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Natural Gas Rate Updates

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As the regulator in the province, the Ontario Energy Board sets the rates that natural gas utilities are allowed to charge their customers for:

  • the gas you use, also known as Gas Supply Charge
  • transporting the gas into Ontario and delivering it to your home
  • storing the gas until it is needed
  • managing your account – a fixed charge for services like meter readings, equipment maintenance, emergency response, billing  and account changes. This is also known as Customer Charge or Monthly Charge

Visit the Natural Gas Bill webpage for descriptions of these of charges.

 

Current Rates for Supply - At a Glance

These rates are for the gas you use (gas supply). They are adjusted four times each year, on January 1, April 1, July 1 and October 1.  Some rates, such as transportation, may change at the same time. Others follow a different timeline, like delivery rates, which generally change once a year.

January 1, 2017 Natural Gas Rates
Union Gas Limited (South) * 16.7188 ¢/m3
Enbridge Gas Distribution Inc. 10.5285 ¢/m3
Natural Resource Gas Limited ** 17.4599 ¢/m3
* The rate for Union South includes transportation charges. 

** The rate for NRG includes storage and transportation charges.

To see how these natural gas rates relate to your overall bill, visit our Natural Gas Bill Calculator.

View past natural gas rates

 

Rate Changes - How it Works

Natural gas is a commodity that is traded on North American markets. Market prices fluctuate daily, rising and falling based on supply and demand (how much is available and how many people/businesses need it). Major weather events are one factor that can affect the market price.

Utilities in Ontario are not allowed to earn a profit on the supply – the price paid on the open market must be passed through to customers with no markup.

Every three months, each utility asks the OEB to adjust its rates to cover:

  • Future costs – the utility estimates the market price for natural gas over the next 12-month period. This is used to calculate the rate to charge customers.
  • Past costs – the utility also reviews the difference between what was forecast to be paid the last time and what was actually paid. The customer is either refunded or charged the difference through the rate. If a utility collected more from customers than it paid for the gas, the rate will include a credit. Likewise, if not enough was collected, the rate will include a charge. This is called the Gas Price Adjustment or Cost Adjustment, which you may see on your bill under Supply.

Because the forecasting is done far in advance it is never exact. But, by adjusting the gas rate periodically through the year instead of one time, there’s less likelihood of customers or the utility owing a large amount.

 

How Seasonal Factors Can Affect Costs

Another factor affecting costs is the time of year. Natural gas is generally more expensive in the winter months, so most utilities buy a certain amount during the summer when the price is cheaper. The supply is stored, and then delivered to customers during colder months when customers need it to heat their homes.

Sometimes, as happened in the unexpectedly cold and long winter of 2014, a utility may underestimate the amount of supply it will need and then have to buy extra supply at a higher price. Because it passes on the actual cost of the gas, the utility then has to collect the extra cost from its customers. The reverse also happens, where the actual market price is lower than the forecast, so the utility credits its customers the amount.

 

Rate Changes - by Utility

Union Gas Limited

January 1, 2017 Natural Gas Rates

Annual Rate Impact for an Average System Supply Consumer (using 2,200m3/year):

Previous Service Area

New Service Area

Total Annual Increase/Decrease*

South South $121.92 
Fort Frances North West $81.11
Northwestern North West $104.91
Northern (Union SSMDA) North West $55.85
Northern (Union NDA) North East  $162.52
Eastern North East $121.13

* Does not include temporary charges or credits

In the North West Zone (formerly Fort Frances, Northwestern and Northern – SSMDA), there has been an increase to the price for natural gas, transportation costs, the Transportation Price Adjustment and the delivery costs. This increase is offset to some extent by a decrease in the Gas Price Adjustment and storage costs.  Customers in the North West Zone will see an overall increase to their annual bills.

In the North East Zone (formerly Northern – NDA, and Eastern), there has been an increase to the price for natural gas, the Transportation Price Adjustment, the storage costs and the delivery costs. This increase is offset to some extent by a decrease in the Gas Price Adjustment and transportation costs.  Customers in the North East Zone will see an overall increase to their annual bills.

In the Southern Zone, there has been an increase to the price for natural gas, the Gas Price Adjustment, the storage costs and the delivery costs. This increase is offset to some extent by a decrease to the transportation costs. Customers in this service area will see an overall increase to their annual bills.

 

The rates are increasing in Union’s service territory for three main reasons:

Cap-and-Trade Compliance Costs

Under the Climate Change Act, Union is required to develop strategies to meet its Climate Change Act compliance obligations. New costs will be incurred by Union to comply with the Climate Change Act and the Ontario Energy Board is responsible for assessing the cost consequences of Union’s compliance plan for the purpose of approving recovery of the costs through rates.

The cap-and-trade costs will be recovered through charges on the delivery line on customers’ bills. The Ontario Energy Board approved, on an interim basis, an increase in delivery rates of about 3.3 cents per cubic metre of natural gas which is designed to recover the costs of Union’s compliance with the Ontario government's cap-and-trade program.

For the typical residential customer in any of Union’s service zones, the compliance costs associated with cap-and-trade included in rates as of January 1, 2017 is about $74 a year.

Annual Delivery Rate Adjustment

Union’s delivery rates are adjusted once a year using a five-year incentive regulation framework, which was approved by the Ontario Energy Board for the years 2014 through 2018.

Through the approved framework, delivery rates are adjusted at the beginning of each year using a pre-set formula, which allows for:

  1. An annual increase equivalent to inflation, less an adjustment for expected productivity.
  2. Adjustments to reflect changes in average gas use.
  3. Adjustments for the inclusion in rates of certain costs such as major infrastructure expansions and previously approved energy-efficiency programs for customers.

Gas Supply Quarterly Rate Adjustment and One-Time Adjustment for Service Area Changes

For January 1, 2017, Union’s natural gas commodity, storage and transportation rates were changed to reflect changes in the market prices that Union expects to pay for natural gas supplies, storage and transportation services. This adjustment occurs once every three months to reflect ongoing changes in market prices.

Union also implemented a one-time adjustment to its rate zones and associated gas supply, storage and transportation rates in northern and eastern Ontario to reflect changes Union made to where it sources its natural gas supply and transportation services. 

For customers in Union’s Southern and North East Rate Zones, Union set the reference price for the natural gas commodity based on a forecast of the market price at Dawn (which is a market hub in Southwestern Ontario). For the Southern Rate Zone, this means that the transportation costs are now captured in the commodity rate as the Dawn Reference Price reflects an all-in price of natural gas for customers in this zone. For the North East Rate Zone, this means that a portion of the transportation costs are captured in the commodity rate as Union will be purchasing a portion of the natural gas supply for customers in this zone from Dawn.

 

Natural gas rates are based on a forward looking forecast for the next 12 months. Forecasts are never perfect, so the billed price is normally either higher or lower than the actual market price. The difference is tracked in a special account and is adjusted with a credit or a charge in subsequent QRAM applications. 

Natural Gas Prices:

Rate Zone

Natural Gas Price ¢/m3

Gas Price Adjustment ¢/m3

Effective Price ¢/m3

North West 11.7711 -1.7023 10.0688
North East * 16.3002 -2.1882 14.112
South ** 16.0178 0.7010 16.7188

* The commodity rates for Union North East include a portion of the transportation costs.
** The commodity rates for Union South include all of the transportation costs.

Enbridge Gas Distribution Inc.

January 1, 2017 Natural Gas Rates

The OEB approved Enbridge’s rates for January 1. Effective January 1, 2017, the Gas Supply Charge (including gas supply cost quarterly adjustment) = 10.5285¢ per m3

Annual Rate Impact for an Average Consumer (using 2,400 m3/year) = $76.79

 

The rates are increasing in Enbridge’s service territory for three main reasons:

Cap-and-Trade Compliance Costs

Under the Climate Change Act, Enbridge is required to develop strategies to meet its Climate Change Act compliance obligations. New costs will be incurred by Enbridge to comply with the Climate Change Act and the Ontario Energy Board is responsible for assessing the cost consequences of Enbridge’s compliance plan for the purpose of approving recovery of the costs through rates

The cap-and-trade costs will be recovered through charges on the delivery line on customers’ bills. The Ontario Energy Board approved, on an interim basis, an increase in delivery rates of about 3.3 cents per cubic metre of natural gas which is designed to recover the costs of Enbridge’s compliance with the Ontario government's cap-and-trade program.

For the typical residential customer in Enbridge’s service territory, the compliance costs associated with cap-and-trade included in rates as of January 1, 2017 is about $80 a year.

Annual Delivery Rate Adjustment

Enbridge’s delivery rates are adjusted once a year using a Custom Incentive regulation framework, which was approved by the Ontario Energy Board for the years 2014 through 2018.

Through the approved framework, delivery rates are adjusted at the beginning of each year, which allows for:

  1. Adjustments to reflect changes in their natural gas volume forecast.
  2. Adjustments related to updates to certain operation and capital expenses.
  3. Adjustments to update Enbridge’s Return on Equity and cost of debt.

Gas Supply Quarterly Rate Adjustment

For January 1, 2017, Enbridge’s gas commodity, storage and transportation rates were changed to reflect changes in the market prices that Enbridge expects to pay for natural gas supplies, storage and transportation services. This adjustment occurs once every three months to reflect ongoing changes in market prices.

 

Natural gas rates are based on a forward looking forecast for the next 12 months. Forecasts are never perfect, so the billed price is normally either higher or lower than the actual market price. The difference is tracked in a special account and is adjusted with a credit or a charge in subsequent QRAM applications.

Natural Gas Price ¢/m3

Gas Cost Adjustment ¢/m3

Effective Price ¢/m3

11.4462 -0.9177 10.5285

Natural Resource Gas Limited

January 1, 2017 Natural Gas Rates

The OEB approved the following commodity rates effective January 1, 2017. 

Gas Supply Charge (including quarterly adjustment) = 17.4599 ¢/m3

Annual Commodity Rate Impact for an Average Consumer (using 2,009 m3/year) = $15.57

The main reason for the rate change is an increase to the forecast price NRG expects to pay for natural gas over the next 12 months.

Note: Natural gas rates are based on a forward looking forecast for the next 12 months. Forecasts are never perfect, so the billed price is normally either higher or lower than the actual market price. The difference is tracked and adjusted with a credit or a charge in subsequent QRAM applications.

Total Annual Bill impact for an Average Customer = $83.78

The Climate Change Mitigation and Low-carbon Economy Act, 2016 (Climate Change Act) was passed by the Ontario Legislature and received Royal Assent on May 18, 2016. On May 19, 2016, Ontario Regulation 144/16, The Cap and Trade Program (Cap and Trade Regulation), was issued. The Climate Change Act and the Cap and Trade Regulation set forth the details of a Cap and Trade program for the purposes of reducing greenhouse gas (GHG) emissions in Ontario.

Under the Climate Change Act, the Gas Utilities will need to develop strategies to meet their Climate Change Act compliance obligations. New costs will be incurred by the Gas Utilities to comply with the Climate Change Act and the OEB is responsible for assessing the cost consequences of the Gas Utilities’ compliance plans for the purpose of approving recovery of the costs through rates.

Union Gas Limited (Union Gas), Enbridge Gas Distribution Inc. (Enbridge) and Natural Resource Gas Limited (NRG) each filed an application with the Ontario Energy Board (OEB) on November 15, 2016 seeking approval of the forecast costs arising from their Cap and Trade Compliance Plan for the January 1 - December 31, 2017 time period. As part of the application, NRG sought approval to recover the forecast costs of its Cap and Trade Compliance Plan. 

In an interim Rate Order issued by the OEB on November 25, 2016, the OEB permitted NRG to recover through delivery rates an additional 3.3945 cents m3 in customer bills.

 

Conserve and Pay Less

You can reduce the amount of your bill by using less natural gas.  Read more about conservation, energy efficiency and government rebates by visiting:

 

What the OEB Does NOT Regulate

The OEB does not regulate competitive products and services, which are available from a number of companies competing for your business. They include:

  • contracts offered by natural gas marketers
  • water heater rentals
  • repair or maintenance services for water heater rentals

 

 

 

 

Page last updated 2016-12-21

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