Data-Driven Procurement and Consulting Noel Temple, CEP Energy Consultant September 2018 Data-Driven Procurement and Consulting

Summer 2018 - Fifth Hottest on Record JUNE 1 – AUG 20 TEMPERATURE DEPARTURES COOLING DEGREE DAY RANKINGS Strong warmth has dominated most of the nation since June 1. June 1st through Aug 20th (summer to date) cooling degree days are at 904, which is good enough for 4th hottest since 1950. This summer will likely hold around 4th place, however it could make a run at 3rd place (2010 summer). Overall this summer is running about 75 CDDs warmer than last summer at this time. Here are the rankings of some selected regions: ERCOT: 5th hottest PJM: 11th hottest NEISO: 3rd hottest MISO: 10th hottest CAISO: hottest on record BPA: 2nd hottest

Natural Gas Supply and Demand Overview Week Ending August 15 Customer Takeaway: The most recent natural gas balance sheet shows demand ticking down by ~2 Bcf/d driven by less power burn while dry production hits another all-time high.

Gas Productions Hits a Record 82 Bcf/d Gas production reached a new high for week-ending August 15 touching 82 Bcf/d, a 600 MMcf/d increase from previous week’s record. This is the third week in a row of gains after it reached 81 Bcf/d in mid-July. As gas output increases steadily throughout the year, the 12-month NYMEX gas strip has stayed relatively flat which has slightly increased the negative correlation between the two going from 49% in June to its current 51%. Customer Takeaway: Gas production chugs along but has been neutralized by strong, sustained power burn over the past 5 weeks. As cooling demand dissipates with progression into the fall, strong production may enable some robust injections. But will they be historically strong to put a dent into overall storage deficits?

Natural Gas Stockpiles Fall Below Five Year Lows This past Thursday’s (8/16) storage fill of 33 Bcf was slightly better than the market consensus of 31 but fell short of the 5-year average as well as last year’s injection at this point in the year. Consequently, deficits to both last year and the 5-year average grew slightly and are now up to 22 and 20%, respectively. With another disappointing addition, it’s been 4 weeks of YTD inventories below the 5-year low from 2014. The latest EIA STEO revised their end of Oct storage tally down to 3,343 Bcf in their latest STEO with one prominent third party picking stocks to finish near 3,100 Bcf. Customer Takeaway: The bullish storage sentiment is gaining momentum with every historically low week of injections adding to a stubbornly plump deficit. 12 short weeks remain in the official injection season and with each passing week jitters could build creating some price support regardless of weather forecasts. Data sources: EIA, Constellation © 2018 Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy-Gas Division, LLC or Constellation NewEnergy, Inc., affiliates of each other and ultimate subsidiaries of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

NYMEX Prompt Nearing $3 Once Again Customer Takeaway: NYMEX prompt-month gas remains range bound between $2.70 and $3 for now. Strong production and the lingering storage deficit is keeping things balanced. Failure to close the storage deficit before winter could lead to a break above $3/MMBtu, as you can see above, pricing is creeping back up.

PJM Wholesale Market Settlements

Historical Natural Gas Prices

Fundamental steps in procurement process Evaluate energy spend, budget, planning Analyze current energy usage profile and applicable tariffs Due diligence/monitoring of suppliers Negotiate “green apples to green apples” prices Review supply contracts/negotiate changes if required Process all documents and manage supplier interaction Provide customer service excellence Monitor market and identify future solutions

Data-Driven Electricity Price Analytics APPI Energy works collaboratively with the Energy Research Council (ERC), an affiliated entity. ERC’s mission is to provide facts-based thought leadership concerning energy procurement and management in deregulated markets, through primary research and analysis. ERC collects and analyzes competitive supplier prices from many suppliers in deregulated electricity markets. ERC develops insights and value-added information that is updated/reported weekly. Analysis based on 130 million price data points Benchmarking historical prices Trends for forward price curves Insights: when to buy and for what contract length Identifies suppliers that provide lowest prices in each service territory

Tariff Prices vs. Average Supplier Price

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Noel Temple ntemple@appienergy.com 667-330-1159 Thank you! Noel Temple ntemple@appienergy.com 667-330-1159