Frequently Asked Questions about October 2018 Rates

The Ontario Energy Board (OEB) approved changes to Union Gas' rates effective Oct. 1, 2018. Please visit myaccount business rates to view the rates specific to your area.

Are my rates changing in October?

Yes. On Oct.1, Union Gas changed the rates our customers pay. Rate changes include:

Rate M2

Rate 10

  • An Increase in the gas commodity rate,
  • Removal of the provincial cap-and-trade charges previously included in delivery rates, and
  • Price adjustments from prior periods
  • Increases in the gas commodity, transportation, and storage rates,
  • Removal of the provincial cap-and-trade charges previously included in delivery rates, and
  • Price adjustments from prior periods

The new rates incorporate applicable temporary credits that don’t affect the annual impacts listed on your rate notice included with your bill.

Union Gas buys natural gas and gas transportation services for our customers from the market and we pass these costs to you without mark-up. Storage and delivery rates are reviewed and approved by the OEB, which conducts an open review process with participation from consumer groups and Ontario municipalities.

How long will these rates remain in effect?

These rates are in effect from Oct. 1 through Dec. 31, 2018. Rates for natural gas used, transportation and storage services are adjusted once every three months (January, April, July, October) to reflect ongoing changes in market prices.

Please visit our myaccount business rates page to view the rates specific to your area.

What makes up the charges on my bill?

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. Also, in southern Ontario the cost of transportation to Ontario is included in the "Gas used" charge and therefore there is no longer a separate Transportation to Union Gas line item on customer bills for southern Ontario customers.

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. For customers in southern Ontario, the transportation cost is included in the "Gas used" line on your bill.

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 delivery rates from prior periods.

The Ontario government's cap-and-trade program costs were included in delivery costs. Union Gas is removing the provincial cap-and-trade charges effective Oct. 1,2018 and there is a temporary delivery price adjustment to true-up any costs and credits related to the cap-and-trade program 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 is available when 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.

Why is Union Gas changing the rates customers pay for natural gas?

Union Gas buys natural gas supplies from the market and we pay other pipeline companies to transport the natural gas supply from where it is produced into our distribution system in Ontario. We adjust the rates we charge our customers for these items quarterly to reflect changes in market prices, which are passed through to our customers without mark-up.

This rate adjustment reflects changes in the market price of natural gas supplies and transportation services. In addition, as part of this rate change, Union Gas is removing the provincial cap-and-trade charges for natural gas effective Oct. 1, 2018.

There are also price adjustments to make up the difference between our forecast for natural gas and natural gas transportation market prices and the actual costs from prior periods, and a temporary delivery price adjustment to true-up any costs and credits related to the provincial cap-and-trade program from prior periods.

Why did Union Gas not adjust rates in July as they have done in the past?

We applied to the Ontario Energy Board (OEB) for a change in the rates our customer's pay for natural gas effective July 1, 2018, as part of a quarterly rate adjustment process to reflect changes in market prices. The OEB's decision was not going to be available in time for us to implement the changes for July 1. Any resulting impacts from the discontinued July rate change are included as part of the Oct. 1, 2018 rate adjustment.

What will customers save from the removal of the cap-and-trade charge?

The provincial cap-and-trade charge was about 3.3 cents per cubic metre of gas used which added more than $2,400 annually for a typical M2 rate customer in southern Ontario and more than $3,100 for a typical Rate 10 customer in northern and eastern Ontario. The removal of the provincial cap-and-trade charge is effective Oct. 1, 2018. Your actual savings will depend on the amount of natural gas you use.

Why do I have a delivery price adjustment for cap-and trade on my October bill if cap-and-trade charges were removed from the bill effective October 1, 2018?

This is a temporary price adjustment to true-up any costs and credits related to the cap-and-trade program from prior periods.

Why do natural gas prices change?

Because natural gas is a commodity, the market price can fluctuate with changes in the amount of readily available supply or in the level of demand for the product. We adjust customer prices for market fluctuations every three months to reflect changes in the market price. Over the long term, the price our customers pay has declined and is lower today than 10 years ago.

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

The combined impact of these changes for business customers in southern Ontario is a decrease of about $1,552 per year.

What’s the impact of this rate change on business customers in northeastern and northwestern Ontario (Rate 10 - North East and Rate 10 - North West)?

The combined impact of these changes for business customers in northeastern Ontario is a decrease of about $1,098 a year, and a decrease in northwestern Ontario of about $3,154 per year.

Why do customer rates differ by location?

Different areas of the province are served by different natural gas supply basins and transportation pipelines. We buy these services from the market and pass the cost through to our customers. Because the market costs for these services can vary by location, this can result in rate changes that differ by location.

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.

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.

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.

How does this rate change impact customers who buy natural gas from an energy marketer?

If customers buy natural gas from an energy marketer, the price paid for gas supplies depends on the terms of the contract and is excluded from this rate change. For other services purchased from Union Gas (natural gas transportation, storage and delivery), and previous cap-and-trade costs, business customers will see and overall decreases in the cost of the services they purchase from Union Gas ranging between about $2,400 and about $3,000, depending on location.

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.

What is 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 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 to learn more.