Frequently Asked Questions about the October 2009 Rates

The Ontario Energy Board (OEB) approved changes to Union Gas’ rates effective October 1, 2009.

Please go to Rates to view the rates specific to your area.

Are my rates changing in October?

Yes. Union Gas is changing the rates we charge our customers. Rate changes were approved for all Union Gas residential customers in Ontario and include:

A reduction in the rates Union Gas charges customers for natural gas; and

A gas price adjustment to refund the difference between forecast costs and actual costs from prior periods. 

Changes to the rates reflect what we expect to pay for natural gas supplies as part of our quarterly rate adjustment process to reflect ongoing changes in the market price of gas.

The proposed rate change represents an approximate 11 per cent decrease in the total annual bill for an average residential customer who purchases natural gas from Union Gas. That means an average annual decrease of 95 to 113 dollars, depending on location. The rates will remain in effect from Oct. 1 through Dec. 31, 2009.

As detailed below, customers living in southwestern Ontario who purchase natural gas from Union Gas will see a price decrease of about $95 a year compared to rates in effect from July 1 to Sept. 30, 2009, depending on the amount of gas used. Customers living in Northern and Eastern rate zones who purchase gas from Union Gas will see a price decrease of about $113 a year compared to rates in effect from July 1 to Sept. 30, 2009.

This marks the fourth time this year that Union Gas has reduced rates, which amounts to a total decrease of approximately 45 per cent since January 2009 or about $615 for an average customer in southwestern Ontario.

Gas supply costs - Gas supply costs include information on the “Gas Commodity Rate” and “Gas Price Adjustment” lines on your bill.

For customers in southwestern Ontario, the net natural gas supply rate decreased by about $104 per year to about 11 cents/m3. This decrease consists of an annual decrease of about $17 in the gas commodity rate to reflect a decrease in Union Gas’ forecast cost to purchase gas for the next 12 months, and an annual decrease of about $87 in the gas price adjustment rate to reflect the difference between forecast costs and actual costs from prior periods.

In the Northern, Eastern and Northwestern rate zones, the natural net gas supply rate decreased by about $108 per year, to about eight cents/m3 depending on the delivery zone. This consists of an annual decrease of about $17 in the gas commodity rate to reflect a decrease in Union Gas’ forecast cost to purchase gas supplies for the next 12 months, and a decrease of about $91 in the gas price adjustment to reflect the difference between forecast costs and actual costs from prior periods.

Transportation costs - Transportation costs refer to information on the “Transportation to Union Gas” and “Transportation Price Adjustment” lines on your bill.

For customers in southwestern Ontario, the transportation to Union Gas rate increased by about $9 annually to reflect what Union Gas expects to pay for transportation services for the next 12 months.

In the Northern rate zone, there’s an annual decrease of about $5 in the transportation price adjustment rate to refund the difference between what we expected to pay for transportation services and the actual cost to buy those services from prior periods.

Why is the natural gas commodity rate adjusted each quarter?

We review and adjust our rates every three months to reflect ongoing changes in the market price of natural gas. Making adjustments quarterly brings forecast costs more in line with our actual costs. When actual costs differ from forecast, future rates are adjusted to refund or collect the difference from customers. These steps ensure you’re billed at a rate that closely reflects the market price of gas, help minimize large out-of-period adjustments and smooth out peaks and valleys related to daily changes in the market price of gas.

What are price adjustments?

Price adjustments refund or collect the difference between forecast costs and actual costs from a prior period. The price Union Gas charges you for natural gas is based on a forecast of what the market price of gas will be for 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 is not allowed to 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 of 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 the actual cost of gas.

Why are rate change impacts reflected on a yearly basis?

Customers told us they wanted to know the specific unit price and the dollar impact associated with the unit price for rate changes. It’s consistent and easier to compare price changes by using yearly dollar impacts. Each time rates change, we provide the effect of the rate change on the yearly gas bill using a typical residential customer’s gas use of 2,600 m3 a year.

You quote annual savings, but change rates every three months. What will I save from now until your next rate change?

The average residential customer will save about $29 to $35 from October through December. Savings will depend on your location and amount of natural gas used.

What assumptions are used to calculate typical natural gas use?

When calculating natural gas use for a typical residential customer, we define this as three people living in a 15 to 20 year-old house that measures about 2,000 square feet. The home includes a mid-efficiency gas furnace that’s approximately 81 per cent efficient, water heater and another gas-fuelled appliance such as a fireplace.

Factors that influence natural gas consumption include:

Weather – Weather is the biggest factor affecting natural gas consumption. In cold weather, more gas is needed to heat your home.

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

Home Size – It requires more energy to heat a bigger home and, the more people in a house, the higher the use of natural gas. Every 100 square feet of home size larger than 2000 square feet adds about 100 m3 of gas consumption annually on average.

The age and energy efficiency of your home also affect natural gas consumption. Each person in addition to the average three people per home uses approximately 200 to 400 more cubic meters of gas. The number of gas appliances and frequency of use also influence consumption.

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 our 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 monthly bill, are passed through to you without mark up.

Will my Equal Billing Plan rate be adjusted to reflect this rate reduction?

Your Equal Billing Plan (EBP) payment amount was established in September based on a forecast of the amount of natural gas you’ll use over the course of a year and what we expect gas prices will be during that same period. We review your EBP account each September and periodically throughout the year to determine if your payment is set at the correct level, and we’ll adjust it up or down based on more current information, which includes all rate changes.

If you purchase your gas from a retail energy marketer, the rate charged by the marketer is taken into account when calculating your payment amount.

Will the price of natural gas continue to decline?

Natural gas, like other commodities, is publicly traded and any significant event that impacts either supply or demand, such as extremes in weather across North America, can impact the market price. We can’t predict what the market price of gas will be in the future because of the number of forces that can influence market prices.

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.

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

If you purchase natural gas from an energy marketer, the price you pay for the gas commodity depends on the terms of your contract with the energy marketer, and is excluded from this rate change.

Residential customers in northern and eastern Ontario who buy natural gas from a retail energy marketer will see a decrease of about $5, depending on location, to refund the difference between our forecast costs for transportation services and our actual cost for those services in prior periods.

If you have questions, please contact your retail energy marketer directly at the phone number that appears on your bill.

Is natural gas my best energy value?

Absolutely, natural gas is a cost competitive energy choice and costs significantly less than electricity or fuel oil for space and water heating. With Union Gas rates at their lowest level in 10 years, natural gas continues to be the best energy choice for consumers.

Do you disconnect customers who can’t pay their bills?

We understand that occasionally some customers encounter difficulties paying their utility bills. We deal with every case on an individual basis and work with customers to find the best possible solution. We also work with many social service agencies, church groups, municipalities and elected officials to offer our customers solutions. Disconnecting service from an existing customer is only used as a tool of last resort.