Manager, Supply Resource Planning Cascade Natural Gas Corporation OPUC Commissioner Workshop 2019 Natural Gas Outlook July 16, 2019 Mark Sellers-Vaughn Manager, Supply Resource Planning (509) 734-4589 mark.sellers-Vaughn@cngc.com

Meeting Customer’s Needs Ensuring a safe, reliable distribution system to meet demand. Actively promote energy efficiency. Ensure all core customers’ natural gas supply needs are met – Disciplined Market Analysis Firm transportation agreements Diversified Supply Mix Prudent Storage Management Mitigate price volatility for Customers – Gelber & Associates hired as hedging consultant. Flexible, risk responsive multi-year hedging using fixed priced physicals and financial derivatives. Senior management, through the Gas Supply Oversight Committee (GSOC), authorizes appropriate strategies to manage risk.

Diversified pipeline transport flow

Cascade Natural Gas transport summary by supply area

Regional pricing as of 7/09/2019

Upstream Pipeline Update - GTN AECO gas is critical to Cascade’s long-term portfolio, particularly to Oregon. In previous Oregon IRPs Cascade noted a potential Bend shortfall along GTN. Cascade acquired 10,000 dth/day of GTN north to south forward haul on December 1, 2017. The acquisition addressed GTN shortfalls until approximately 2026-2027. GTN and Cascade have continued to hold discussions regarding future capacity needs. Westcoast Energy has pushed out their hydrostatic testing to mid July. Cascade does not expect this to have an impact on customers. There remains uncertainty surrounding the continued inspections scheduled to wrap up in October. There is potential for reduced service this coming heating season and the forward market is reflecting this. Upstream Pipeline Update - Enbridge

Acquisition of Mist Storage April 8, 2019 – Northwest Natural introduced Mist Storage RFP Maximum storage capacity (MSC) of up to 600,000 dths. Maximum daily withdrawal quantity (MDWQ) of up to 30,000 dths/day. The term of service is May 1, 2019 through April 30, 2024. April 17, 2019 – Resource modeling completed Additional storage flowing from north of the gorge and up the I-5 corridor. Only incremental storage option north of the Roosevelt compressor. Mist storage may also be a useful resource from a price arbitrage perspective as well as potentially assisting in addressing other operational events such balancing, entitlement and OFO situations. April 19, 2019 – GSOC discussess bid for Mist storage GSOC decided the benefits to Cascade’s system warranted the bidding. GSOC instructed Gas Supply to bid $3.461. Cascade was awarded this capacity on April 21, 2019 at a price of $3.461 per Dth (max rate).

Highlights of the 2019 portfolio design Physical supply portfolio procurement design based on a declining percentage each year. Annual load expectation (Nov-Oct) is approximately 30,000,000 dths, consistent with recent load history. Contracting for physical supplies at approximately 80% of annual requirements; Year 2: 40%, Year 3: 20%. Most of Oregon’s gas is sourced from AECO. Oregon’s impact to the new hedging program should be minor. Hedging Hired Gelber & Associates (G&A) as our hedging consultant. Recent price indications suggest fixed price physicals are less expensive than their financial counterpart. G&A recommends using financial instruments when economically appropriate. Hedge program uses a three-year forward-looking ladder with minimum and maximum purchase levels.

November 2019 through October 2020 Gas Supply Outlook for Cascade Last heating season’s colder than normal weather provided more recent data for determining when and size of peak events. There is still some uncertainty regarding completion of Enbridge pipeline repairs. Cascade has sufficient firm supplies flowing on our firm transportation to meet load requirements. Cascade has added Mist storage to our mix of supply resource options. Firm peaking and citygate delivery contracts are in place. All storage accounts will be full by September 30, 2019. We will continue to use fixed-price physical supplies to minimize impact of price fluctuation. Financial instruments, when economically appropriate, are now better integrated into the company’s hedging strategy. Continual assessment of portfolio and market to seek out opportunities to minimize portfolio costs.