Yes, rates are increasing overall. The details include:
- An increase or decrease in the market price of natural gas, depending on where you live,
- Increases in transportation and storage rates, depending on where you live,
- A decrease in delivery rates, and
- Gas, transportation and delivery 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 now 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 and transportation is about $20 a year. In the North West zone, the net annual increase is about $50, and an increase of about $41 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 now combined included in the "Gas used" line on your bill. In the North West, the net transportation cost increased about $2 annually. In the North East rate zone, the net annual transportation cost decreased by about $2.
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 new cap-and-trade program costs are also included in delivery costs. Visit uniongas.com/capandtrade for more details.
For all customers in Ontario, there's a very slight decrease of about $0.07 to $0.14 a year, depending where you live, to safely and reliably deliver natural gas to your home or business.
Union Gas buys natural gas supplies from the market and we pay other pipeline companies to transport the gas into our distribution system in Ontario from where it's produced. 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.
The combined impact of these changes is an overall increase of about $20 a year in southern Ontario, and an increase between $41 and $50 a year in northeastern and northwestern Ontario.
Natural gas is a commodity and the market price can fluctuate when there are changes in the amount of readily available supply or in the level of demand for the product. For example, there can be price increases in winter months when more natural gas is being used.
Different areas of the province are served by different supply basins and transportation pipelines. We buy these services from the market and pass the cost through to our customers without mark-up. As the market costs for these services vary by location, the costs can and do differ over time. This has resulted in a higher bill impact in northern Ontario than in southern Ontario.
Equal Billing Plan (EBP) payment amounts were established in September based on a forecast of natural gas use over the course of a year, and what natural gas prices were forecasted to be during that same period. Union Gas will review EBP accounts in April to determine if payments are set at the correct level based on the most current information, which includes rate changes. If it’s not, we’ll adjustment payments up or down so that the total amount paid remains aligned with the expected cost. A final true up between what was paid and the actual cost will occur in August.
If natural gas is purchased from an energy marketer, the price paid for gas depends on the terms of the contract and is excluded from this rate change.
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 (January 1st, April 1st, July 1st and October 1st) 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.
North American natural gas markets are changing, with increasing natural gas production in areas closer to Ontario, and declining production from Western Canada.
As of Jan. 1, 2017, customers in one of the four previous rate zones (Northern, Eastern, Western and Fort Frances) were divided geographically 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 ensures that customer costs are better aligned with the true cost of the natural gas and transportation services they use.
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 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.
Union Gas provides a range of tools and education to give consumers and businesses the power to take control and manage their energy use. For more information visit uniongas.com/savemoney.