Frequently Asked Questions about October 2014 Rates

Natural gas remains your best energy value. It is even more affordable now than 10 years ago. Union Gas purchases natural gas in a competitive open market and passes the actual cost of the gas to our customers without mark-up. You pay what we pay for natural gas. The Ontario Energy Board (OEB) reviews and approves our gas rates every three months before they can take effect.

The OEB approved, on an interim basis, changes to Union Gas’ rates effective October 1, 2014. These new rates remain in effect through December 31, 2014.

Please visit MyAccount business rates to view the rates specific to your area.


Are my rates changing in October?

Yes. On October 1, Union Gas is changing the rates we charge our customers for natural gas supplies and transportation services. Rate changes for our business customers include:

Rate M2  Rate 10
  • Decreases in the natural gas commodity, gas price adjustment, transportation and delivery rates
  • Decreases in the natural gas commodity, gas price adjustment and delivery rates
  • Increase in the transportation price adjustment rate

The new rates incorporate applicable temporary credits and charges that do not affect the annual impacts listed on your rate notice (included with your bill).

Union Gas purchases natural gas and gas transportation services for our customers from the market and we pass these costs to you without mark-up.

These rates are in effect from October 1 through December 31, 2014.  Please visit MyAccount business rates to view the rates specific to your area.

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What makes up the charges on my bill?

Union Gas purchases natural gas and gas transportation services for our customers from the market and we pass these costs through to our customers without mark-up.

Gas costs - Gas commodity costs include information on the “Gas used” and “Gas price adjustment” lines on your bill. The net natural gas rate reflects what we expect to pay for gas supplies during the next year, as well as an adjustment to make up the difference between our forecast cost of gas and actual costs from prior periods.

Transportation costs - Transportation costs include information on the “Transportation to Union Gas” and “Transportation price adjustment” lines on your bill. Natural gas is transported into Ontario from a variety of locations across North America using different pipelines for delivery across the province, so your transportation costs vary and depend on where you are located in the province.

Delivery costs - Delivery costs include the information on the “Delivery” and “Delivery Price Adjustment” lines on your bill and reflect the cost of delivering natural gas to your business, as well as, an adjustment to make up the difference between our forecast and actual gas costs in delivery rates from prior periods.

Storage costs - Storage costs include the information on the “Storage” and “Storage Price Adjustment” lines on your bill and reflect the cost of storing natural gas so it’s available whenever you need it.

Monthly Charge – The fixed monthly charge partially covers the cost of maintaining a safe and reliable natural gas distribution system. It includes things like meter reading, customer services and 24-hour emergency response.

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Why is Union Gas changing its rates?

The price Union Gas charges you for natural gas is based on a forecast of what the market price of gas will be during the next 12 months. This forecast is updated and approved by the OEB every three months to reflect changes in the market price of gas. Union Gas does not earn a profit on the sale of gas, so we track the difference between the price we charge for gas based on this forecast and the actual cost for gas we purchase during the same period. When forecast costs differ from actual costs, Union Gas applies a price adjustment to refund or collect the difference. This way, we can ensure that customers pay for the actual cost of gas, and not a penny more.

These rate changes reflect a decrease in what Union Gas expects to pay for natural gas supplies. There are also adjustments for the difference between what we expected to pay for natural gas supplies and transportation services in a prior period and the actual costs of these items. All customers will also see a decrease in natural gas delivery rates.

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What’s the impact of this rate change on business customers in southern Ontario (Rate M2)?

The Ontario Energy Board approved, on an interim basis, a decrease to Union Gas’ gas commodity, gas price adjustment, transportation and delivery rates, as of October 1, 2014. The new rates incorporate applicable temporary credits and charges that do not affect the annual impact listed below.

The total annual bill decrease will be $2,635.92 for a typical Rate M2 customer in southern Ontario using 73,000 m3 of natural gas a year.

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What's the impact of this rate change on business customers in northern Ontario (Rate 310)?

The Ontario Energy Board approved, on an interim basis, a decrease to Union Gas’ gas commodity, gas price adjustment and delivery rates, and an increase to the transportation price adjustment, as of October 1, 2014. The new rates incorporate applicable temporary credits and charges that do not affect the annual impact listed below.

The total annual bill decrease will be $2,084.86 for a typical Rate 310 customer in northern Ontario using 93,000 m3 of natural gas a year.

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What's the impact of this rate change on business customers in eastern Ontario (Rate 610)?

The Ontario Energy Board approved, on an interim basis, a decrease to Union Gas’ gas commodity, gas price adjustment and delivery rates, and an increase to the transportation price adjustment, as of October 1, 2014. The new rates incorporate applicable temporary credits and charges that do not affect the annual impact listed below.

The total annual bill decrease will be $2,080.15 for a typical Rate 610 customer in eastern Ontario using 93,000 m3 of natural gas a year.

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What’s the impact of this rate change on business customers in northwestern Ontario (Rate 110)?

The Ontario Energy Board approved, on an interim basis, a decrease to Union Gas’ gas commodity, gas price adjustment and delivery rates, and an increase to the transportation price adjustment, as of October 1, 2014. The new rates incorporate applicable temporary credits and charges that do not affect the annual impact listed below.

The total annual bill decrease will be $2,092.49 for a typical Rate 110 customer in northwestern Ontario using 93,000 m3 of natural gas a year.

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What's the impact of this rate change on business customers in the Fort Frances area (Rate 210)?

The Ontario Energy Board approved, on an interim basis, a decrease to Union Gas’ gas commodity, gas price adjustment and delivery rates, and an increase to the transportation price adjustment, as of October 1, 2014. The new rates incorporate applicable temporary credits and charges that do not affect the annual impact listed below.

The total annual bill decrease will be $2,098.47 for a typical Rate 210 customer in the Fort Frances area using 93,000 m3 of natural gas a year.

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Why is the price of natural gas decreasing?

Natural gas, like other commodities, is publicly traded and the market price varies in response to the amount of supply and demand for the product across North America.  Natural gas is in plentiful supply and Union Gas’ rate change reflects, in part, a decrease in what we expect to pay for natural gas supplies over the next year. The price of natural gas has steadily declined and is lower today than 10 years ago. Experts predict prices will remain affordable well into the next decade.

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Will the price of natural gas continue to decrease?

While we can't predict what the market price of gas will be in the future, discoveries of massive new supplies in North America paired with new extraction techniques have driven the price of natural gas to record lows. While there will be fluctuations up and down, the long-term pricing forecasts suggest that the price of natural gas will remain affordable well into the next decade.

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Why is the cost of natural gas transportation changing?

The rates we charge customers for transportation are based on what we expect to pay companies like TransCanada Pipelines to transport natural gas from where it is purchased, such as western Canada, to our distribution network in Ontario. This rate change reflects a decrease in what Union Gas expects to pay for transportation services. There are also adjustments for the difference between what we expected to pay for transportation services in the prior period and the actual costs of these items. We pass this cost through to our customers without mark-up.

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Why do natural gas and gas transportation costs differ between northern and southern Ontario?

The costs to serve different geographic areas vary. Natural gas for northern and eastern Ontario comes from producers in Alberta and travels into Ontario through a single transmission pipeline - the TransCanada Pipeline. Southern Ontario is supplied by a more diverse mix of natural gas producers and pipelines. As a result the cost to purchase natural gas and gas transportation services for these different areas can differ.

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How often does Union Gas change its rates?

You’ll see two general types of natural gas rate changes during the calendar year. The first type occurs quarterly, on the first of January, April, July and October, to reflect changes in what Union Gas expects to pay for gas commodity and transportation services, as well as, differences between forecast and actual costs for prior periods. This is shown as a change in the gas commodity and transportation rates on your bill and may also appear as a small change in delivery rates as Union Gas also uses natural gas to power our delivery system. These changes, which are passed through to you without mark-up, help ensure that you’re billed at a rate that closely reflects the expected market price of gas.

The second type of rate change occurs annually and reflects the overall costs to run a safe and reliable natural gas distribution system. On your bill, this may appear as a change in the delivery and storage rates or the monthly charge.

All rate changes are approved by the OEB.

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How long will these rates remain in effect?

These new rates will remain in effect for three months - from October 1 through December 31, 2014.

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What are price adjustments?

Price adjustments refund or collect the difference between our forecast costs and actual costs from prior periods. The price Union Gas charges you for natural gas is based on a forecast of what the market price of gas will be during the next 12 months. This forecast is updated and approved by the OEB every three months to reflect changes in the market price of gas. Union Gas does not earn a profit on the sale of gas, so we track the difference between the price we charge for gas based on this forecast and the actual cost for gas we purchase during the same period. When forecast costs differ from actual costs, Union Gas applies a price adjustment to refund or collect the difference. This way, we can ensure that customers pay for the actual cost of gas, and not a penny more.

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Why are rate change impacts reflected on an annual basis?

Customers told us they want to know the dollar impacts of rate changes on an annualized basis. Each time rates change, we provide the effect of the rate change on the yearly natural gas bill using a typical customer’s gas use from their rate class.

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What influences natural gas consumption?

Weather – The weather affects your natural gas consumption. In cold weather, more gas is needed to heat your facility.

Age, type and energy efficiency of facility/equipment – The age, type and energy efficiency of your facility and natural gas equipment can significantly affect natural gas consumption.

Facility size – It requires more energy to heat a bigger space and, the more people in a space, the higher the natural gas use.

Furnace efficiency – High-efficiency furnaces are about 60 per cent more energy efficient than conventional low-efficiency furnaces. Mid-efficiency furnaces are about 33 per cent more efficient than conventional furnaces.

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Does Union Gas make a profit on natural gas?

No. Like a trucking company, Union Gas earns income on delivering and storing the product – natural gas – and not on the product itself. The rates we charge for delivery and storage services are regulated by the OEB and have remained relatively stable for a number of years. Gas commodity and transportation costs, which make up the majority of your bill, are passed through to you without mark-up.

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I noticed the same line twice on my bill. Am I being billed twice?

No, the billing period doesn’t begin and end on the first and last days of each month, but covers a period somewhere mid-month to mid-month. Consumption for the period prior to a rate change is billed at the old rate and consumption after a rate change is billed at the new rate. The number of days at each rate depends on the monthly cycle in which your account is billed.

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I buy natural gas from an energy marketer. How does this rate change impact me?

If you purchase your natural gas supplies from an energy marketer, the price you pay for your gas depends on the terms of your contract.

Please contact your energy marketer at the telephone number that appears on your bill with questions.

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Is natural gas my best energy value?

Natural gas is clearly the best energy choice for Ontario businesses. It costs much less to heat your facility and water with gas compared to using electricity or fuel oil. There are many other benefits to using gas beyond price including efficiency, versatility, reliability and abundance of domestic supply that makes natural gas your best energy choice. Read more about the many benefits of natural gas.

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What's Union Gas doing to help me manage my energy costs?

Our natural gas storage facilities allow us to buy gas when it’s less expensive and use it in the winter when market prices are typically higher.

Conservation is one of the best long-term ways to reduce energy costs. We understand that in order to stay competitive you need to closely monitor your ongoing energy use, invest in energy efficiency, and take advantage of valuable rebates and incentives. Visit the Save Money & Energy section on uniongas.com to learn more.

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