oil from shale has gifted North America with a vast energy resource. (See Figures S1-S4 for current North SUPPLY American shale plays, production growth since 2000 and projected long-term supply through 2040.) The Pacific Northwest is located adjacent to two prolific producing regions: The Western Canada Sedimentary Basin spanning British Columbia (BC) and Alberta, and the U.S. Rocky Mountain states (see Figure S5). More than two-thirds of the natural gas consumed in the region is sourced from Canada. The supply optionality resulting from our connection to these basins is shown in Figure S6. Projected growth in production in both regions is shown in Figures S7 and S8.

Source: U.S. EIA, 2011 Page 4 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

Figure45 S2. U.S. Shale Propels 57% North American Production Increase Figure S4. U.S. Technically Recoverable Nat. Gas Resource at All Time High from 2005-2018 40 3,384 3000 35 % 30 2500 300 2107 25

2000 1652 1253 20 Shale resource not assessed separately 1073 Tcf/year Trillion Cubic Feet Cubic Trillion

Tcf/year 687 15 1500 616 1,119 158 10 ~200 158 157 1,00 163 159 169 166 158 1000 3 146 155 169 147 147 147 141 5

1153 0 1057 1052 1104 1120 500 936 958 950 955 1007 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 856 854 881 921 897 U.S. Production Canadian Production Source: U.S. EIA Data Tables, U.S. Natural Gas Production, 01/31/2019 0 Statistics Canada, Tables 25-10-0047-14 (2000-2015); 25-10-0055-01 (2016-17)

Figure S3. N. American Production Projected to Increase 24% from 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020-2040 U.S. Production Canadian Production Traditional Coalbed Shale 60 Source: Potential Gas Committee, 2019

50 NOTES: In its latest biennial assessment of U.S. natural gas resources, the Potential Gas Committee (PGC) found the nation has a technically recoverable (probable, possible, and 40 speculative) resource base of 3,384 Tcf as of year-end 2018. This exceeds the PGC’s previous assessment (year-end 2016) by 20 percent. When added to the EIA’s proven reserves 30 2

Tcf/year estimate of 464 Tcf, the total of 3,838 represents about 103 years of gas. Tcf/year Canada’s technically recoverable gas is estimated at 1,220 Tcf and its proven reserves at 20 69 Tcf.2

10

0

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 U.S. Production Canadian Production Source: EIA, 2020 Annual Energy Outlook Table 13 – Natural Gas Supply, Disposition & Prices 2Potential Gas Committee Reports Record Future Supply of Natural Gas in the U.S., Sept. 11, 2019. Canada Energy Regulator, Canada’s Energy Future 2019, Supplement – Natural Gas Production http://potentialgas.org/press-release.

NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 5

S5 FIGURE S5. Source of Natural Gas for the Pacific Northwest FIGURE S6. ConnectionNorthwest to Three* Pipeline's Basins 10-year ProvidesSupply Diversity Supply Optionality** Northwest Pipeline's 10-year Supply Diversity Fort Liard 1 NorthwestNorthwestNorthwest Pipeline's Pipeline's Pipeline's 10 - 10year 10-year-year Supply SupplySupply Diversity DiversityDiversity 5 7% 100% 9% 9% 8% 8% 8% 8% 9% 10% 10% $5.00 100% 1 $5.005 0.9 1 9% 8% 7% 7% 8% 8% 8% 9% 10% 10% 10% 4.5 5 9% 8% 8%7% 8%8% 8%8% 9%8% 10% 10% 10% Fort Nelson 9% 9% 8% 7% 9% 10% 10% 90% 90% 9% 9% 8% 8% 8% 15% 8% 9% 10% 10%$4.50$4.50 Weten 0.9 28%15% 15% 16% 4.5 Canaian 0.8 0.9 4 4.5 Seimenta 16% 24% 80% 80% 33% 28% 16%15% $4.00$4.00 ain 37% 34% 28% 28% 28% 24% 24%16% 0.8 37%38% 34% 33% 33% 15% 16% 31% 4 0.7 0.8 38%43% 37% 34% 31%24% 3.5 4 70% 43%46% 38% 34% 33% 24%$3.50 Fort St. 70% 43% 37% 33% $3.50 John 38% 37% 34% 0.7 43% 38% 3.5 0.6 0.7 46% 3 3.5 60% 60% 46% 43% $3.00$3.00 0.6 3 50%0.5 0.6 $2.502.5 3 50% 55% 55% 50%55%50% 50% $2.50

44% 44% US$/DTH PERCENTAGE 44% 0.5 2.5PRICES

40% 42% 50% 37% $2.00 PRICES 0.440%0.5 42% 55% 50% 37% 2 $2.002.5 44% 40% 40% 51% 51% 51% 55% 40% 46% 44% US$/DTH PERCENTAGE 46% 46% PERCENTAGE 42% 44% US$/DTH PERCENTAGE 30%PERCENTAGE 0.4 $1.50 2 0.330%0.4 40% 44% 44% 40% 51% 1.5 $1.502 40% 44% 44% 40% 46% 51% 35% 42% 46% 40% 42% 20% 20%0.3 $1.00$1.001.5 0.2 0.3 35% 1 1.5 35% 40% 10% 40% 21% 24% 24% 23% 23% 22% $0.50 10%0.2 18% 21% 24% 22% $0.501 0.2 14% 18% 13% 13% 21% 23% 1 0.1 8% 10% 10% 14% 18%13% 13% 0.5 Calgary 0% 8% 14% 13% 13% $0.00 0% 10% 8% 10% 24% 23% $0.00 0.1 21% 24% 0.5 0 0.1 18% 21% 23% 0 0.5 20102010 20112011 20122012 2013201314% 2014201418% 2015201513% 2016201613% 20172017 20182018 20192019 2009 10% 2010 8% 2011 10% 2012 14% 2013 2014 13% 2015 13% 2016 2017 2018 Vancouver Alber ta10% 8% 10% British Columbia D ome sti c 0 Alber ta British Columbia D ome sti c Thru 12/31/19 0 NWGA Member Pipelines 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Thru2018 12/31/190 Albe rtaStorage British Columbia Alberta/Stanfield PricesDomes tic British Columbia/SumasStorage Prices Victoria Sumas Other Pipelines Storage2009 2010 2011 2012Alberta/Stanfield2013 Prices 2014 2015British Columbia/Sumas2016 Prices2017 Thru 12/31/182018 North Kingsgate Storage British Columbia/Sumas Prices Through2019 12/31/20192019RenewableRenewable total total Natural Gas Supply Basins Alberta/Stanfield Prices British Columbia/Sumas Prices Domestic/ Opal Prices Albe rta British Columbia Domes tic Storage Thru 12/31/18 DomesticAlbe rta BritishDomestic/Opal Columbia PricesDomes tic Storage 2,815,193Thru Dth 12/31/18 Seattle Spokane 2,815,193 Dth Alberta/Stanfield Prices British Columbia/Sumas Prices Domestic/ Opal Prices Wenatchee BritishAlberta/Stanfield Columbia Prices BritishAlberta/Stanfield Columbia/Sumas Prices PricesDomestic/ Opal Prices ONTANA R Alberta untain ain Source: Northwest Pipeline Portland

Big Horn * For purposes of this chart, the Alberta and BC portions of the WCSB are depicted separately. Powder Bend River **Does not include volumes of Alberta-sourced gas shipped to the region via FortisBC’s Southern Crossing Boise pipeline or directly shipped/delivered by TC Energy's GTN pipeline. . Pocatello Wind River Medford WOING Malin Klamath Green Falls River NOTES: Figure S6 illustrates the benefits the region derives from having access to multiple

Denver- sources of natural gas supply. The anomaly shown in 2018 was the result of the Enbridge BC Salt Lake City Julesburg Uinta Pipeline rupture, which constrained BC supply availability and raised prices at the Sumas Piceance trading hub. These higher prices, coupled with very low cost San Juan Basin supply (see Source: NWGA Figure S8 for context), meant the region relied more heavily on supplies from the U.S. Rockies. The issue extended through 2019 until full service was restored on the BC Pipeline in December, 2019. Page 6 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

FIGURE S7. BC Drives Projected 35% WCSB Production Growth from FIGURE S8. Rocky MountainRockies / SanProduction Juan Production Predicted Forecast to Remain Flat 2020-2040 2019 - 2040 Alberta British Columbia 16 22 Rockies San Juan 14

17 12

10

12 8 Bcf/day

Bcf/Day 6 7

4

2 2

0 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2040 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 -3 Alberta British Columbia Rockies San Juan Source: Canada Energy Regulator, Canada’s Energy Future 2019, Supplement – Natural Source: Wood Mackenzie 2019 H2, published with permission Gas Production

NOTES: WCSB production is forecast to decline for a few years, before growing to 21 Bcf/day NOTES: As shown, Rockies’ production is generally flat through 2040. by 2040 to meet expected rising demand for LNG exports. Most of that growth will come The San Juan basin in northwest New Mexico is located below the Piceance play shown from the Montney formation that spans BC and Alberta. in Figure S5. It is the southern terminus of the Williams NW Pipeline that serves the Pacific Northwest. NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 7

RENEWABLE NATURAL GAS IN THE PACIFIC NORTHWEST

Regional gas utilities and pipelines continue to work with farmers, developers customer costs by more than 5 percent. Washington gas utilities are currently working and local governments to capture and purify biogas that can be injected as RNG with Washington Utilities and Transportation Commission (WUTC) staff and other into existing natural gas systems, while new policies are being enacted to interested parties to develop RNG cost recovery rules, RNG program limitations and provide incentives for further development. RNG gas quality requirements. In BC, there are five operating biogas projects using agricultural waste, Currently there are five projects producing or soon-to-begin producing RNG in landfill waste and curbside organic waste to generate about 250,000 Washington state – two landfills and one multi-farm dairy-waste digester connected to Gigajoules (GJ) (equivalent to 237,000 Dth) of RNG annually. FortisBC already Williams Northwest Pipeline and two wastewater treatment facilities connected to purchases and injects RNG into its existing system, as well as investing in and Puget Sound Energy's (PSE) distribution system. However, these facilities are currently operating biogas upgrading equipment, and is building another RNG- all committed to serving the vehicle fuel market, primarily in California. As the vehicle producing facility at the Vancouver Landfill. When the facility begins fuel market matures and reaches saturation, it is expected that landfill- and wastewater- operation in late 2021, it will double BC’s existing expected RNG supply. sourced RNG will be redeployed to serve local utility demand. On the customer side, FortisBC was one of the first utilities in North America to introduce a voluntary participation RNG Program in 2011. FortisBC customers can designate between 5 and 100 percent of their natural gas use as RNG and pay a premium on their bill. FortisBC then injects an equivalent amount of RNG into the FortisBC distribution system. Today, more than 10,500 BC homes and businesses are enrolled in the RNG program. The provincial CleanBC plan, enacted in 2018, set an ambitious target of 15 percent RNG blend by 2030. Though not yet in force, it represents a major shift in how FortisBC needs to look at its gas supply. Ultimately, FortisBC expects to use a number of tools to reach this Example of RNG production from a landfill source objective, but if required to fill the gap with RNG, this represents a greater than 30-fold increase in its current PSE has held preliminary discussions with numerous developers seeking to supply levels. complete RNG projects in western and central Washington and with various municipal In Washington, the state legislature passed a law in 2019 that and regional wastewater treatment plants and landfills that seek to create additional requires each gas local distribution company (LDC) to offer RNG to revenue streams and reduce their own carbon footprint. PSE has begun physical and its customers and gives those entities the ability to introduce RNG into economic feasibility analysis of the facilities necessary to interconnect approximately 12 their standard supply portfolios, provided the cost of RNG does not increase viable projects. Page 8 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

Other Washington utilities, such as Cascade Natural Gas, are also considering potential supply sources and some believe they may be able to offer RNG directly to retail customers through opt-in programs by late 2020 or mid-2021. By 2025, as much as 2 percent of Washington gas use could be sourced from renewable sources, with a potential of 5 percent by 2030. RNG development could In Oregon, similar to Washington, a law passed in 2019 requires the Public Utility reduce U.S. GHG emissions Commission to adopt RNG programs for both large and small gas utilities, enabling them to fully recover costs of integrating RNG into their systems. Up to 5 percent of a utility’s between 101-235 million revenue requirement may be used to cover the incremental costs of RNG. The law also metric tons (MMT) by outlines goals for adding as much as 30 percent RNG into the state’s pipeline system by 2040 – the equivalent of 2050. A 2017 study by Oregon’s Department of Energy showed a technical potential of recovering some 48 billion cubic feet (Bcf) of RNG within the state annually, an amount reducing GHG emissions that could supply every home using natural gas in Oregon today with a local, renewable from average annual energy source.3 Oregon’s first gas-grid-connected RNG facility, Threemile Canyon Farms in Boardman, residential natural gas use began production in 2019, with a tie into the Williams Pipeline system. Three more projects by 95% from levels observed have announced plans to interconnect to NW Natural’s pipeline distribution system, over the last 10 years.4 beginning with the City of Portland’s Columbia Boulevard Wastewater Treatment Plant and Shell New Energies’ Junction City projects in 2020, and the Metropolitan Wastewater Management Commission project in Eugene-Springfield in 2021. Like RNG producers in Washington state, these projects are earmarked to supply the California vehicle market for now, although some of the Portland RNG will power city trucks at a natural gas fueling station to be built at the treatment plant. In Idaho, Intermountain Gas Company has integrated RNG produced from one dairy farm in Jerome since December 2019, producing approximately 750 Dth/day. Another RNG producer is scheduled to come online sometime in February 2020. — Contributors: Bill Donahue and Michael Mullally, PSE; Dave Santen, Northwest Natural; Scott Gramm, FortisBC; Eric Wood, Intermountain.

3Biogas and Renewable Natural Gas Inventory SB 337 (2017), 2018. www.oregon.gov/energy 4https://www.gasfoundation.org/2019/12/18/renewable-sources-of-natural-gas/ NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 9

2020 GAS OUTLOOK • COMMODITY PRICES The commodity cost of natural gas has plummeted with the surge in supply over the last decade (see Figure P1), saving regional consumers across all economic sectors hundreds of millions of dollars. Commodity prices are expected to remain below $5/Dth PRICES through 2050 (see Figure P2). High demand coupled with infrastructure constraints may periodically cause short-lived regional price volatility. The price of natural gas is also advantageous relative to other transportation fuels (see Figure P3).

12 2020 AEO HH NPCC AECO NPCC Sumas NPCC Opal FIGURE P1. Historic Natural Gas Prices FIGURE P2. Natural Gas Price Forecast Comparisons 11 6

10 5 9

8 4

7 $7.15

6 3 2017$/Dth $2019/Dth

5 $2019/Dth

$2019/Dth $4.09 2 4

3 1 $3.42

2 2020 AEO HH NPCC AECO NPCC Sumas NPCC Opal 0 1 6 2020 2023 2026 2029 2032 2035 2038 2041 2044 2047 2050 0 Source: EIA 2020 Annual Energy Outlook; NPCC – Fuel Price Forecast, June 2019 Update 1981 1991 2001 2011 1982 1983 1985 1992 1993 1995 2002 2003 2005 2012 2013 2015 1984 1986 1987 1988 1989 1990 1994 1996 1997 1998 1999 2000 2004 2006 2007 NOTES:2008 2009 52010 Price forecasts2014 2016 reflect2017 the existence of and an ongoing expectation for robust Source: U.S. EIA Natural Gas Wellhead Prices at Henry Hub. (Henry Hub is a trading point in natural gas supplies throughout the forecast period (2029) and beyond. Louisiana that serves as a benchmark for North American natural gas pricing.) The4 Northwest Power and Conservation Council (NPCC) forecasts natural gas prices at trading hubs where the Pacific Northwest sources its gas: AECO5 and Sumas for natural gas originating in Alberta and British Columbia, and Opal for gas produced in the U.S. Rocky 5The price differential between Henry Hub and AECO is explained here: https://open.alberta.ca/dataset/3b7ec04e-fd07- 3 4518-bfde-d8cb857d9587/resource/896c312a-7efb-442f-8f9a-5b62bb46e1c0/download/19-explaining-gas-price- Mountain states of Colorado, Utah and Wyoming. differentials.pdf The price of natural gas coming from the supply areas upon which the Pacific Northwest $2019/Dth relies is2 typically lower than the North American benchmark at Henry Hub.

1

0

2020 2023 2026 2029 2032 2035 2038 2041 2044 2047 2050 Page 10 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

FIGURE P3. Transportation Fuel Price Forecast NGVS: ECONOMICALLY AND 4.5 ENVIRONMENTALLY BENEFICIAL 4 As illustrated in Figure P3, natural gas promises to deliver 3.5 substantial economic value now and in the future relative to other transportation fuels. Natural gas engines also produce 3 superior environmental performance (e.g., reduced

2.5 greenhouse gas emissions) compared to gasoline and diesel engines. This is especially true for production of $2019/GGE* 2 such pollutants as nitrous and sulfur oxides (NOx, SOx),

$2019/GGE* which can cause serious health issues. 1.5 For instance, contemporary natural gas engines 1 operate well below the below the U.S. Environmental Diesel Gasoline Natural Gas Protection Agency's (EPA) threshold for NOx emissions 0.5 of 0.2 grams/brake horsepower (0.2g/bhp) even * gasoline gallon equivalent 0 while idling. And while the newest diesel engine technology can achieve the EPA standard, it only 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 does so when it is operating at about 40 miles per Diesel Gasoline Natural Gas* hour. This means emissions largely remain over Source: EIA 2020 Annual Energy Outlook, Table A3 – Energy Prices by Sector and Source the EPA threshold, given the stop-and-go driving NOTES: Forecast prices for transportation fuels include the commodity cost patterns typical of heavy trucks and buses and all costs associated with delivery to the station (transport, distribution) and operating in urban areas, where vulnerable dispensing to the vehicle (pumping). According to the EIA, prices for natural gas as populations often live. (Click here to see an a transportation fuel are expected to decline over the forecast period because: NWGA fact sheet on vehicle emission 1) In the near term, prices reflect mostly compressed natural gas (CNG) comparisons). purchased and delivered by utilities (higher commodity cost), and at a higher For more information on how using natural capital cost per unit of fuel dispensed (smaller stations with lower utilization). gas for transportation provides both an 2) Over time, it is expected that more heavy-duty vehicles (freight carriers and environmental and economic solution to our region’s marine vessels) will transition to liquefied natural gas (LNG) purchased directly from air quality issues, visit www.nwalliance.net. the spot or futures markets (lower commodity cost) and dispensed through stations with greater economies of scale (lower capital costs per unit of fuel dispensed). Refer to the EIA’s Natural Gas Market Module assumptions document for more detail: https://www.eia.gov/outlooks/aeo/assumptions/pdf/natgas.pdf.)

NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 11

2020 GAS OUTLOOK • REGIONAL DEMAND

Overall demand for natural gas in the Pacific Northwest is forecast to grow at nearly the same rate as reported last year: a modest 1.0 percent per year (see forecast demand growth by sector in Table D1). Natural gas as a fuel to generate electricity paces overall expected growth in regional gas use (see Figure D2), in part due to retirement of coal generation units in the 2021-2022 time frame. Meanwhile, residential and commercial customers continue the decades-long trend of using gas more efficiently (see Figure D3), dampening growth in those sectors. Figure D1 (below) shows how regional demand has fluctuated over the past two decades. Figure D4 shows forecast peak and average day demand.6

FIGURE D1.Residential Historic RegionalCommercial DemandIndustrial by SectorGeneration Electricity Consumption 1000 NOTES: While regional residential and commercial consumption has remained relatively flat over the past 900 decade, industrial usage has declined considerably, in part due the “Great Recession” that cost the region more 800 than 20 percent of its industrial gas load between 2007 and 2012. The industrial sector is still the largest regional 700 user, however (see Figure D2).

600 As noted above, the region is using increasingly more natural gas to generate electricity. However, year-to-year 500 variations occur because gas is typically used only when other resources (hydro, nuclear, wind, solar) are

Million Dth Million 400 unavailable in sufficient quantities, and the first resource Million Dth/ year turned off. 300

200

100

0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Residential Commercial Industrial Generation Electricity Consumption

6The source of all charts and tables in this section is NWGA. Page 12 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

2019 Outlook originial figures.excluding S3, S6, P1,2,3.xlsxSector Demand 2/14/2010:58 AM TABLE D1. Forecast Annual and Cumulative* Demand Changes by Case Figure D2. Expected Case Forecast by Economic Sector Residential Commercial Industrial Generation

Low Expected High 350 Annual Cumulative Annual Cumulative Annual Cumulative 0.2% Rate Rate Rate Rate Rate Rate 300 TOTAL -0.1% -1.2% 1.0% 8.7% 1.3% 11.0% 1.1% Residential 0.3% 2.5% 1.1% 9.0% 1.8% 14.7% 250 Commercial 0.5% 4.1% 1.1% 9.7% 2.3% 18.4% 1.9% Industrial -1.0% -9.2% 0.2% 1.6% 0.8% 7.3% 200 Generation 0.0% 0.0% 1.9% 15.7% 0.7% 6.3%

* through 2028/2029 Million Dth 1.1%

Million Dth 150

NOTES: This demand forecast is a compilation of the planning conducted by NWGA member-companies, including the integrated resource plans each 100 natural gas utility is required to file with their respective state/provincial regulator. 50 Low and high demand cases are driven by a variety of economic and policy factors, including growth, commodity cost, cost of carbon, etc. See 0

Appendix B for forecast assumptions utilized by a number of regional utilities. 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/2029 Commercial Generation Residential Industrial

NOTES: Residential, commercial and industrial demand for natural gas is expected to grow at a slightly slower pace than forecast in last year’s Outlook, while generation demand is anticipated to grow at a slightly greater rate. The forecast step increase in gas demand for generation shown in 2021-2022 coincides with the retirement of several coal-fired generation units currently serving the region, including Boardman in Oregon (end of 2020), Centralia Boiler 1 in Washington (end of 2020), and Colstrip Units 1 & 2 in Montana (mid-2022). This forecast demonstrates the expectation that natural gas will play an increasingly important role in maintaining system reliability and affordability as policymakers drive the region toward a cleaner energy future. NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 13

FIGURE D3. Declining Per Capita Consumption in Residential and FIGURE D4. PeakPeak Day and Average DayAvg DemandJan Day ForecastAvg May Day Peak Day Avg Jan Day Avg May Day Commercial Sectors Pipeline Underground Storage Peak LNG 8 180 3700000

7 160 +124% 3200000 6 140 2700000 5 120 2200000 4

100 3 -32% 1700000 Million Dth/day 80 2

1200000 Million Dth/year 60 Res/Comm Customers Res/Comm Use per Customer (Dth) Customer per Use 1

Use per Customer (Dth)Use per Customer 700000 40 0 1 2019/202 2020/213 2021/224 2022/235 2023/246 2024/257 2025/268 2026/279 2027/2810 2028/202911 12 20 200000 Gas Year Year (Nov (Nov-Oct)-Oct) Peak Day7 Avg. Jan. Day Avg. May Day - -300000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Number of Residential and Commercial Customers Per Capita Demand NOTES: The Pacific Northwest uses the least amount of gas during the month of May. Gas used to generate electricity for air conditioning typically ramps up in June before tailing off NOTES: While the number of residential and commercial natural gas consumers in our during the fall. January is the month during which our region typically uses the most gas to region has grown 124 percent since 1990, per capita usage of natural gas has dropped 32 heat space and water for homes and businesses. percent due to energy efficiency efforts, including more efficient gas appliances. Natural gas utilities design their systems to serve demand on the coldest day likely to occur in the territories they serve. Figure D4 illustrates that demand for natural gas on those days can nearly double the demand experienced during an average winter day. While each company approaches its planning standard a little differently, “peak” or “design” days are typically based on actual 24-hour average temperatures recorded at representative locations. A comparison of the NWGA member company weather design standards can be found in Appendix B.

7 Peak Day values represent firm sales and transportation customers only. Page 14 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

THE FACTS ABOUT GREENHOUSE GAS EMISSIONS

Greenhouse gas (GHG) emissions are the frequent subject of U.S. Methane Emissions per Mcf of Gas Produced 9 discussions relating to natural gas. The facts about emissions, particularly how much methane is released from natural gas production and delivery systems, are often skewed. This is particularly troubling when fact-based decision-making is crucial to crafting long-term and far-reaching energy policy. A better understanding of methane emissions released from natural gas production and delivery systems helps clarify how the proper deployment of natural gas can deliver significant environmental kG CO2e/Mcf kG CO2e/Mcf benefits. Let’s take a closer look at the numbers. Industry-wide Natural Gas Emissions are Low and Declining The U.S. Environmental Protection Agency (EPA) made further updates to its estimates of methane emissions in its

Inventory of U.S. Greenhouse Gas (GHG) Emissions and Sinks: Source: EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2017 1990–2017 (“Inventory”), released in 2019. The Inventory The Inventory also confirmed that natural gas distribution systems have a small incorporates new data available from studies on emissions footprint that continues to decline. emissions as well as the EPA’s own Greenhouse Gas Distribution systems emit less than 0.1 percent of U.S. Methane Emissions from Reporting Program (GHGRP). produced natural gas annually, a decline of 73 percent Natural Gas Distribution Systems The Inventory found that industry-wide from 1990 to 2017 even as U.S. natural gas utility methane emissions8 as a rate of natural gas 50 companies added more than 730,000 miles of production were 1.3 percent. (In BC, this methane pipeline to serve 19 million more customers, leakage rate is estimated to be as low as 0.5 40 increases of 50 and 36 percent respectively, and percent.) The ratio of methane emissions per unit natural gas production increased by 50 percent. 30 of natural gas produced has declined The bottom line: New control technologies, continuously during the past several decades, 20 Down 73% replacement of old cast iron and bare steel pipes, dropping 48 percent since 1990. since 1990 and better industry practices have contributed to 10 significant emissions reductions, even as annual CO2e Tons Million Metric natural gas production and consumption have hit 0 record highs. 1990 2005 2017 Source: EPA Inventory, 1990-2017

8Industry-wide, or “lifecycle” emissions, as defined by the EPA, include natural gas field production, processing, transmission and storage, and distribution. 9Includes methane emissions from petroleum production based on the natural gas fraction of total energy content produced from oil wells. NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 15

Regionally, Emissions are Already Lower and Expected to Decline Even Faster Regional Natural Gas Emissions are Small Relative to Other Sectors In the basins from which the Pacific Northwest sources most of its natural gas, policy- Overall, direct use of natural gas for space and water heating in homes and makers and regulators have taken action to further decrease methane emissions from commercial buildings in the Pacific Northwest account for 8 percent of total regional upstream operations. Effective January 2020 in BC, the source of about two-thirds of our GHG emissions (see pie chart). The transportation sector (trucking, fleets, personal region’s natural gas, the BC Oil and Gas Commission (BC OGC) has committed to reducing vehicles, public transit, etc.) produces the largest share of regional emissions (42 percent). methane emissions from upstream oil and gas operations by 45 percent by 2025 relative to The “other” category in the chart includes agriculture, forest practices, waste streams 2014 levels, targeting everything from compressor seals to storage tanks. The BC approach (landfills, waste water treatment), building heat from fuels other than natural gas, oil and is expected to reduce methane emissions by 10.9 megatonnes (10.9 million metric tons) of gas extraction (BC only), and industrial emissions not related to natural gas combustion. CO2 equivalent over a 10-year period, the equivalent of taking 390,000 cars off the road Current Emissions by Source in Pacific Northwest each year.10 In addition, BC’s natural gas transmission sector is expected to reduce its emissions by 40 to 45 percent below 2012 levels by 2050 under the Canadian federal Res/Comm Methane Regulation, which also came into force in January 2020. Like the BC OGC, the 8% Other federal Methane Regulation is focused on reducing emissions from fugitives and venting. 23% In 2014, Colorado (which provides much of our region’s Rockies’ gas, about one-third of our supply) approved the first methane regulations in the U.S. requiring energy companies to reduce methane emissions from oil and natural gas operations by routinely checking their oil and natural gas wells—both new and existing—statewide, and immediately addressing any leaks. The regulations go beyond those of the EPA, which apply only to new or modified operations, according to the Environmental Defense Fund, which helped craft

Colorado’s regulations. Industrial 12% Transportation By 2016, field surveys of oil and gas equipment by the Colorado Department of Public 42% Health and Environment (CDPHE) found a 75 percent drop in the number of sites where methane leaks were detected compared to similar surveys conducted prior to the regulations taking effect, said Will Allison, former director of the department's Air Pollution Control Division. By 2018, Garry Kaufman, the division’s new director, said, “Colorado’s Electricity program has reduced emissions of methane and volatile organic compounds from the oil 15% and gas sector by hundreds of thousands of tons per year, while still allowing for growth in this important economic resource for Colorado.” So another bottom line: gas pipelines serving the Northwest have the lowest methane Sources: BC 2017 Inventory: BC Community Energy Emissions Inventory for Residential/Commercial Combustion of Natural Gas; Oregon 2017 GHG Inventory; Washington 2017 GHG Inventory; U.S. EIA State emissions on the continent and will continue to improve. Carbon Dioxide Emissions Data for 2017 Residential/Commercial combustion of Natural Gas in OR/WA, October 2019.

10For details from the BC Oil and Gas Commission, see https://www.bcogc.ca/public-zone/reducing-methane-emissions Page 16 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

Electrification: High Costs with Minimal Emissions Reduction Steps towards a Low-Emissions, Diversified Energy Future So what is the best path forward to achieve meaningful emissions reductions in It makes considerably more sense to keep our options open in the future the Northwest? Some believe “electrifying everything” is the answer. But the – by maintaining a mix of energy sources and employing each where it is electrification option has serious economic and reliability costs, as well as its own most efficient and cost-effective – while continuing to innovate and reduce environmental consequences. If you rely on one source for all energy, what emissions no matter the energy source. In the Pacific Northwest, the happens during outages? What happens during peak cold days in the winter, when natural gas industry is committed to supporting GHG abatement targets even demand-response systems and utility-scale power storage systems (large while also continuing to provide its customer with choices and solutions batteries) cannot sufficiently supplement intermittent production by solar and at a reasonable and predictable cost now and in the future. To that end, wind sources? we are making investments in: Again, let’s look at some numbers. FortisBC’s current natural gas system is • Energy efficiency and demand-side management programs designed to meet the peak demand equivalent of 28.1 GW. In contrast, BC Hydro’s current peak demand is 11.1 GW; when its Site C dam is completed, that will add an • Replacing higher-carbon fuels for all possible uses (space and additional 1.1 GW of generation at a cost of about $10 billion. Based on the water heating, transportation, electricity generation) with cleaner 15 expected cost of the Site C project, electrifying just FortisBC’s natural gas demand alternatives such as RNG and hydrogen. would require multiple billion dollars in investments in BC Hydro’s system. • Efficient natural gas-fired generation plants to support Ultimately, electrification would require staggering investments in the electric grid intermittent renewable energy sources and meet peak demand (e.g., transmission and distribution infrastructure) along with significant investments • An ever tighter natural gas delivery system in additional power sources – whether energy efficiency, power storage, demand- response, new generation, or potentially costly purchases on the spot market. At These actions will help maintain a healthy and diversified the consumer level, this would also come with power bill increases and equipment energy system across our region, ensuring system reliability and replacement costs. continuing to put North America’s abundant, low-priced natural According to a 2018 American Gas Association study, aggressive policy-driven gas supply to good use, while still allowing opportunities to residential electrification could reduce GHG emissions across the U.S. by only 1 to drive emissions lower through innovation. 1.5 percent by 2035.11 In the Northwest, served by gas distribution12 and –Contributor: Robert Schuster, FortisBC transmission systems with lower emissions relative to elsewhere, the reduction achievements would be even smaller. And no one has yet estimated the environmental costs of the new electric transmission and distribution infrastructure that would have to be built to move the replacement electricity to market, nor the incremental emissions that will result from increased electricity generation in the near-term,13 nor the waste stream created by renewables.14

11For a summary of potential implications of residential electrification, see https://www.aga.org/globalassets/research--insights/reports/a-thoughtful-pathway-towards-u.s.-emissions-reductions.pdf 12A study conducted by Washington State University found that methane emissions from natural gas local distribution systems throughout the U.S. are also declining. https://methane.wsu.edu/ 13In BC, this includes investments in liquefied natural gas (LNG) systems to displace marine fuel oil in the international marine segment and to displace coal in Asian economies, with associated emissions reductions. 14Renewables alone will not make up projected regional power needs through 2030. See https://www.ethree.com/wp-content/uploads/2019/12/E3-PNW-Capacity-Need-FINAL-Dec-2019.pdf 15 Decommissioned wind farm turbines are not recyclable, and already posing issues at landfills. See https://www.npr.org/2019/09/10/759376113/unfurling-the-waste-problem-caused-by-wind-energy NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 17

2020 GAS OUTLOOK • REGIONAL CAPACITY

The region’s system of natural gas pipelines and storage facilities safely and reliably delivers energy to more than 3.5 million homes and businesses across the Pacific Northwest (see Figures C1 and Table C1). Regional pipeline capacity exceeds 90 percent utilization during normal winters (see Figures C2 and C3), making storage a critical regional asset. Given the long lead times required to develop infrastructure (3-5 years), ongoing evaluation of capacity needs remains critical. (Figure C4 shows proposed pipeline expansions or additions.)16

FIGURE C1. Pacific Northwest Natural Gas TABLE C1. Regional Storage Facilities

U O Infrastructure and CapacitiesO R T HE S T T ERR (MDth/day)T ORES Facility Owner Type Capacity + Max Withdrawal (MDth) ++(MDth/day) Jackson Prairie, WA Avista, PSE, NW Pipeline Underground 25,448 1,196 Mist, OR+++ NW Natural Underground* 19,172 656 Underground Subtotal 44,620 1,852 Plymouth, WA NW Pipeline Peak (LNG) 2,388 305 Tilbury, BC FortisBC Energy Peak (LNG) 1,634 155 Station 2 Mt. Hayes, BC FortisBC Energy Peak (LNG) 1,530 153 2060 Portland, OR NW Natural Peak (LNG) 504 132 Newport, OR NW Natural Peak (LNG) 980 65 Nampa, ID Intermountain Gas Peak (LNG) 588 60 Tacoma LNG PSE Peak (LNG)** 538 85 Swarr Station PSE Peak (LPG)*** 128 30 AECO Gig Harbor, WA PSE Peak (LNG) 16 3 Peak Storage Subtotal 8,306 988 155 TOTAL STORAGE 52,926 2,840 153 Sumas 1753 + Kingsgate Pipelines Working gas capacity; gas that can be used to serve the market. 2850 . Fortis BC System ++ Enbridge BC Pipeline Start of season or full rate; underground storage withdrawal rates decline as working gas volumes North Starr Road TC Energy GTN 165 TC Energy NGT L decline. Palouse Williams Northwest Pipeline +++ Mist capacity and deliverability include the North Mist Expansion in service May 2019. 1196 305 69 Other Pipelines Underground Storage 550 ** Tacoma LNG will come into partial service in 2021, full service by 2023. 656 Jackson Prairie Mist *** LPG: Liquid Propane Gas and Air mixture. Offline for upgrades. Returns to service in 2023. 132 LG Storage Stanfield Nampa 706 Newport 60 Plymouth NOTES: Storage facilities are an essential component of the region’s delivery system, providing Portland 65 Tilbury flexibility to serve demand when the weather gets cold. For shorter duration events, underground 495 Mt. Hayes storage is a more cost-effective solution than building pipelines to serve seasonal, cold weather 110 Kemmerer 655 Malin 158 loads. Above ground storage, usually LNG, is designed to serve the last measure of demand on the 2080 very coldest days of the year. 1500 16The source of all charts and tables in this section is NWGA. Page 18 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

Peak Day Avg Jan Day Avg May Day FIGURE C2.Pipeline Peak and AverageUnderground Day Supply/Demand Storage Peak LNG Balance FIGURE C3. Regional PipelineTransport Capacity UtilizationLoad Factor 8 8 Transport Load Factor 7 7 100%

6 6 2016/17 Actual 75% 5 5

4 2017/18 Actual 4 50%

MMDth/day 3 3 2019/20 Forecast 2 25% 2 1 Full Transpo rt Usage 1 (100%) 0 0% 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/2029 Nov Dec Jan Feb Mar - Gas YearGas (Nov-Oct) Year (Nov-Oct) Avg. May Day Avg. Jan. Day Peak Day17 Pipeline Underground Storage Peak LNG 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 NOTES: Natural gas utilities are obligated to serve their firm sales customers at all times, even during the coldest NOTES: Another way to think about deliverability is to consider weather.Peak Consequently, Day Avg Jan they Day designAvg theirJune Day systemsPipeline to accommodateUnderground extreme,Peak but Shaving plausible, conditions called peak or capacity utilization. Figure C3 plots the actual monthly winter design days (see Appendix B for a comparison of NWGA member company weather design standards). Figure C2 demand from 2016-17 and 2017-18, along with first-year forecast aggregates the projected design day volumes of NWGA members across the region and plots them against available demand (2019-20, assuming a normal winter) against region- capacity. The chart reflects increases in pipeline, underground and peak storage capacities due to expansions on the wide pipeline capacity utilization or “load factor.” The higher the Enbridge BC Pipeline and upgrades at North Mist, Tacoma LNG and Swarr Station Propane Air storage facilities. utilization rate, the lower the margin is to accommodate One can see that the region’s delivery system has very little excess capacity to serve peak loads, which vanishes unplanned outages. Figure C3 illustrates that the actual and altogether by the end of the forecast period. However, what would happen during an extended cold weather event if forecast coldest winter months experience utilization factors in pipeline capacity was limited and storage inventories depleted? This circumstance actually occurred in February 2019, excess of 75 percent, even exceeding 90 percent. when very cold weather coincidentally struck the entire region for an extended period. While Figure C2 assumes that Overall, the existing system safely and reliably serves the all delivery infrastructure is operating at maximum first-of-season (November) deliverability, the February cold snap region. Taken together, Figures C2 and C3 illustrate two important demonstrated the limitations of that assumption. In fact, when combined with unplanned infrastructure curtailments facts: 1) in-market area storage, both below and above ground, is and depleted underground storage inventories, the prolonged, extremely cold weather proved a severe test of the a critical regional asset; 2) the region must continue evaluating region’s deliverability. the need for additional long-duration capacity to reliably serve While the Pacific Northwest endured the late-season cold weather with little disruption, the situation current needs and future growth. demonstrated how close the region is to exceeding deliverability capacity during severe weather events. Getting 17 Peak Day values represent firm sales and transportation customers only. through that event largely unscathed was due in part to existing demand response on the gas system via interruptible 18Click here to learn more about: Gas Scheduling in the Northwest; an informational brief sales and transportation contracts. Buyers and shippers with interruptible contracts receive significantly discounted published by the joint Power & Natural Gas Planning Task Force of the NWGA and the Pacific Northwest Utilities Conference Committee. rates in exchange for agreeing to having their supply disrupted when necessary to maintain system pressures.18 NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 19

FIGURE C4. Infrastructure Projects Proposed to Serve the Region

Fort Liard NOTES: Market participants weigh the risk of disruptions against the costs of various infrastructure options to make decisions about what is needed and when. In response to these

Fort Nelson market signals, several infrastructure expansions have been proposed in the Pacific Northwest:

Weten Canaian 1. Enbridge T-South expansion: addition of 190 million cubic feet per day (MMcf/d) of firm Seimenta ain capacity. Fort St. 2. FortisBC Southern Crossing expansion: addition of 300-400 MMcf/d of bidirectional capacity. John 3. Williams Northwest Pipeline (NWP) Sumas Express: still under assessment. 4. TC Energy Gas Transmission Northwest (GTN) Trail West/N-Max: addition of 500 MMcf/d capacity, expandable to 1,000 MMcf/d. 5. TC Energy other system enhancements: two projects to add a combined 525 MMcf/d of incremental firm transportation to the Alberta/BC export delivery point. 6. Pembina Pacific Connector Gas Pipeline (PCGP) Project: Addition of 1,000 MMcf/d capacity to serve proposed Coos Bay LNG export facility.

Calgary (See Appendix D for more detailed project descriptions.)

Vancouver

Victoria Sumas North Kingsgate Enbridge: T-South Looping ONTANA Seattle Spokane FortisBC: Southern Crossing Wenatchee Expansion NWP: Sumas Express TC Energy: GTN Trail West TC Energy NGTL and Foothills BC Enhancements Pembina Pacific Connector Portland

R untain ain A H O Bend Boise O R E G O O G Pocatello Medford Malin Klamath Falls

Salt Lake City A L O R A E A A

U T A H Page 20 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 21

Appendices

APPENDIX A – Data Tables

APPENDIX B – Planning Assumptions Including Weather Design

APPENDIX C – Resource Deficiencies and Preferred Resources

APPENDIX D – Proposed Infrastructure Project Descriptions Page 22 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 23

Appendix A1: Maximum Capacities Dth/day SUPPLY 2019 / 2020 2020 / 2021 2021 / 2022 2022 / 2023 2023 / 2024 2024 / 2025 2025 / 2026 2026 / 2027 2027 / 2028 2028 / 2029 Pipeline Interconnects 4,043,324 4,043,324 4,146,324 4,146,324 4,146,324 4,146,324 4,146,324 4,146,324 4,146,324 4,146,324 WCSB via TCPL/GTN 1,565,059 1,565,059 1,565,059 1,565,059 1,565,059 1,565,059 1,565,059 1,565,059 1,565,059 1,565,059 Stanfield (NWP from GTN) 692,920 692,920 692,920 692,920 692,920 692,920 692,920 692,920 692,920 692,920 Starr Rd (NWP from GTN) 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 165,000 Palouse (NWP from GTN) 70,459 70,459 70,459 70,459 70,459 70,459 70,459 70,459 70,459 70,459 GTN Direct Connects 511,568 511,568 511,568 511,568 511,568 511,568 511,568 511,568 511,568 511,568 Kingsgate/Yahk BC Interior from TCPL 125,112 125,112 125,112 125,112 125,112 125,112 125,112 125,112 125,112 125,112 Rockies via NWP 495,000 495,000 495,000 495,000 495,000 495,000 495,000 495,000 495,000 495,000 NWP north from NWP south 655,000 655,000 655,000 655,000 655,000 655,000 655,000 655,000 655,000 655,000 Max Demand on Reno Lateral (160,000) (160,000) (160,000) (160,000) (160,000) (160,000) (160,000) (160,000) (160,000) (160,000) WCSB via DEGT 1,983,265 1,983,265 2,086,265 2,086,265 2,086,265 2,086,265 2,086,265 2,086,265 2,086,265 2,086,265 T-South to Huntingdon 1,753,060 1,753,060 1,856,060 1,856,060 1,856,060 1,856,060 1,856,060 1,856,060 1,856,060 1,856,060 T-South to BC Interior (Including Kingsvale) 230,205 230,205 230,205 230,205 230,205 230,205 230,205 230,205 230,205 230,205

Storage 2,745,468 2,745,468 2,814,468 2,814,468 2,814,468 2,844,468 2,844,468 2,844,468 2,844,468 2,844,468 Jackson Prairie (NWP from JP) 1,196,000 1,196,000 1,196,000 1,196,000 1,196,000 1,196,000 1,196,000 1,196,000 1,196,000 1,196,000 Mist Storage (NWN) 676,000 676,000 676,000 676,000 676,000 676,000 676,000 676,000 676,000 676,000 Plymouth (NWP from LNG) 305,300 305,300 305,300 305,300 305,300 305,300 305,300 305,300 305,300 305,300 Newport LNG (NWN) 65,280 65,280 65,280 65,280 65,280 65,280 65,280 65,280 65,280 65,280 Portland LNG (NWN) 131,880 131,880 131,880 131,880 131,880 131,880 131,880 131,880 131,880 131,880 Nampa LNG (IGC) 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 Gig Harbor Satellite LNG (PSE) 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 Swarr Stn Propane (PSE) - - - - - 30,000 30,000 30,000 30,000 30,000 Tilbury LNG (FortisBC) 155,466 155,466 155,466 155,466 155,466 155,466 155,466 155,466 155,466 155,466 Mount Hayes LNG (FortisBC) 153,042 153,042 153,042 153,042 153,042 153,042 153,042 153,042 153,042 153,042 LNG Tacoma (PSE) - - 69,000 69,000 69,000 69,000 69,000 69,000 69,000 69,000 Total Available Supply 6,788,792 6,788,792 6,960,792 6,960,792 6,960,792 6,990,792 6,990,792 6,990,792 6,990,792 6,990,792 Page 24 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

Appendix A2: Annual Demand Forecast (Dth) – Expected Case Region/Sector 2019 / 2020 2020 / 2021 2021 / 2022 2022 / 2023 2023 / 2024 2024 / 2025 2025 / 2026 2026 / 2027 2027 / 2028 2028 / 2029 BC Lower Mainland & Van. Island 162,132,074 163,890,167 165,228,776 166,454,142 167,433,510 168,268,614 169,151,109 170,033,604 170,963,490 171,798,594 Residential 57,121,786 57,490,132 57,771,343 58,004,711 58,291,982 58,605,391 58,918,801 59,232,210 59,545,620 59,859,029 Commercial 47,539,101 48,526,156 49,513,494 50,501,105 51,456,739 52,400,108 53,343,477 54,286,845 55,230,214 56,173,582 Industrial 40,126,136 40,576,219 40,646,279 40,650,666 40,339,738 39,965,455 39,591,172 39,216,889 38,842,606 38,468,323 Power Generation 17,345,051 17,297,660 17,297,660 17,297,660 17,345,051 17,297,660 17,297,660 17,297,660 17,345,051 17,297,660 W. Washington 253,880,501 251,661,410 279,530,939 281,681,334 282,173,874 284,240,360 286,913,845 286,627,810 291,472,320 290,428,649 Residential 77,309,204 78,586,384 79,135,929 79,637,458 80,239,921 80,874,349 80,761,808 81,054,678 81,479,822 82,117,750 Commercial 47,598,145 47,868,792 47,661,846 47,771,897 47,987,168 48,174,715 48,087,291 48,181,994 48,326,067 48,545,620 Industrial 81,150,789 80,996,106 80,632,059 80,513,965 80,476,567 80,516,866 80,514,897 80,578,990 80,656,960 80,768,274 Power Generation 47,822,364 44,210,128 72,101,104 73,758,014 73,470,217 74,674,430 77,549,849 76,812,149 81,009,470 78,997,005 W. Oregon 137,513,871 137,801,680 138,450,783 139,011,908 139,796,782 140,111,233 140,661,036 141,150,854 141,827,095 142,484,966 Residential 40,085,354 40,149,392 40,340,255 40,514,363 40,826,039 40,784,733 40,873,315 40,924,811 41,093,775 41,249,349 Commercial 26,199,174 26,500,075 26,956,140 27,408,085 27,943,050 28,261,584 28,667,552 29,061,998 29,556,302 30,050,793 Industrial 50,272,117 50,194,987 50,197,162 50,132,235 50,070,467 50,107,690 50,162,943 50,206,819 50,219,792 50,227,598 Power Generation 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 BC Interior 63,352,412 64,090,672 64,968,121 65,016,882 65,512,640 66,150,396 66,788,151 67,425,907 68,063,662 68,701,417 Residential 18,332,569 18,382,241 18,394,266 18,384,860 18,399,011 18,424,675 18,450,338 18,476,002 18,501,665 18,527,329 Commercial 11,821,255 12,126,044 12,432,484 12,740,760 13,047,646 13,353,804 13,659,962 13,966,121 14,272,279 14,578,437 Industrial 33,198,588 33,582,387 34,141,372 33,891,262 34,065,983 34,371,917 34,677,850 34,983,784 35,289,718 35,595,652 Power Generation E. Washington & N. Idaho 69,444,490 69,848,922 70,504,045 70,856,570 71,037,855 70,355,208 70,840,788 71,369,957 72,690,459 73,104,650 Residential 21,336,357 21,469,302 21,639,982 21,750,111 22,107,664 22,083,611 22,097,855 22,085,085 22,152,848 22,023,171 Commercial 16,034,142 16,041,340 16,099,192 16,139,020 16,236,382 16,188,587 16,205,470 16,219,769 16,299,418 16,251,392 Industrial 18,642,314 18,727,272 18,816,454 18,905,729 19,000,218 19,155,944 19,332,551 19,511,309 19,697,274 19,875,468 Power Generation 13,431,677 13,611,007 13,948,418 14,061,710 13,693,592 12,927,066 13,204,913 13,553,795 14,540,919 14,954,619 E. Oregon & Medford 135,831,980 136,257,564 135,942,273 135,634,098 133,252,265 131,592,917 133,786,814 137,634,853 144,490,888 146,404,897 Residential 8,494,453 8,618,014 8,762,683 8,918,071 9,113,244 9,221,267 9,371,750 9,521,425 9,713,251 9,816,118 Commercial 7,190,319 7,177,158 7,208,097 7,244,971 7,304,337 7,312,808 7,345,497 7,378,031 7,434,711 7,442,199 Industrial 11,343,266 11,449,919 11,540,357 11,614,243 11,678,972 11,758,882 11,845,608 11,932,969 12,023,276 12,109,483 Power Generation 108,803,942 109,012,474 108,431,136 107,856,813 105,155,712 103,299,958 105,223,960 108,802,429 115,319,651 117,037,097 S. Idaho 120,444,126 122,204,177 123,741,623 125,638,589 127,709,017 129,851,740 132,069,823 134,366,489 136,745,135 139,209,339 Residential 44,144,004 45,536,604 47,079,453 48,611,739 50,293,136 52,031,419 53,828,492 55,686,322 57,606,941 59,592,450 Commercial 4,352,304 4,409,638 4,484,042 4,557,717 4,635,771 4,715,161 4,795,912 4,878,045 4,961,585 5,046,555 Industrial 60,947,818 61,257,935 61,178,128 61,469,133 61,780,110 62,105,159 62,445,419 62,802,123 63,176,610 63,570,334 Power Generation 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 PNW Annual Demand - Base 942,599,455 945,754,592 978,366,560 984,293,523 986,915,943 990,570,467 1,000,211,567 1,008,609,475 1,026,253,049 1,032,132,513 Residential 266,823,727 270,232,069 273,123,911 275,821,312 279,270,997 282,025,446 284,302,359 286,980,532 290,093,922 293,185,196 Commercial 160,734,441 162,649,203 164,355,295 166,363,554 168,611,093 170,406,768 172,105,161 173,972,802 176,080,575 178,088,578 Industrial 295,681,027 296,784,824 297,151,810 297,177,233 297,412,054 297,981,913 298,570,440 299,232,881 299,906,235 300,615,133 Power Generation 219,360,260 216,088,495 243,735,544 244,931,422 241,621,799 240,156,340 245,233,607 248,423,259 260,172,317 260,243,606 NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 25

Appendix A3: Annual Demand Forecast (Dth) – High Case Region/Sector 2019 / 2020 2020 / 2021 2021 / 2022 2022 / 2023 2023 / 2024 2024 / 2025 2025 / 2026 2026 / 2027 2027 / 2028 2028 / 2029 BC Lower Mainland & Van. Island 164,389,863 168,081,944 171,051,638 173,962,246 176,661,508 179,263,152 181,963,016 184,714,684 187,566,534 190,377,403 Residential 57,548,179 58,311,196 58,909,432 59,466,625 60,087,420 60,743,738 61,408,928 62,083,112 62,766,416 63,458,968 Commercial 48,604,831 50,578,472 52,397,515 54,261,056 56,134,916 58,040,504 59,991,743 61,989,591 64,035,024 66,129,040 Industrial 40,891,802 41,894,617 42,447,032 42,936,905 43,094,122 43,181,249 43,264,686 43,344,321 43,420,042 43,491,735 Power Generation 17,345,051 17,297,660 17,297,660 17,297,660 17,345,051 17,297,660 17,297,660 17,297,660 17,345,051 17,297,660 W. Washington 310,351,325 316,138,134 316,570,088 321,774,319 325,107,495 330,509,064 332,782,483 332,163,776 338,450,014 338,219,963 Residential 85,122,919 87,328,166 88,220,077 89,051,380 90,311,082 92,205,884 92,390,911 93,679,716 95,447,114 96,641,950 Commercial 53,601,150 54,968,474 55,406,758 55,958,423 56,870,149 58,040,190 58,198,653 59,165,361 60,381,756 61,326,621 Industrial 86,931,459 87,132,532 86,849,205 86,891,811 87,015,066 87,320,544 87,257,890 87,568,215 87,942,759 88,175,118 Power Generation 84,695,797 86,708,962 86,094,048 89,872,705 90,911,198 92,942,446 94,935,029 91,750,484 94,678,385 92,076,275 W. Oregon 144,754,282 147,316,140 149,181,114 150,922,379 152,861,609 154,297,342 155,957,759 157,544,186 159,319,357 161,067,632 Residential 40,182,778 40,365,114 40,828,667 41,280,431 41,880,548 42,126,505 42,512,374 42,865,634 43,348,212 43,821,201 Commercial 26,262,073 26,638,700 27,270,973 27,907,489 28,638,769 29,158,096 29,776,581 30,392,342 31,122,542 31,861,883 Industrial 57,352,206 59,355,100 60,124,248 60,777,233 61,385,066 62,055,516 62,711,578 63,328,985 63,891,377 64,427,322 Power Generation 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 BC Interior 64,484,046 66,144,963 67,825,377 68,660,176 69,991,425 71,500,903 73,040,400 74,610,489 76,211,751 77,844,781 Residential 18,503,061 18,708,229 18,842,106 18,954,859 19,092,806 19,243,714 19,395,776 19,549,003 19,703,402 19,858,982 Commercial 12,109,490 12,683,472 13,219,845 13,772,515 14,338,347 14,918,367 15,513,692 16,124,670 16,751,659 17,395,020 Industrial 33,871,495 34,753,262 35,763,426 35,932,801 36,560,271 37,338,822 38,130,932 38,936,815 39,756,691 40,590,780 Power Generation E. Washington & N. Idaho 85,112,333 80,436,231 78,014,288 78,757,094 79,462,032 78,602,602 79,238,198 79,068,544 81,416,152 82,106,548 Residential 21,859,797 22,096,160 22,365,389 22,579,503 23,025,871 23,086,662 23,185,566 23,258,573 23,418,244 23,369,404 Commercial 16,465,400 16,529,923 16,641,753 16,737,127 16,882,931 16,879,693 16,940,812 16,999,939 17,127,937 17,120,818 Industrial 19,544,495 19,648,173 19,756,006 19,864,042 19,977,433 20,154,894 20,353,853 20,555,538 20,765,280 20,965,751 Power Generation 27,242,641 22,161,975 19,251,140 19,576,422 19,575,797 18,481,354 18,757,967 18,254,494 20,104,691 20,650,576 E. Oregon & Medford 156,688,669 159,911,606 163,914,003 162,573,353 161,449,484 162,204,460 165,886,351 161,717,008 176,227,188 178,145,748 Residential 8,791,446 8,935,064 9,117,802 9,298,874 9,517,312 9,644,421 9,815,953 9,986,887 10,202,492 10,324,767 Commercial 7,391,166 7,387,043 7,435,768 7,484,475 7,554,593 7,571,405 7,613,511 7,655,590 7,723,245 7,739,306 Industrial 11,707,951 11,828,684 11,933,625 12,022,010 12,101,547 12,197,015 12,299,899 12,403,456 12,510,442 12,612,468 Power Generation 128,798,107 131,760,815 135,426,808 133,767,995 132,276,032 132,791,619 136,156,988 131,671,075 145,791,008 147,469,208 S. Idaho 121,125,213 123,670,495 126,029,840 128,748,063 131,744,276 134,861,089 138,103,823 141,478,043 144,989,564 148,644,467 Residential 44,752,720 46,729,141 48,853,623 50,990,167 53,359,603 55,836,834 58,426,713 61,134,309 63,964,920 66,924,078 Commercial 4,408,013 4,469,019 4,571,654 4,674,368 4,783,027 4,894,212 5,007,981 5,124,395 5,243,515 5,365,404 Industrial 60,964,480 61,472,335 61,604,563 62,083,528 62,601,646 63,130,043 63,669,129 64,219,339 64,781,129 65,354,984 Power Generation 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 PNW Annual Demand - High 1,046,905,731 1,061,699,513 1,072,586,349 1,085,397,629 1,097,277,829 1,111,238,611 1,126,972,030 1,131,296,729 1,164,180,560 1,176,406,543 Residential 276,760,898 282,473,071 287,137,097 291,621,838 297,274,642 302,887,758 307,136,221 312,557,235 318,850,800 324,399,349 Commercial 168,842,123 173,255,103 176,944,265 180,795,454 185,202,732 189,502,466 193,042,973 197,451,888 202,385,678 206,938,091 Industrial 311,263,889 316,084,702 318,478,105 320,508,329 322,735,151 325,378,083 327,687,967 330,356,668 333,067,720 335,618,158 Power Generation 290,038,821 289,886,637 290,026,881 292,472,007 292,065,304 293,470,305 299,104,869 290,930,938 309,876,361 309,450,944 Page 26 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

Appendix A4: Annual Demand Forecast (Dth) – Low Case Region/Sector 2019 / 2020 2020 / 2021 2021 / 2022 2022 / 2023 2023 / 2024 2024 / 2025 2025 / 2026 2026 / 2027 2027 / 2028 2028 / 2029 BC Lower Mainland & Van. Island 158,063,272 156,607,129 155,347,108 154,002,896 152,488,214 150,875,763 149,348,174 147,856,501 146,446,647 144,975,017 Residential 56,320,984 55,963,341 55,680,640 55,351,681 55,073,746 54,819,826 54,564,873 54,308,939 54,052,077 53,794,338 Commercial 46,418,301 46,393,469 46,560,136 46,707,199 46,804,560 46,872,223 46,922,707 46,956,608 46,974,508 46,976,972 Industrial 37,978,936 36,952,659 35,808,672 34,646,356 33,264,856 31,886,054 30,562,935 29,293,294 28,075,011 26,906,047 Power Generation 17,345,051 17,297,660 17,297,660 17,297,660 17,345,051 17,297,660 17,297,660 17,297,660 17,345,051 17,297,660 W. Washington 223,955,053 224,826,832 225,501,532 225,033,469 225,166,897 227,121,793 229,613,601 230,642,377 230,015,072 231,294,504 Residential 67,927,916 68,634,782 69,281,122 69,286,922 69,424,521 70,099,090 70,541,095 70,766,268 70,703,621 71,337,454 Commercial 42,687,045 43,116,066 43,496,157 43,488,089 43,688,574 44,111,705 44,482,029 44,680,593 44,725,819 45,329,117 Industrial 74,373,758 74,063,905 73,866,790 73,632,198 73,476,315 73,508,644 73,625,125 73,610,976 73,544,719 73,748,296 Power Generation 38,966,334 39,012,079 38,857,462 38,626,259 38,577,487 39,402,354 40,965,352 41,584,540 41,040,913 40,879,637 W. Oregon 130,516,883 128,227,808 127,674,757 127,059,074 126,688,423 125,883,028 125,323,918 124,718,927 124,297,798 123,872,389 Residential 39,986,513 39,871,217 39,798,294 39,696,813 39,719,208 39,391,420 39,183,648 38,934,382 38,790,607 38,632,787 Commercial 26,135,606 26,322,314 26,606,639 26,874,712 27,212,479 27,330,259 27,523,820 27,697,094 27,955,533 28,207,670 Industrial 43,437,538 41,077,051 40,312,598 39,530,324 38,799,511 38,204,124 37,659,225 37,130,226 36,594,433 36,074,707 Power Generation 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 20,957,226 BC Interior 60,923,847 59,823,221 59,166,351 57,807,913 56,856,623 56,042,536 55,240,747 54,451,132 53,673,561 52,907,905 Residential 17,943,342 17,644,303 17,391,102 17,121,525 16,877,570 16,647,595 16,420,722 16,196,909 15,976,116 15,758,303 Commercial 11,571,671 11,649,354 11,769,386 11,885,142 11,993,744 12,095,974 12,192,663 12,283,951 12,369,973 12,450,866 Industrial 31,408,834 30,529,565 30,005,863 28,801,246 27,985,309 27,298,967 26,627,362 25,970,272 25,327,472 24,698,737 Power Generation E. Washington & N. Idaho 62,514,042 62,202,304 62,074,348 62,327,000 62,709,479 62,221,426 62,493,870 62,277,022 62,780,884 62,951,847 Residential 20,817,098 20,858,701 20,941,599 20,964,872 21,222,178 21,122,316 21,059,622 20,969,329 20,954,091 20,737,262 Commercial 15,608,694 15,567,648 15,578,895 15,572,419 15,616,979 15,530,160 15,507,118 15,481,553 15,518,244 15,428,106 Industrial 17,735,889 17,806,238 17,881,335 17,956,120 18,035,560 18,173,861 18,332,015 18,491,889 18,658,131 18,817,807 Power Generation 8,352,360 7,969,716 7,672,518 7,833,590 7,834,763 7,395,089 7,595,116 7,334,250 7,650,418 7,968,671 E. Oregon & Medford 98,061,591 98,193,948 95,876,412 97,396,482 97,669,759 93,880,828 96,089,271 93,426,550 95,953,863 98,647,150 Residential 8,192,696 8,291,894 8,415,876 8,548,976 8,718,785 8,808,058 8,938,549 9,068,112 9,237,474 9,319,354 Commercial 6,987,286 6,963,094 6,984,587 7,011,304 7,058,994 7,059,363 7,083,220 7,106,847 7,153,282 7,151,579 Industrial 10,975,975 11,071,134 11,152,967 11,219,418 11,277,246 11,349,888 11,428,986 11,509,548 11,592,849 11,672,607 Power Generation 71,905,635 71,867,825 69,322,982 70,616,785 70,614,734 66,663,519 68,638,516 65,742,044 67,970,257 70,503,610 S. Idaho 119,596,417 119,982,700 121,031,727 122,007,881 123,064,355 124,145,478 125,251,972 126,384,589 127,544,113 128,731,358 Residential 43,399,871 44,128,478 44,979,200 45,790,490 46,701,958 47,631,144 48,578,388 49,544,037 50,528,445 51,531,971 Commercial 4,313,751 4,338,547 4,378,964 4,417,437 4,459,965 4,502,902 4,546,252 4,590,020 4,634,209 4,678,824 Industrial 60,882,795 60,515,675 60,673,563 60,799,954 60,902,432 61,011,432 61,127,331 61,250,532 61,381,459 61,520,563 Power Generation 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 11,000,000 PNW Annual Demand - Low 853,631,105 849,863,941 846,672,233 845,634,715 844,643,750 840,170,851 843,361,553 839,757,099 840,711,939 843,380,171 Residential 254,588,421 255,392,716 256,487,833 256,761,278 257,737,967 258,519,449 259,286,897 259,787,976 260,242,430 261,111,469 Commercial 153,722,353 154,350,492 155,374,764 155,956,301 156,835,295 157,502,586 158,257,808 158,796,666 159,331,569 160,223,134 Industrial 276,793,726 272,016,227 269,701,788 266,585,615 263,741,228 261,432,968 259,362,979 257,256,736 255,174,074 253,438,764 Power Generation 168,526,605 168,104,506 165,107,848 166,331,520 166,329,261 162,715,848 166,453,870 163,915,720 165,963,865 168,606,804 NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 27

Appendix A5: Peak Day Firm Demand/Supply Balance (Dth) – Expected Case DEMAND (Region/Sector) 2019 / 2020 2020 / 2021 2021 / 2022 2022 / 2023 2023 / 2024 2024 / 2025 2025 / 2026 2026 / 2027 2027 / 2028 2028 / 2029 BC Lower Main & Van. Island (I-5 Corridor) 1,217,359 1,230,909 1,242,333 1,253,029 1,262,681 1,272,210 1,281,740 1,291,270 1,300,799 1,310,329 Residential 539,395 542,583 544,963 546,897 549,331 552,008 554,685 557,362 560,039 562,717 Commercial 450,884 459,572 468,256 476,936 485,296 493,535 501,774 510,013 518,251 526,490 Industrial 179,688 181,364 181,723 181,807 180,663 179,277 177,890 176,504 175,117 173,731 Power Generation 47,391 47,391 47,391 47,391 47,391 47,391 47,391 47,391 47,391 47,391 W. Washington (I-5 Corridor) 1,766,120 1,776,072 1,789,946 1,801,500 1,811,478 1,822,639 1,832,919 1,838,581 1,843,896 1,851,213 Residential 848,299 855,926 865,739 873,877 880,474 887,602 894,117 897,643 900,442 904,748 Commercial 350,442 352,436 356,005 358,988 361,929 365,453 368,696 370,419 372,490 375,023 Industrial 215,605 215,936 216,428 216,862 217,302 217,811 218,332 218,745 219,191 219,668 Power Generation 351,773 351,773 351,773 351,773 351,773 351,773 351,773 351,773 351,773 351,773 W. Oregon (I-5 Corridor) 1,200,758 1,207,192 1,213,756 1,220,812 1,228,126 1,235,423 1,242,778 1,250,026 1,257,048 1,264,183 Residential 595,642 598,566 601,440 604,782 608,236 611,562 614,843 617,934 620,719 623,945 Commercial 322,864 326,382 330,021 333,882 337,792 341,712 345,724 349,839 354,077 357,943 Industrial 69,948 69,940 69,989 69,842 69,793 69,844 69,906 69,948 69,947 69,990 Power Generation 212,305 212,305 212,305 212,305 212,305 212,305 212,305 212,305 212,305 212,305 BC Interior 417,775 422,700 427,634 430,352 434,383 438,860 443,337 447,814 452,291 456,768 Residential 196,676 197,209 197,338 197,237 197,389 197,665 197,940 198,215 198,491 198,766 Commercial 134,861 138,262 141,681 145,120 148,544 151,960 155,375 158,791 162,207 165,623 Industrial 86,237 87,228 88,615 87,994 88,450 89,236 90,022 90,808 91,594 92,380 Power Generation E. Washington & N. Idaho 486,092 491,090 495,964 500,497 503,179 507,082 514,260 518,481 522,949 526,796 Residential 235,932 239,348 242,636 245,664 248,436 251,002 254,899 257,609 260,478 262,897 Commercial 155,544 156,659 157,776 158,814 158,548 159,416 161,911 162,940 164,052 164,992 Industrial 94,616 95,083 95,551 96,020 96,195 96,663 97,449 97,932 98,419 98,906 Power Generation E. Oregon & Medford (Non I-5 Supply) 694,913 697,564 705,082 707,651 709,129 711,589 715,305 717,858 720,408 722,930 Residential 100,772 102,806 104,613 106,594 107,999 109,893 112,475 114,434 116,389 118,324 Commercial 58,461 58,900 59,221 59,630 59,586 59,972 60,863 61,277 61,690 62,096 Industrial 34,178 34,356 34,534 34,713 34,831 35,009 35,253 35,434 35,615 35,796 Power Generation 501,502 501,502 506,714 506,714 506,714 506,714 506,714 506,714 506,714 506,714 S. Idaho 713,378 729,161 744,865 760,866 777,120 794,409 812,276 830,741 849,825 869,550 Residential 396,063 410,202 425,136 439,643 453,886 469,616 485,891 502,730 520,153 538,179 Commercial 39,816 40,502 41,225 41,926 42,614 43,344 44,086 44,841 45,609 46,390 Industrial 143,999 144,957 145,004 145,797 147,120 147,949 148,799 149,670 150,563 151,481 Power Generation 133,500 133,500 133,500 133,500 133,500 133,500 133,500 133,500 133,500 133,500 Total Design (Peak) Day Demand 6,496,394 6,554,687 6,619,579 6,674,708 6,726,096 6,782,211 6,842,615 6,894,771 6,947,217 7,001,769 Total Supply 6,788,792 6,788,792 6,960,792 6,960,792 6,960,792 6,990,792 6,990,792 6,990,792 6,990,792 6,990,792 Supply Surplus/(Shortfall) 292,398 234,105 341,213 286,084 234,696 208,581 148,177 96,021 43,575 (10,977) Page 28 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

Appendix B: IRP Characteristics Company Region/Area Customer Classes Forecast Econometrics Economic Source Period Avista 2 divisions (WA/ID, OR); 5 Residential, commercial, industrial. 20 years Separate forecast for customers and use per customer. IHS Global Insight; Bureau of Labor Statistics; Oregon Em- service territories (WA, ID, Key drivers: Population growth, service area residential ployment Department; Washington Employment Security Roseburg/Medford, Klamath permitting; U.S., California, and service area employment Department; Idaho Department of Labor; U.S. Census; Bureau Falls, La Grande); 11 demand growth; U.S. industrial production; U.S. GDP growth; non- of Economic Analysis; NOAA; University of Oregon Economic areas according to available weather seasonal factors; and real natural gas prices. Indicator; Construction Monitor; U.S. Federal Reserve; The Econo- pipeline capacity. mist; Wall Street Journal; IMF; World Bank; Bloomberg; Blue Chip Consensus; Washington Office of Financial Management. Cascade CNGC forecasts at its city Residential, commercial, industrial, 20 years Customer counts, population growth, employment Woods & Poole, SNL, Federal Reserve, Schneider Electric, gates in the 2018 IRP. 6 re- core interruptible. rates, weather, natural gas price and other regional Wood Mackenzie and other regional economic market gions; West, Central and East economic market intelligence. intelligence. for market share; by county for economic forecasting. Dominion Utah and Wyoming (Idaho Residential by state; small com- 10 years for Rate of natural gas service, housing starts, and University of Utah’s Kem C. Gardner Policy Institute Research, Energy rolled into Utah). mercial by state; large commercial, demand unemployment rate are used in forecasting by state. U.S. EIA, U.S. Census Bureau, IHS. industrial, and electric generation forecast; 30 gas demand all together; firm years for customer and transportation. All SendOut model. rate classes are forecasted by state, but non-GS (all but residential and small commercial) is only presented systemwide in the IRP document. FortisBC Lower Mainland; Vancouver Residential, commercial, industrial, 20 years Forecasts based on third-party housing starts forecast and Conference Board of Canada, user surveys. Island; Northern BC; LNG service. market capture. New dwellings, commercial floor space Southern Interior, Whistler. and industrial plant capacity added based on account growth rates. Anticipated “natural” efficiency improve- ments incorporated in both existing buildings and new construction. Anticipated changes in the saturation and gas shares for specific end-uses also included. Inter- 6 regions (includes an “all Residential, commercial, and 5 years Forecast based on household growth forecast in counties Church 2019 Household Growth Forecast; industrial mountain other” category); West, industrial (potato processors, served. Key drivers include historical market penetration rate of customer survey. Central, and East for market other food processors, chemical county-wide building permits, residential conversion rates and share rates; by county for and fertilizer, manufacturers, commercial acquisition rates as a function of total historical sales. economic forecasting. institutions, and all other). Market intelligence based on regional economic development activity and large customer’s specific growth projections. NW 11 regions based on Residential, commercial, and 20 years Customer growth drivers: population, housing starts, nonfarm Oregon Office of Economic Analysis; Oregon Employment Natural topology of the gas industrial. employment. Daily demand drivers: weather variables, time Department; U.S. Bureau of Economic Analysis; U.S. Bureau distribution system. trend, customer count, day of the week, snow depth, water of Labor Statistics; U.S. Census Bureau; Northwest Economic source temperature. Research Center. Pacific By state (California, Oregon, Residential, commercial, industrial, 20 years (2019- Forecast by state and customer class. Key drivers: New PacifiCorp’s 2019 IRP Conservation Potential Assessment Power Washington, Idaho, Utah, irrigation, and Public Street and 2038), but IRP technologies/end use, demographics, employment, income, conducted by Applied Energy Group. and Wyoming) which is Highway Lighting. discussion focuses weather, DSM, and energy efficiency mandates. allocated to 37 “bubbles,” on first 10 years including 10 load bubbles. with a near-term two- to four-year action plan. 2020-2050. Portland Single contiguous service Industrial customers comprise Forecast for residential customers and use per customer. Non- Primarily Oregon Office of Economic Analysis economic forecast General area. slightly less than 25% of demand residential modeled by sector. Key drivers: Regional population and IHS Global Insight. Electric with the remainder approximately and demographics, building permits, gross domestic product, split between residential and and sector level employment including regional industrial commercial. trends and outlook. A trended, gradually warming, normal weather assumption. Puget Single contiguous service Firm: residential, commercial, indus- 20 years Regional and national economic growth, demographic Moody’s Analytics U.S. Macroeconomic Forecast, PSE’s Sound area. trial, large volume commercial, large changes, weather, prices, seasonality, housing starts, and DSM regional and economic forecasts, U.S. Bureau of Economic Energy volume industrial. Interruptible: for customer growth and use per customer forecasts; stochas- Analysis, U.S. Bureau of Census, Washington State commercial and industrial. tic approach for developing Low and High growth scenarios. Employment Security Department, Washington Office of Financial Management. NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 29

Appendix B: Continued Company Scenarios Developed Price Forecast Weather Design

Avista Average Case, Expected Case, Expected Case with Low NYMEX & 2 proprietary 20-year forecasts. Coldest day on record, historic peak, and Price, High Growth with Low Price, Low Growth with average weather data for each demand region. High Price, and an Alternate Weather Standard.

Cascade Low, Medium, High, High Growth with Low Price, Low A blend of public and private sources (U.S. EIA 20 yr, Wood Mackenzie, NYMEX strips, NPCC) System-weighted 56 HDD, based on coldest

Growth with High Price, Moderate CO2 costs, High CO2 based on Cascade’s general portfolio mix. day in past 30 years. costs.

Dominion Stochastic modeling yielding mean, median and base Means and standard deviations associated with historical data from 9 area price indices; 1-in-20-year weather occurrence: 70 HDD at Energy cases; normal weather case also reported to inform average of 2 price forecasts including PIRA (19 months) and IHS CERA (252 months) as basis SLC coincident across service territory. quarterly variance reporting and pass-through cases. for stochastic modeling inputs.

Fortis BC Reference Case, High and Low (driven by customer Henry Hub forecasts using GLJ , Wood Mackenzie and U.S. EIA along with NYMEX futures. 1-in-20-year day determined through extreme addition forecasts); scenarios by region. value analysis based on weather data from the last 60 years; result may vary from the actual coldest day in last 20 years.

Inter- Low, Base and High combined with other variables to 3 proprietary 5-year forecasts. 78 HDD for total company, weighted by mountain yield 6 demand scenarios. customers in each district; several distinct laterals and areas of interest are assigned unique HDDs.

NW Supply Infrastructure (3 sensitivities); Economic Growth IHS CERA 99th percentile of highest demand day in a Natural (2 sensitivities); Environmental Policy (4 sensitivities). given year.

Pacific 2019 IRP studies included coal unit economic studies, PacifiCorp subscribes to expert third-party natural gas forecasting services to receive 1-in-20 weather occurrence included in Power regional haze scenarios, portfolios, and sensitivities. base and scenario forecasts. These forecasts form the basis of PacifiCorp’s low, medium, sensitivity load forecast to determine resource and high natural gas fundamental forecasts for key Western natural gas hubs, as input type and timing impacts. to AURORAxmp® (Aurora). Aurora1, a production cost simulation model for the Western interconnect, produces a consistent electricity price forecast for key Western power hubs and unique price projections. For resource adequacy assessment, extensive Portland Futures examined changing CO2 costs, gas costs, load, PGE forward trading for near-term prices (2020-2023); Wood Mackenzie gas forecast for the General capital costs, renewable generation and critical hydro. years 2025-2040, with linear interpolation applied in 2024 to transition from the PGE forward load and weather data used to capture variability Electric trading curve. PGE escalates the fundamentals forecast at inflation for dates after 2040. of weather from 1980-2017, with older years “trained” to more recent history.

Puget Base, Low, High, High + Low Demand, Base + Low Gas Prices for 2018 through 2021 represent 3-month average forward marks. Beyond 2021, 52 HDD daily average. Sound Price, Base + High Gas Price, Base + Low Demand, Base natural gas forward prices represent the long-term forecast per Wood Mackenzie. Also Energy + High Demand, Base + No CO2, Base + Low CO2 with generated Low and High gas prices using Wood Mackenzie forecasts. CO2 prices between CPP, Base + High CO2. 2018 and 2021 are based on Wood Mackenzie’s estimated CO2 price for California AB32 under CAR. The CO2 price between 2022 and 2037 is based on California CO2 prices under the Clean Power Plan and is applied WECC-wide.

1 PacifiCorp is a licensed user of the AURORAxmp® model, developed by EPIS, LLC. Page 30 • NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K

Appendix C: Deficiency and Preferred Supply Resources

Company IRP File Date Jurisdiction Year of Peak Day Deficiency Preferred Supply Resources Selected Avista August 31, 2018 Idaho; Oregon; No deficiency in planning horizon N/A Washington Cascade January 25, 2018/ Oregon; Washington 2023 (OR), 2019 (WA) Realign delivery rights; incremental GTN, NWP December 14, 2018 and other upstream pipeline capacity. FortisBC December 14, 2017 – next British Columbia 2022 - Interior Transmission System; 2028 - Additional compression, pipeline looping or IRP proposed to be filed no Vancouver Island Transmission System. Coastal LNG storage. later than March 31, 2022. Transmission System–potential constraints as early as 2024 depending on natural gas for transportation and LNG export uptake. To be reassessed in next IRP. Intermountain October 2019 Idaho No deficiency within 5-year planning horizon. N/A NW Natural August 24, 2018 Oregon; Washington 2020 Energy efficiency; Mist recall; renewable natural gas (RNG); Central Coast feeder uprating; additional pipeline capacity (specific pipeline dependent on scenario). Puget Sound November 15, 2017 Washington 2022-23 Acquire energy efficiency; upgrade Swarr Energy propane air facility; LNG distribution piping upgrade; NW Pipeline/Westcoast Pipeline expansion; acquire more Westcoast capacity to Station 2. NORTHWEST GAS ASSOCIATION 2 0 2 0 O U T L O O K • Page 31

Appendix D: Proposed Regional Natural Gas Infrastructure Project Descriptions Today’s market for regional infrastructure capacity values reliability, diversity Northwest Pipeline (NWP) Sumas Express: Williams NWP continues to of supply and tidewater access for the export of LNG. It is only a matter of time assess the regional benefits of expanding its system along the I-5 Corridor from before new capacity within the region will be required. Figure C4 on page 19 in Sumas, WA, to the market areas in WA and OR. NWP believes that expanding in its the Capacity section illustrates active regional infrastructure proposals, which existing corridor is both economical and permittable and can be accomplished in include: a scalable manner to meet anticipated regional growth. Depending on ultimate Enbridge T-South Expansions: Following a highly successful open market needs, NWP can meet demand growth by adding additional loop and season, Enbridge is proceeding to add 190 million cubic feet per day (MMcf/d) of compression at its existing compressor stations in the corridor. additional firm capacity supported by long-term contracts under a cost-of-service TC Energy System Enhancements: TC Energy currently has two proposed framework, which will enable greater access for growing Montney production projects to increase the capacity of the NGTL System West Path to the Alberta/BC to attractive demand markets in the Pacific Northwest by late 2021. In addition, border for export delivery services. In April 2019, TC Energy received NEB approval Enbridge continues to evaluate further expansion of its T-South system to provide to begin construction on the second phase of the West Path Delivery Project, incremental delivery options for growing Western Canada gas supply to Northwest which will provide an additional 264 MMcf/d of firm transportation service to the markets. Future expansions on T-South would require pipeline looping and Alberta/BC export delivery point commencing in June 2020. Additionally, NGTL, compression and could be brought into service post 2022. Foothills BC and GTN coordinated to conduct an open season for a 261 MMcf/d FortisBC Southern Crossing Expansion: FortisBC’s existing Southern expansion project to provide additional firm services from the NOVA Inventory Crossing pipeline system enables bidirectional gas flow between Enbridge’s Transfer (NIT) service through GTN. The first 100 MMcf/d segment of the expansion T-South system at Kingsvale, BC, and TC Energy’s BC system just upstream from capacity is targeted to come in-service November 1, 2022, and the second 160.5 the interconnection with GTN at Kingsgate, ID. The proposed expansion involves MMcf/d is targeted to come in-service November 1, 2023. a 161-kilometre (km, or 100-mile) pipeline looping project on the segment Pembina Pacific Connector Gas Pipeline Project (PCGP):The PCGP is a between Kingsvale and Oliver, BC, and would facilitate access to an additional proposed 229-mile (369 km) 36-inch diameter pipeline extending from Malin to 300-400 MMcf/d of bidirectional capacity. This expansion would provide pipeline Coos Bay, OR. PCGP will serve the Jordan Cove LNG export terminal. PCGP includes diversity and security of gas supply by moving Alberta-sourced gas east to west a compressor station located near Malin yielding a total project design capacity to serve existing demand and potential industrial projects proposed for the BC of more than 1,000 MMcf/d. The pipeline will provide access to supplies from Lower Mainland and the I-5 Corridor. In addition, this expansion would also allow Western Canada and the U.S. Rockies via interconnections with GTN and the Ruby gas flow from Station 2 to the Kingsgate market, improving the utilization of BC Pipeline. pipeline capacity when demand is low during summer months. Fort Liard

Fort Nelson

Western Canadian Sedimentary Basin

Fort St. John About the NWGA

The NWGA is a bi-national trade organization of the Pacific Northwest natural gas industry. Its mission is to promote natural gas as a cornerstone of the region’s energy, economic and environmental foundation. The NWGA produces timely and regionally relevant information relating to natural gas; shapes and communicates the industry’s perspective, and engages in policy Calgary analysis and advocacy. NWGA members serve more than three million consumers in communities throughout Idaho, Oregon, Vancouver Avista Utilities Cascade Natural Gas Washington and British Columbia. Intermountain Gas Victoria Sumas North Kingsgate FortisBC Energy Avista Utilities Puget Sound Energy NW Natural MONTANA Puget Sound Energy www.avistacorp.com www.pse.com Seattle Spokane Wenatchee FortisBC System Cascade Natural Gas Corp. Enbridge Inc. Enbridge BC Pipeline TC Energy GTN www.cngc.com www.enbridge.com TC Energy NGTL Williams Northwest Pipeline FortisBC Energy TC Energy Other Pipelines www.fortisbc.com www.tcenergy.com/ Portland Rocky Mountain Intermountain Gas Co. Williams – NW Pipeline Basin www.intgas.com www.northwest.williams.com I D A H O Bend NW Natural Boise O R E G O N W Y O M I N G www.nwnatural.com Pocatello Medford Malin Klamath Falls

Salt Lake City 1914 Willamette Falls Dr. #260 West Linn, OR 97068C A L I F O503-344-6637 R N I A www.nwga.orgN E V A D A @nwgas

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