Frequently Asked Questions about January 2017 Rates

In 2017, a number of rate changes are reflected in Union Gas customer bills as the Ontario government’s cap-and-trade program came into effect, as well as updated delivery rates, rate zones, and market-adjusted rates for gas used, storage and transportation. Under the Ontario government's cap-and-trade program, Union Gas must buy emission allowances for the natural gas used by applicable business customers in Ontario and recovers this cost from customers.

Natural gas remains your best energy value. It's 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 markup. 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 changes to Union Gas’ rates effective Jan. 1, 2017. Please visit MyAccount business rates to view the rates specific to your area.

Are my rates changing in January?

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

Rate M2

Rate 10

  • An increase in the gas commodity rate,
  • Decreases in the transportation rate,
  • A slight increase in the storage rate, and
  • Increases in delivery rates to recover the expected costs related to the cap-and-trade program and to safely and reliably deliver natural gas to businesses.
  • An increase in the gas commodity rate,
  • Changes in transportation and storage rates, depending on location,
  • Increases in delivery rates, including costs related to the new cap-and-trade program and to safely and reliably deliver natural gas, and
  • A one-time adjustment for the change in rate zones.

The new rates incorporate applicable temporary credits 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. 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?

Delivery rates will remain in effect for all of 2017. 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 MyAccount business rates 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 will now be combined included in the "Gas used" charge and therefore there will no longer be 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 now combined 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 gas costs in delivery rates from prior periods.

The Ontario government’s new cap-and-trade program costs are also now included in delivery costs. Under the new legislation, Union Gas must buy emissions allowances for the natural gas used by applicable business customers and recovers this cost from consumers. Visit uniongas.com/capandtrade for more details.

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.

Why is Union Gas increasing its rates?

This rate change is mainly driven by three factors; an increase in delivery rates due to the Ontario government's new cap-and-trade legislation, the annual increases in delivery rates to recover the expected costs to safely and reliably deliver natural gas to businesses, and changes in gas supply, storage and transportation rates, depending on location. These changes reflect:

  • Increases in what we expect to pay for natural gas and to deliver it to your business,
  • Changes in transportation and storage rates, and
  • A one-time adjustment for the change in rate zones in northern and eastern Ontario, which was introduced to better reflect changes in where we buy natural gas supplies and transportation services for our customers, and the costs of these services.

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 an increase of about $4,100 per year.

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

The combined impact of these changes for business customers in northwestern and northeastern rate zones is between about $3,000 and $6,800 per year.

Why do I no longer have a transportation line item on my bill?

There are changes to how transportation costs are displayed on the bill for some customers. Customers in southern Ontario who buy their natural gas from Union Gas will no longer have a transportation line item on their bill. This is because the gas supply for these customers is being sourced in southwestern Ontario at an all-in cost that includes transportation. For customers in southern Ontario the transportation costs are now included in the "Gas used" line on the bill.

Why is there a large increase in the gas commodity line and a large decrease in the transportation line item on the bill for North East customers?

Customers in the new North East zone will notice an increase in the gas supply cost, which is offset by a decrease in the transportation cost. This is because a portion of the gas supply is being purchased in southwestern Ontario, and it is at an all-in cost that includes transportation to Ontario.

Why is Union Gas changing customer rate zones in the north and east and how will that impact the rates customers pay?

North American natural gas markets are changing, with increasing natural gas production in areas closer to Ontario, and declining production from Western Canada.

As a result, Union Gas changed its rate zones to better reflect the mix of natural gas supply markets and transportation pipelines available to serve each area and the associated costs for these services. In this way, customer costs are better aligned with the natural gas supply and transportation services they use.

As of Jan. 1, 2017, customers currently in one of the four previous rate zones (Northern, Eastern, Western and Fort Frances) will be divided into two new rate zones: North West (west of Kapuskasing, and between Sault Ste. Marie and Elliott Lake) and North East (from North Bay to Kapuskasing, Timmins, and from North Bay to Espanola). This change better reflects the mix of natural gas supply markets and transportation pipelines available to serve each area and customer costs are better aligned with the true cost of the natural gas supply and transportation services they use.

Why do costs differ for various parts of the province?

Different areas of the province are served by a different mix of natural gas transportation pipelines and gas supply sources which means the cost for Union Gas to purchase gas and the service to transport the supplies to our customers varies 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.

Under the Ontario government's new cap-and-trade legislation, Union Gas must buy emission allowances for the natural gas used by applicable business customers and recovers this cost from customers. There is an increase in delivery rates of about 3.3 cents per cubic metre of natural gas used for the new cap-and-trade program.

All rate changes are approved by the Ontario Energy Board (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.

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 cap and trade and how do I find out more information about it and how it impacts my Union Gas bill?

The Ontario government introduced the cap-and-trade program effective Jan.1, 2017 and it caps the amount of greenhouse gas (GHG) emissions that Ontario homes and businesses are allowed to emit, and lowers that limit over time. Under the legislation, Union Gas must buy allowances for the natural gas used by its applicable customers and recovers this costs on natural gas bills. Visit uniongas.com/capandtrade for more details. If you have questions or concerns about the program, please contact the Ministry of the Environment and Climate Change at 1-800-565-4923 or ontario.ca/capandtrade.

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 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 to learn more.