Frequently Asked Questions about the April 2013 Union Gas Rates
Union Gas wants you to understand natural gas pricing and why natural gas remains your best energy value. Union Gas buys the gas you use and gas transportation services in a highly competitive open market and passes the actual cost of these to you without markup. And, the Ontario Energy Board (OEB) reviews and approves our gas rates before they can take effect, ensuring that the rates we pass onto you are fair and reasonable.
The OEB approved changes to Union Gas’ rates effective April 1, 2013. These new rates remain in effect through June 30, 2013, and incorporate applicable temporary charges and credits that don’t affect the annual impacts on your bill.
Please go to Rates to view the rates specific to your area.
Yes, rates are decreasing for all Union Gas customers. The details include:
The rate changes represent a decrease of about $6 to $16 a year depending where you live, for an average residential customer using 2,200 cubic metres (m3) of natural gas per year and buying gas from Union Gas.
As detailed below, customers in southern Ontario who purchase natural gas from Union Gas will see an annual bill decrease of about $6 depending on the amount of gas you use. Customers in northern, northwestern and eastern Ontario who buy gas from Union Gas will see an annual bill decrease of about $16, depending on where you live and the amount of gas you use.
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 natural gas 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.
For customers in southern Ontario, the net natural gas commodity rate decreased by about 1.8 cents/m3, resulting in an annual decrease of about $1 per year.
In northwestern, northern and eastern Ontario, the net natural gas commodity rate decreased about 0.1 cents/m3, resulting in a decrease of about $2 per year.
Transportation costs - Transportation costs include all information on the "Transportation to Union Gas" and "Transportation price adjustment" lines on your bill.
Transportation costs vary depending on where you live in Ontario due to changing fuel prices, pipeline tolls and available capacity to different parts of the province.
For customers in southern Ontario, the transportation rate decreased about $4 a year to reflect the decreased cost of transporting natural gas to Ontario.
In northern, northwestern and eastern Ontario, there's a decrease of about $14 a year in the transportation rate to make up the difference between our forecast cost of transporting natural gas to Ontario and actual costs from prior periods.
Delivery costs - Delivery costs include information on the "Delivery" and "Delivery price adjustment" lines on your bill.
For customers in southern Ontario, there's a slight decrease of about $0.1 a year in delivery rates to reflect the updated cost of delivering natural gas to your home through our safe and reliable distribution system.
For customers in northern, northwestern and eastern Ontario, there's a slight decrease of about $0.2 a year in delivery rates to reflect the updated cost to deliver natural gas to our customers for 2013.
Union Gas purchases natural gas and natural gas transportation services into Ontario from the market and we pass these costs through to our customers without mark-up. These rate adjustments reflect a change in the market prices we expect to pay for natural gas and to transport it to Ontario for the next year. There are also adjustments to make up the difference between our forecast for natural gas and transportation market prices and the actual costs from prior periods.
These rates will remain in effect from April 1 through June 30, 2013.
The price of natural gas can vary based on the amount of supply or demand for the product. Access to new, massive deposits of natural gas have driven natural gas prices to their lowest level in a decade. Although there will be fluctuations, experts predict that prices will remain affordable for years to come. In fact, the typical Ontario homeowner spent $400 less on natural gas in 2012 than they did just five years ago.
We base our customer rates on a forecast of what we expect to pay for natural gas and to transport it into Ontario on pipelines like TransCanada Pipeline. These costs can differ from our forecast, and adjustments are made quarterly to either refund or collect the difference, so that customers pay the actual costs for these services and nothing more.
The costs to serve different geographic areas vary. Natural gas for northern and eastern Ontario comes from producers in Alberta and travels into Ontario through a single pipeline – the TransCanada Pipeline. Southern Ontario is supplied by a more diverse mix of natural gas producers and pipelines. As a result, the cost to purchase natural gas and transportation services for these different areas can differ.
While we can’t predict what the market price of gas will be in the future, discoveries of massive new supplies in North America paired with new extraction techniques have driven the price of natural gas to record lows. While there will be fluctuations, the long-term pricing forecasts suggest that the price of natural gas will remain affordable well into the next decade.
You told us that you want to know the dollar impacts of rate changes on an annualized basis. Each time rates change, we provide the effect of the rate change on a yearly basis using a typical residential customer's gas use of 2,200 m3 a year.
When calculating natural gas use for a typical residential customer, we define this as three people living in a 15-to-20 year-old home that’s about 2,000 square feet. The home includes a mid-efficiency gas furnace that’s approximately 81 per cent efficient, a gas water heater and another gas-fuelled appliance such as a fireplace.
Weather – Weather’s the biggest factor affecting natural gas consumption. In cold weather, more gas is needed to heat your home.
Furnace efficiency – High-efficiency furnaces are about 60 per cent more energy efficient than conventional low-efficiency furnaces. Mid-efficiency furnaces are about 33 per cent more efficient than conventional furnaces.
House size – It requires more energy to heat a bigger house and, the more people in a house, the higher the natural gas use. Every 100 square feet of house size larger than 2000 square feet adds about 100 m3 of gas consumption annually on average.
The age and energy efficiency of your house also affect natural gas consumption. Each person in addition to the average three people per house uses approximately 200 to 400 more cubic meters of gas a year. The number of gas appliances and frequency of use also influence consumption.
No. Like a trucking company, Union Gas earns money for delivering and storing the product – natural gas – and not on the product itself. The rates we charge for delivery and storage services are regulated by the OEB and have remained relatively stable for a number of years. Gas commodity and transportation costs, which make up the majority of your bill, are passed through to you without mark up.
Your Union Gas Equal Billing Plan (EBP) payment amount was established in September based on a forecast of the amount of natural gas you'll use over the course of a year and what we expect gas prices to be during that same period. Periodically throughout the year, we review your equal billing account to determine if your equal billing payment is set at the correct level and, if it’s not, we’ll adjust it up or down based on more current information, which includes all rate changes.
If you purchase your natural gas from a retail energy marketer, the rate charged by the marketer is taken into account when calculating your EBP payment amount.
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 which your account is billed in.
If you purchase your natural gas supplies from an energy marketer, the price you pay for gas depends on the terms of your energy marketer contract, and is excluded from this rate change.
Residential customers who purchase their natural gas supplies from an energy marketer will see an overall decrease in the cost of the services they purchase from Union Gas of about $0.12 in southern Ontario, and about $14 per year in northern and eastern Ontario.
Please contact your energy marketer directly at the telephone number that appears on your bill with questions.
Union Gas provides a range of practical tools and education that gives consumers the power to take control and efficiently manage their energy use. Visit uniongas.com/energyefficiency to find out more.