FortisBC receives approval for changes to natural gas and propane rates

Dec 9, 2016

SURREY, B.C – FortisBC has received approval from the BC Utilities Commission (BCUC) to change the delivery rate and storage and transport rate that gas customers pay, effective January 1. FortisBC customers will see no change to the cost of natural gas on their billing statement although the cost of propane will be changing for Revelstoke customers, effective January 1.

FortisBC bills are un-bundled, which means that customers can see the costs associated with delivering natural gas, broken down into components:

Delivery charges

Delivery charges reflect the costs of safely and reliably delivering gas to customers through FortisBC’s distribution system. They help cover the costs of maintaining our natural gas distribution system, make investments in our business and help us make improvements to meet customers’ needs. Delivery charges are set by the BCUC annually. Two components make up customers’ delivery charges: the basic charge and the delivery rate.

Basic charge:

The basic charge is a flat daily fee that partially recovers the fixed costs of FortisBC’s system, whether or not customers are using any gas but are connected to the system. FortisBC customers will see no changes to their basic charge January 1.

Delivery:

The delivery rate is what FortisBC charges to deliver natural gas service to customers. It enables the utility to recover costs and make investments in infrastructure, ensuring ongoing system integrity and reliability.

2017 is the final year of a three-year phased-in approach to a common delivery rate across the province. After that phase-in, customers will pay the same amount for natural gas no matter where they live, with the exception of Fort Nelson. This means that customers in the Mainland, Interior and Northern parts of our service territory will see a slight increase in the delivery rate on their bill January 1 while customers on Vancouver Island and in Whistler will see a decrease January 1.

Commodity charges

Commodity charges reflect the costs of buying and transporting gas on behalf of customers. FortisBC does not mark up these costs, customers pay what we pay. Two components make up customers’ commodity charges: the storage and transport rate and the cost of gas rate.

Storage and transport:

The storage and transport rate reflects what we pay to other companies to store and transport gas through their pipelines and infrastructure. FortisBC customers will see a decrease to their storage and transport rate January 1.

Cost of gas:

The cost of gas rate reflects the market price of natural gas itself. Natural gas is currently at some of its lowest commodity rates in the last 10 years. FortisBC reviews the cost of natural gas every three months with the BCUC. FortisBC customers will see no change to the cost of gas rate January 1, with the exception of those customers in Revelstoke.

Revelstoke customers receiving piped propane will see an increase to the cost of propane rate. The price of propane is influenced by the price of crude oil. Propane prices are higher due to stronger crude oil prices, increased propane exports and reduced storage levels.

Below are the residential customer rate changes for each region.* Rates will be effective January 1, 2017.

Region	Cost of gas rate	Delivery rates(s)	Storage and transport rate	Total bill change*
Lower Mainland, Fraser Valley, Interior, North and the Kootenays	No change	Increase of $0.281 per GJ	Decrease of $0.11per GJ	Increase of approximately $15 per year, or an increase of 2 per cent
Whistler	No change	Decrease of $1.515 per GJ	Decrease of $0.11 per GJ;	Decrease of approximately $163 per year or a decrease of 13 per cent
Vancouver Island, Sunshine Coast and Powell River	No change	Decrease of $0.766 per GJ;	Decrease of $0.11 per GJ	Decrease of approximately $44 per year or a decrease of 7 per cent
Revelstoke (propane)	Increase of $0.993 per GJ	Increase of $0.281 per GJ	Not applicable	Increase of approximately $64 per year or an increase of 9 per cent

* Based on average residential annual usage for each region.

Quote

"We recognize that customers expect us to keep rates as low as possible while providing safe, reliable service. Market conditions have allowed us to maintain our current natural gas commodity rates for most customers, which make up about one quarter of a customer's bill. Also, storage and transport rates are decreasing due to mitigation measures we’ve put in place."

- Diane Roy, vice president of regulatory affairs, FortisBC

Quick facts

• Natural gas is the number one heating choice in Canada.
• More than 50 per cent of the total amount of energy used in a home goes toward space heating.
• As other energy costs continue to rise, natural gas has remained the affordable option for a decade now.
• Space heating and water heating together represent about 78 per cent of home energy costs.
• With natural gas space heating systems up to 98 per cent efficient, natural gas is more affordable for space and water heating than other energy sources such as electricity.

BACKGROUNDER

Items on a customer’s bill:*

Basic charge

The basic charge is a flat daily fee that partially recovers the fixed costs of our system, whether or not you are using any natural gas, as long as you are connected to the system. The basic charge is reviewed by the BCUC annually.

Delivery charge

The delivery charge is based on consumption and pays for the cost of safely and reliably delivering gas through our system to your home or business. This helps cover the costs of maintaining our natural gas distribution system, earn a return on the amounts invested in our business and fund improvements to meet customers' needs. Delivery charges are reviewed by the BCUC annually.

Storage and transport

Storage and transport reflects the prices we pay to other companies to store and transport gas through their pipelines and infrastructure. We do not mark up these costs, and they are reviewed quarterly and set annually by the BCUC.

Cost of gas

Every three months, FortisBC reviews natural gas and propane cost of gas rates with the BCUC to make sure rates passed on to customers cover the cost of purchasing the gas on their behalf.

• Factors affecting the market price of natural gas and propane in North America include weather, supply and demand and economic conditions.
• Propane prices are also influenced by global oil markets.
• FortisBC does not mark up the cost of gas, customers pay what we pay.

Natural gas prices in British Columbia continue to remain near their lowest levels within the last decade.

• FortisBC does not mark up the cost of gas, so customers pay what we pay for the natural gas.
• Natural gas is traded in the North American marketplace as a commodity like oil, gold or lumber. Our commodity rates are reviewed every three months by the BCUC to ensure the rates we are charging appropriately cover the cost of natural gas we purchase on behalf of our customers.
• Factors affecting the market price of natural gas and propane in North America include weather, supply and demand and economic conditions.
• FortisBC does not profit from natural gas commodity charges; customers pay what FortisBC pays for the gas.
• Rates are reviewed each quarter based on a forecast of what our costs to purchase gas will be over the following 12 months, based on forward prices forecasted by the market.

Other charges and taxes

Other charges and taxes include the B.C. carbon tax, Clean Energy Levy, GST and, in some municipalities, the municipal operating fee. These charges are set by various levels of government and collected by FortisBC on their behalf. FortisBC does not gain revenue from these charges.

FortisBC works to minimize natural gas price fluctuations

FortisBC works to minimize price fluctuations and provide cost effective gas supply for our customers.

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 market sources
• Purchasing gas based on daily and monthly pricing structures
• Purchasing and injecting gas into storage during the summer, when prices are typically lower

This storage gas is later withdrawn for customer use during the heating season, when market prices are typically higher.

Helping customers conserve energy

FortisBC is committed to helping customers conserve energy and get the most out of their energy dollar by providing both financial incentives and advice on energy efficient technologies and practices.

Those curious about how their energy use may be affecting their natural gas bill can use the FortisBC energy calculator or to learn more about FortisBC’s natural gas rates.

Common rates

As of January 1, 2015, FortisBC does business as one company. Previously, we did business as separate utilities to deliver natural gas in the province. This meant that you paid different rates for your natural gas, depending on where you lived.

For example, customers living on Vancouver Island, the Sunshine Coast or in Powell River and Whistler paid more for their natural gas than customers living in the Lower Mainland or in the Interior. This was because the utilities that served them were smaller and operated under separate regulatory structures, which were in place when FortisBC originally purchased them.

By coming together as one company, and moving to one common rate, we have eliminated rate differences that exist across B.C. In 2015, we began phasing in common rates, which continued over the past two years and into 2017, ensuring all customers pay one common rate by 2018.

 

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