NEB PREDICTS HIGHER AVERAGE ENERGY PRICES FOR THE SUMMER

19 May 2011

CALGARY – Canadians can expect to pay more for most energy products this summer than last summer, however there will be adequate supplies to meet Canadian demand, said the National Energy Board in its 2011 Summer Energy Outlook.

The NEB is predicting costs for transportation fuels this summer to be higher than last year because crude oil prices will average between US $100 and US $120 per barrel. Global crude oil prices have risen on account of geopolitical events that have affected exports, and created some uncertainty about future exports from the Middle East and other oil producing regions.

Over the next few months, natural gas prices are expected to average in the range of US $4.00 to US $5.00 per MMbtu. North American natural gas production is predicted to continue at a steady pace easily satisfying a slight increase in North American natural gas demand.

“We’ve seen a record amount of horizontal wells drilled recently in North America’s major shale gas formations,” said Gaétan Caron, CEO and Chair of the National Energy Board. “This is why we are expecting stable natural gas production levels for 2011.”

The steady supply of natural gas in the U.S. is reducing their need to import liquefied natural gas (LNG) and Canadian natural gas. We are also seeing some shipments of LNG from overseas that may have been destined to North America now being directed to Japan for use in power generation due to outages at the nuclear facilities. On the demand side, industrial gas use is expected to increase in the steel, chemical and power generation sectors as the economy continues to recover.

Electricity rates this summer for Canadians will vary from province to province as multiple jurisdictions are planning to increase electricity rates. Nova Scotia saw a six per cent increase earlier this year; BC Hydro’s rates increased by eight per cent; and Ontario’s time-of-use and tiered rates increased by four and six per cent, respectively. These regulated rate increases reflect the higher cost of new electricity generation relative to existing generation.

Canada’s two wholesale electricity markets in Alberta and Ontario have different outlooks for the summer. Ontario will likely have lower prices as weather trends indicate a cooler summer for 2011. In contrast, Alberta will likely have higher prices as demand this year is up five per cent compared to the start of 2010, and supply has been reduced because three coal-fired units were shut down last year.

The move to renewable energy is becoming a trend in Canada for electricity generation. For 2011, wind resources are increasing faster than any other generation type. Over 1000 MW of wind resources are expected to be added this year bringing the national wind capacity close to the 5000 MW mark by the end of 2011.

The NEB is an independent federal regulator of several parts of Canada's energy industry. Its purpose is to regulate pipelines, energy development and trade in the Canadian public interest. As part of its mandate, the NEB monitors the supply of all energy commodities in Canada and reports its findings. The NEB Internet site is regularly updated with new energy information for the Canadian public.

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This news release is available on the NEB’s Internet site at www.neb‑one.gc.ca under What’s New!

For further information: Erin Dottor (erin.dottor@neb-one.gc.ca)
                                        Communications Officer
                                        Telephone: 403-299-3712
                                        TTY (teletype): 1-800-632-1663