FortisBC doesn't mark up the cost of gas. You pay what we pay. Natural gas is a commodity traded on the open market like other commodities such as oil, coffee or lumber. As with most commodities, the price is dictated by supply and demand. When demand is high, the price rises. When supply is high, the price drops.
FortisBC buys natural gas from producers, and then charges you exactly what we paid for it. We don't mark up the cost of gas. That means you pay what we pay.
FortisBC is the largest distributor of natural gas in British Columbia. We don't explore for or produce natural gas. Essentially, we are a delivery service, bringing natural gas to more than 930,000 residential, institutional commercial and industrial customers across BC.
Delivery versus storage and transport
The natural gas rate on your bill also includes charges for delivery and storage and transport. Storage and transport reflects the prices we pay to other companies to store and transport gas through their pipelines and infrastructure. Like the cost of gas, storage and transport is not marked up – you pay what we pay.
Delivery charges reflect the costs of safely and reliably delivering gas to customers through our distribution system. This helps cover the costs of maintaining our system, make a modest profit and invest in our business and improvements to meet customers’ needs. They include the fixed daily basic charge and consumption-based delivery charges for the gas you use.
Determining the cost of natural gas
There are several factors that influence the cost of gas.
- Consumption-the consumption of natural gas usually peaks during the coldest months of the year (December-February).
- Weather events-hurricanes, for example, may mandate the temporary shutdown of offshore production platforms. Tornadoes can have a similar effect on onshore production facilities.
- Production levels-when production levels are low, the prices rise. When production levels are high, there may be greater supply flexibility and prices may decrease.
FortisBC works to minimize price fluctuations
We work to get the best value for our customers, and protect them from market fluctuations through our purchasing strategies which include:
- Purchasing gas from a variety of sources
- Purchasing gas based on daily and monthly pricing structures
- Locking in the price of gas through the use of futures contracts (hedging)
- Purchasing a portion of the supply from the spot market
These strategies help FortisBC provide natural gas at rates that are competitive with other sources of energy, such as electricity.
The end result is a reliable, cost effective natural gas supply for our customers.
Who determines what we charge for natural gas?
FortisBC is regulated by the British Columbia Utilities Commission (BCUC). This means we must file rates, changes in rates and other rate matters with the BCUC for approval to ensure that customers receive fair and competitive rates. Every three months, FortisBC and the BCUC review our natural gas commodity costs; and annually we review delivery and storage and transport costs.