The Changing Natural Gas Market
Deregulation - what does it mean?
For many years the gas industry was heavily regulated -- there were many rules about who could buy and sell natural gas. Since 1985 many of those restrictions have been removed. For example, prior to 1985, an Ontario customer could only buy natural gas from one source -- the natural gas utility that served their area. Today, through a process called direct purchase, customers have many more buying options. That means an industrial, commercial or residential customer can buy gas from a marketer, a producer or their local utility, like Union Gas. Whoever they buy it from, the local utility still delivers the gas to the customer.
How can I buy natural gas?
Today, you can buy your natural gas from your local gas utility or you can choose to buy it from a retail energy marketer or broker.
Deregulating the natural gas market
Choosing your natural gas supplier is a big part of deregulating the natural gas market -- but it's not the only part. There are also rules about moving gas between provinces as well as rules for moving gas in and through local townships and communities. Here's a quick look at natural gas markets - then & now.
Then -- the regulated market
Delivering natural gas to communities is very expensive. To encourage the growth and use of natural gas, the Ontario Government granted supply monopolies to natural gas utilities. This helped consumers avoid paying for the additional costs of competing and overlapping gas delivery systems. However, in the place of price competition from other competitors, the government insisted that natural gas prices be regulated and protected. So the Ontario Energy Board (OEB) reviews the prices that gas utilities charge for their delivery services.
Utilities like Union Gas do not make a profit on the sale of natural gas (the commodity). The price our customers pay for this commodity is the price we pay. Union Gas earns its profit from the rates charged for delivering natural gas. These rates and earnings are reviewed by the Ontario Energy Board. We cannot change either the price of the natural gas or its delivery price without first getting approval from the Ontario Energy Board.
Now -- a less regulated market
Today's market is not completely regulated. Gas utilities continue to hold a franchise that allows them to deliver natural gas to an area without competition (if we didn't, there would be no incentive for gas utilities to expand into communities that are not currently served). The OEB continues to monitor and approve all our delivery costs and the gas prices of its regulated utilities. However, they do not regulate the natural gas prices charged by energy retailers or brokers.
The role of Union Gas
Union Gas will continue delivering your natural gas and providing you with related utility services, such as billing, meter reading and 24-hour gas emergency service. You can also choose to buy your gas from Union Gas. As in the case of the long distance telephone market, you can choose to buy from an independent supplier. If you choose to buy your natural gas from an independent energy marketer, Union Gas will continue to deliver your natural gas safely and reliably.
Union Gas provides open access to its system so any gas marketer can move gas through our pipelines. If you choose to have a Marketer supply your gas, we will always deliver the gas a broker has purchased on your behalf.