Frequently Asked Questions about the October 2018 Union Gas Rates

The Ontario Energy Board (OEB) approved changes to Union Gas’ rates effective Oct.1, 2018. These changes include the removal of the cap-and-trade charges previously included in the delivery line of the bill. These new rates remain in effect through Dec. 31, 2018, and incorporate applicable temporary charges and credits that don’t affect the annual impacts on your bill.

Note that temporary charges and credits are excluded from the annual impacts table on the back page of your rate notice and explains what may appear as discrepancies between the information in the paragraphs and the tables.

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

Are my rates changing?

Yes, rates are decreasing for all customers. The details include:

  • Changes in the market price of natural gas and transportation services,
  • Removal of the provincial cap-and-trade charges for natural gas effective October 1, and
  • Price adjustments from prior periods.

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 and transportation services during the next year as well as any adjustments to make up the difference between our forecast cost for 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 customers in southern Ontario, the net increase for gas supplies is about $27 a year. In the North West zone, there is a net annual decrease of about $5 for gas supplies, and there is a net annual increase of almost $52 in the North East zone.

Transportation costs - Transportation costs include all information on the "Transportation to Union Gas" and "Transportation price adjustment" lines on your bill and reflect the cost of transporting natural gas to Ontario from its North American sources.

Transportation costs vary depending on where you live due to changing fuel prices, pipeline tolls and available capacity on pipelines serving different parts of Ontario.

For customers in southern Ontario, the transportation cost is included in the "Gas used" line on your bill. In the North West rate zone, the net transportation cost increased by about $3 annually. In the North East rate zone, the net transportation cost decreased by almost $5 annually.

Delivery costs - Delivery costs include information on the "Delivery" and "Delivery price adjustment" lines on your bill and reflect the cost of delivering natural gas to your home or business through our safe and reliable distribution system. 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.

For all residential customers in Ontario, there's a decrease of about a seventy-three dollars a year in delivery costs; depending where you live, to safely and reliably deliver natural gas to your home or business, mostly related to removing provincial cap-and-trade charges.

Storage costs - Storage costs include information on the "Storage" and "Storage price adjustment" lines on your bill and reflect the cost of storing natural gas.

Storage cost increases in northern and eastern Ontario are between $0.06 and $0.11 a year depending where you live. There is no change for customers in southern Ontario.

Why are natural gas prices changing?

Union Gas buys natural gas supplies from the market and we pay other pipeline companies to transport the gas supplies 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 temporary adjustments to make up the difference between our forecast for natural gas and natural gas transportation market prices and the actual cost from prior periods. As well, there is a temporary delivery price adjustment to true-up any costs and credits related to the provincial cap-and-trade program from prior periods.

How long will these rates remain in effect?

These customer rates will remain in effect from Oct. 1 through Dec. 31, 2018.

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 customers 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 provincial cap-and-trade charge?

The cap-and-trade charge was about 3.3 cents per cubic metre of gas used, which added about $70-$80 to a typical residential customer's annual natural gas bill. Your actual savings will depend on the amount of natural gas you use.

Why do I have a delivery price adjustment (charge for rates M1/M2/Rate 01/Rate 10, credit for other rate classes) for cap and trade on my October bill? I thought these charges were to be removed effective Oct. 1?

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

Why is the rate decrease larger in some areas than others?

The southern, northeast and northwest areas of the province are each served by different natural gas basins and pipelines to transport the gas supply into our distribution system in Ontario. Because the market costs for natural gas and transportation services can vary by location, the costs our customers pay (including adjustments for the difference between our forecast for natural gas and natural gas transportation market prices, and the actual costs from prior periods), can also differ by location.

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.

How will this rate change impact Equal Billing Plan customers?

Equal billing payments are set each year in September based on a forecast of the amount of natural gas you would use in a year, and where natural gas prices are expected to be during the year. Periodically throughout the year, we review your equal billing account to determine if the payment is set at the right level. If it is not, we adjust it up or down based on the more current information, which includes your actual gas use and all rate changes. A final true-up between what was paid and the actual cost occurs each August.

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

If you buy natural gas from an energy marketer, the price you pay for your 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, residential customers will see an overall decrease between $69 and $78 a year depending on location.

Why does Union Gas make adjustments for the cost of natural gas and gas transportation services from prior periods?

The rates we charge customers for natural gas and gas transportation services is based on a forecast of the prices we expect to pay to buy these items from the market. The actual market costs can differ from our forecasts and adjustments are made quarterly (Jan. 1, April 1, July 1 and Oct. 1) to either refund or collect the difference so that you only pay the actual costs for these services and nothing 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. Natural gas consumption for the period prior to a rate change is billed at the old rate and gas consumption after a rate change is billed at the new rate. The number of days at each rate depends on the monthly billing cycle of your account.

What is Union Gas doing to help me manage my energy costs?

Union Gas is committed to improving energy efficiency through a range of products, services and incentive programs to help customers lower their energy use and save money. Learn more about Union Gas energy savings programs at uniongas.com/savemoney.