Natural gas supply in Québec. An undeniable asset for industrial development

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Natural gas supply in Québec An undeniable asset for industrial development

Énergir a key player in sustainable development With more than $7 billion in assets, Énergir distributes 97% of all natural gas in Québec. Its distribution network is strategically developed to enable industrial customers to take advantage of the many benefits natural gas offers. More than 10,000 km of underground pipelines More than 300 municipalities About 8,000 industrial customers Natural gas stockage capacity of 17.31 BCF * Énergir s industrial customers represent nearly 4% of its total clientele and consume almost 80% of the natural gas volumes distributed. Their energy needs are as varied as their activity sectors and that is why Énergir offers them a personalized support service that goes way beyond supplying natural gas: supervising rates and volumes, offering technology choices, cost management, and energy efficiency measures. Énergir more than a natural gas distributor In Québec, it is the leading natural gas distribution company and also produces, through its subsidiaries, electricity from wind power. In the United States, through its subsidiaries, the company operates in nearly fifteen states, where it produces electricity from hydraulic, wind and solar sources, in addition to being the leading electricity distributor and the sole natural gas distributor in Vermont. Énergir values energy efficiency and invests both resources and efforts in innovative energy projects such as renewable natural gas and liquefied and compressed natural gas. * By January 1 st, 2018

A favorable energy context for the industrial sector As well as being an ideal location for access to North American and European markets, Québec is also one of the most propitious Canadian provinces for industrial development because of its many advantages in terms of energy. Here are some of those advantages: 1 Stable Advantageous regulatory framework which ensures stability in natural gas costs. 2 Proactive As a turn-key option, Énergir take care of connecting new customers, including constructing the natural gas line and installing the metering equipment. 1 3 Agile Énergir has an authorized up to 10% transmission over-capacity (compared with estimated needs) to facilitate its industrial customers development. 4 Efficient High energy efficiency programs encourage the development of new industries. 2 5 Strategic location Maritime strategy promoting industrial-port areas, most served by the natural gas network. 6 Political will Québec energy policy that encourages the use of natural gas to reduce GHG emissions in the industrial sector. 7 Resource rich Québec is known for its iron ore, zinc, gold, niobium, titanium, nickel, copper, silver, and lithium deposits. 1 A financial contribution can be required. 2 Certain conditions apply.

Saint-Félicien Amos Saguenay RouynNoranda Val-d Or 3 international airports 82 regional airports 45 airlines ZONE NDA Earlton (Northern Delivery Area) Natural gas distribution network in Québec More than 10,000 km in length, more than 300 municipalities served Access to North American market via Dawn natural gas trading hub Three carriers: TransCanada Pipeline (TCPL), Union Gas, Trans Québec & Maritimes Pipeline (TQM) Four storage sites, including three on the Énergir network Thorne Québec The Port of Montréal is one of the busiest inland ports in the world. Témiscaming Accès au to Access marché Canada-wide canadien market La Tuque QUÉBEC Consumers easily reached via modern transportation infrastructures. ZONE EDA (Eastern Delivery Area) O N TA R I O Joliette P ne eli ip QUÉBEC Québec O N TA R I O Ottawa Natural gas networks Énergir Champion Pipeline TransCanada Pipeline TQM Union Gas Infrastructure Industrial-port areas* (served by the natural gas network) Mirabel Lachute Bécancour SaintGeorges Plessisville Victoriaville Thetford Mines N.B. Montréal Salaberry-deValleyfield International airports LNG plant (liquefaction, storage, and regasification) Underground storage U N I T E D STAT E S * Industrial-port areas: Defined areas serving industrial purposes and located near port services as well road and rail infrastructures, with facilitated access to inputs and to the efficient transshipment of finished goods to North American and international markets. Dawn Drummondville Asbestos MontréalEst Montréal Ottawa Other industrial-port areas* (may be served with LNG, depending on certain criteria) Union Gas Dawn SaintFlavien Sorel-Tracy Contrecœur SainteCatherine OtherAutres industrial-port zones industrialoareas (may be portuaires served with LNG, (possibilité d'être depending desservies on certain en GNL certains Lévis selon criteria) critères) SainteClaire Legend Colpron 02-2018, 8018 EN Tran sca nad a TroisRivières Pointedu-Lac Mont-Tremblant Most natural gas comes from the Dawn hub in southern Ontario and is then distributed directly to customers or stored in Énergir s various storage sites. Most industries opt for the direct purchase supply service, procuring their own natural gas according to their needs. Voie maritime St. Lawrence Accès au Seaway marché européen Access to European market Network of 36 specialized intermodal terminals Marbleton SaintHyacinthe Granby Magog Cowansville Huntingdon Accès au Access to U NÉ ITTAETDS -SUTNAITSE S marché américain U.S. market Sherbrooke East Hereford

Cost of natural gas in Québec The structure of the price applied by Énergir, shown below, is fair and transparent in order to fully support the competitivity of its industrial customers. Énergir s profit is based solely on the added value it brings the distribution of natural gas. Service Description Establishing the cost of service Supply (S) Transport (T) Distribution (D) Balancing (B) Inventories (I) SPEDE Natural gas (molecule) Transmission via pipelines upstream of Québec Delivery of natural gas by the Énergir distribution network Management of variations in consumption and storage Management of natural gas inventories Cap and Trade System Fluctuates depending on supply and demand (markets)* Annual rate based on that of the carriers* Annual rate according to the customer s contract terms and conditions; sliding-scale rate depending on consumption volume Annual rate established based on consumption profile* Monthly adjustment based on price fluctuations over time* Fluctuates depending on acquisition costs and emission rights* * Resale at cost price no profit for Énergir. /m 3 30 25 20 15 10 5 0 D 14% SPEDE 15% S 51% B+I 5% T 15% $CAN/GJ 8 Total 7 6 5 4 3 2 1 0 2012 2013 2014 2015 2016 2017 2018p* f 2019pf 2020pf 2021pf 2022pf Total S T D B+I SPEDE f = forecast Stable prices over the long term The vast reserves of natural gas available in North America, including several recently discovered, support the prediction of very stable prices for many years to come, helping industries plan energy costs better. Evolution of natural gas prices calculated based on consumption of 15 million m 3 at a subscribed volume of 40,000 m 3 /day. Sources of provisional data: Supply: TD Securities. TEID: Rate in effect in April 2018. SPEDE: Bloomberg New Energy Finance. Conversion factors 1 Bcf 28,327,840 m 3 1 Bcf 1.073342 PJ 1 BTU 1,055.055 J 1$/GJ 3.789 /m3 1 GJ 26.392 m 3 1 m 3 37.89 MJ 1 m 3 0.03789 GJ 1 m 3 35,913 BTU

Go to our website to consult our online brochure, as well as the fact sheets on Energy Efficiency, The Technical Properties of Natural Gas, Biomethane, and Liquefied Natural Gas. energir.com/newindustries ventesgrandesentreprises@energir.com