Yes, rates are increasing for all customers. The changes include:
- Adjustments in delivery rates to recover the expected costs to store and deliver natural gas to our customers for 2018, and
- Adjustments in storage and transportation rates to reflect changes in where we source natural gas supplies and transportation services for our customers.
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 decrease for gas supplies is about $0.03 a year. In the North West and North East zones, the net annual decrease is about $0.01 for gas supplies.
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 $0.01 annually. In the North East rate zone, the net transportation cost increased by about $0.63 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 are also included in delivery costs. Visit uniongas.com/capandtrade for more details.
For customers in southern Ontario, there's an increase of $9 a year, and an increase of $6.24 in northern Ontario to safely and reliably deliver natural gas to your home or business.
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.
For customers in southern Ontario there is an increase of $0.37 in storage costs while storage cost increases in northern and eastern Ontario range between $4.60 and $7.29 a year depending where you live.
This rate change is mainly driven by two factors:
- Adjustments in delivery rates to recover the expected costs to safely deliver natural gas to homes and businesses in the coming year. Union Gas delivery rates are adjusted once a year using a five-year regulation framework, which was approved by the Ontario Energy Board (OEB) for the years 2014 through 2018. Through the framework, delivery rates are determined at the beginning of each year using a pre-set formula. Annual delivery rate changes are reviewed by the OEB, which conducts an open public review process.
- Adjustments in storage and transportation rates to better reflect changes in where we source natural gas supplies and transportation services for our customers.
Combined, these two changes represent an increase of $9.34 a year for customers in southern Ontario and increases ranging from $10.84 to $14.15 a year for customers in northern and eastern Ontario.
The southern, northeast and northwest areas of the province are each 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 vary by location, the costs our customers pay can also differ by location.
Rate changes in January 2018 related to changes in what we expect to pay for natural gas supplies and transportation services for our customers. Union Gas buys these items from the market and passes the cost through to customers without mark-up. Natural gas supply and transportation rates are adjusted every three months to help ensure that customers are billed at a rate that more closely reflects the expected market price of natural gas.
The rate changes for Feb.1, 2018 include changes to delivery rates to recover the expected cost to store natural gas and deliver it to customers through our distribution system in 2018. Delivery rates are adjusted once a year, subject to approval by the OEB, which conducts a public review process.
Delivery rates will remain in effect for all of 2018. Rates for natural gas used, transportation and storage services are adjusted quarterly (January, April, July, October) to reflect ongoing changes in market prices.
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.
Equal Billing Plan (EBP) payment amounts 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's not, we'll adjust payments 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.
If you buy natural gas from an energy marketer, the price you pay for your 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), residential customers will see an overall increase ranging from $9.37 to $14.16 a year, depending where you live.
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.
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.
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 carbon units (also known as emission allowances or credits) for the natural gas used by its customers and recovers this cost on natural gas bills. Visit cap and trade section 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.
Union Gas provides a range of tools and education to give you the power to take control and manage your energy use. For more information visit uniongas.com/savemoney.