Frequently Asked Questions about the January 2012 Union Gas Rates
Union Gas wants you to understand natural gas pricing and why natural gas remains your best energy value. Union Gas purchases gas in a highly competitive open market and passes the actual cost of the gas to our customers without markup. You pay what we pay for natural gas. Union Gas is determined to provide customers with good value and does its best to buy gas at the lowest possible price. The Ontario Energy Board (OEB) reviews and approves our gas rates every three months before they can take effect.
The OEB approved changes to Union Gas’ rates effective Jan. 1, 2012. These new rates remain in effect through Mar. 31, 2012.
Please go to Rates to view the rates specific to your area.
Yes, your rates are decreasing. Rate changes were approved for all Union Gas residential customers and include:
A decrease in the natural gas commodity rate,
Adjustments for the difference between what we expected to pay for gas supplies and transportation services in prior periods and the actual costs of these items,
A decrease in delivery rates, and
An increase in the monthly charge.
Union Gas prudently purchases natural gas and gas transportation services for our customers from the market and we pass these costs to you without mark up. We expect to pay less for natural gas for the next 12 months so your rate for gas has decreased.
The rate changes represent a decrease of three-to-four per cent – or between $26 and $30 a year – for an average residential customer using 2,600 cubic metres (m³) of natural gas per year and buying gas from Union Gas.
As detailed below, customers in southern Ontario who purchase natural gas from Union Gas will see an annual bill decrease of about $30 compared to rates from Oct.1 to Dec. 31, 2011 depending on the amount of gas you use. Customers in northern and eastern Ontario who buy gas from Union Gas will see an annual bill decrease of about $26 compared to rates from Oct. 1 to Dec. 31, 2011 depending on the amount of gas you use.
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.
For customers in southern, northern and eastern Ontario, the net natural gas commodity rate decreased to about 11 cents/m3, resulting in an annual decrease of about $41 in southern and eastern Ontario, and about $35 in northern Ontario.
Transportation costs - Transportation costs include all information on the “Transportation to Union Gas” and “Transportation price adjustment” lines on your bill. Natural gas is transported from different sources using different pipelines for delivery to different parts of the province, so your transportation costs can vary and depend on where you live in Ontario.
For customers in southern Ontario, there’s an increase in the transportation to Union Gas rate resulting to an annual increase of about $5. This increase reflects what Union Gas expects to pay for natural gas transportation services during the next 12 months.
In northern and eastern Ontario, there’s a decrease of about $7 per year in the transportation price adjustment rate to adjust for the difference between what Union Gas expected to pay for natural gas transportation services and the actual cost to buy those services during prior periods.
Delivery costs - Delivery costs include information on the “Delivery” line on your bill.
For customers in southern, northern and eastern Ontario, there’s a decrease of about $6 a year in delivery rates to reflect the decreased cost of delivering natural gas to you.
Union Gas purchases natural gas and gas transportation services from the market and we pass these costs through to you without mark up. For the most part, this rate change reflects a decrease in what we expect to pay for gas supplies. There are also adjustments for the difference between what we expected to pay for gas supplies and transportation services in a prior period, and the actual cost of these items, and a decrease in gas delivery rates to partially offset the $1 increase in the monthly charge.
In total, these changes amount to a decrease of about $30 a year – or about four per cent – on the total annual natural gas bill for the average residential customer in southern Ontario who buys gas from Union Gas.
In total, these changes amount to a decrease of about $26 – or about three per cent – for the average residential customer in either northern or eastern Ontario who buys natural gas from Union Gas.
The adjustment for the difference between what we expected to pay for natural gas supplies and the actual costs of those supplies was larger in northern and eastern Ontario. As a result, the overall bill reduction is slightly lower.
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 gas supplies during the next year.
We can’t predict what the price of natural gas will be in the future because, like other commodities, natural gas is publicly traded and any significant event that impacts either supply or demand – like the discovery of new supplies or severe weather – can impact the trading price of natural gas on the North American market.
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. 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.
A $1 a month increase in the monthly charge (to $21) is partially offset by decreases in the delivery rates that vary with the amount of natural gas used.
The monthly charge is a set charge which recovers some of the fixed costs associated with maintaining a safe and reliable distribution system such as meter reading, billing and emergency response. We work hard to keep delivery rates as low as possible. Our customers pay about the same for delivery services today as they did five years ago – around $1 a day.
These rates are in effect from Jan. 1 until Mar. 31, 2012.
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.
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 residential customer’s gas use of 2,600 m3 a year.
When calculating natural gas use for a typical residential customer, we define this as three people living in a 15-to-20 year-old home that’s about 2,000 square feet. The home includes a mid-efficiency gas furnace that’s approximately 81 per cent efficient, a gas water heater and another gas-fuelled appliance such as a fireplace.
What influences natural gas consumption?
Weather – Weather’s 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 energy efficient that conventional low-efficiency furnaces. Mid-efficiency furnaces are about 33 per cent more efficient than conventional furnaces.
House size – It requires more energy to heat a bigger house and, the more people in a house, the higher the natural gas use. Every 100 square feet of house size larger than 2000 square feet adds about 100 m³ of gas consumption annually on average.
The age and energy efficiency of your house also affect natural gas consumption. Each person in addition to the average three people per house uses approximately 200 to 400 more cubic meters of gas a year. The number of gas appliances and frequency of use also influence consumption.
No. Like a trucking company, Union Gas earns money for 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.
Your Union Gas 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 to be during that same period. We review your EBP account each August and periodically throughout the year to determine if your payment’s set at the proper amount and, if it’s not, we’ll adjust it based on current information including rates in effect.
If you purchase your natural gas from a retail energy marketer, the rate charged by the marketer is taken into account when calculating your EBP payment amount.
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 which your account is billed in.
If you buy your natural gas supplies from an energy marketer, the price you pay for gas depends on the terms of your energy marketer contract, and is excluded from this rate change.
Residential customers in southern Ontario who buy natural gas supplies from an energy marketer will see an overall increase of about $5 a year.
Residential customers in northern and eastern Ontario who buy natural gas supplies from an energy marketer will see an overall decrease of about $1 a year.
Please contact your energy marketer directly at the telephone number that appears on your bill with questions.
Natural gas is clearly the best energy choice for Ontario homeowners. It costs much less to heat your home 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. You can read more about the many benefits of natural gas by clicking here.
Union Gas provides a range of practical tools and tips that give you the power to take control and efficiently manage your energy use. Visit uniongas.com/energyefficiency to find out more.
Union Gas also publishes EnerSmart magazine, which provides valuable information about how you can save energy and money while increasing your comfort at home.
