TABLE 1. Updated Natural Gas Long-Run Forecast
(Nominal $/MMBTU)*
* Gray area from 2006 through 2011 is not used in computation of avoided costs, gas futures data from NYMEX is used through 2011. Shaded area from 2012 to 2014 is the transition period. During the transition period, the natural gas forecast is a blend of NYMEX futures and the Long-Run gas forecast.
The current E3 methodology uses an average of the EIA, CEC and SoCalGas forecasts as the input stream for calculating electric generation avoided costs. This table shows the long-run (also referred to as "fundamental") gas price forecasts based on an average of these updated forecasts. Note that only the values in 2015 and later are used in either gas or electric avoided cost calculations. 1
The SoCalGas 4/2/04 forecast was originally provided as inputs to the 2004 California Gas Report. It was subsequently used in the 2004 Market Price Referent (MPR) Staff Report as one of several natural gas price forecasts that were averaged together. In April 2005, parties agreed to use the three non-proprietary fundamental gas price forecasts from the MPR staff report as inputs to the E3 avoided cost update. In February 2006, parties agreed that the EIA and CEC fundamental gas price forecasts should be updated. SoCal Gas informed parties at the February workshop that an update to their forecast was not available. The updates to the CEC and EIA forecasts are described in the Final Report, on pages 36-37.
1 The Final Report incorrectly refers to these values as "Henry Hub." These values are derived from forecasts for delivery in California. However, after 2007, the E3 methodology assumes no basis spread between Henry Hub and California delivery points, so there is no difference between the Henry Hub and the "delivered to utility" forecast prices
