High supply and mild winter results in lowest natural gas rates of the past decade
SURREY, BC, March 17, 2015 /CNW/ - FortisBC has received approval from the BC Utilities Commission (BCUC) to decrease the natural gas commodity rates for all customers starting April 1. Piped propane customers in Revelstoke will also see a decrease in their commodity rate.
"Compared to a year ago, natural gas prices are lower coming out of this past winter due to reduced overall demand for natural gas to heat homes and generate power," said Cynthia Des Brisay, Vice President of Energy Supply and Resource Development. "At the same time, supplies of natural gas have increased, allowing storage levels to return to normal levels. This combination of factors is leading to the lowest commodity rate our customers have seen in the past decade."
"Oil prices have declined as well, driven by increased North American oil supplies and reduced international demand," Des Brisay added. "This drop in oil prices has helped to lower propane prices, benefitting our propane customers."
All natural gas and propane customers will see decreases to their bills as follows effective April 1, 2015:
- Residential customers will see a decrease to the commodity rate of $1.295 per gigajoule (GJ), meaning the commodity rate will change from $3.781 to $2.486. This results in a decrease of approximately:
- $117 per year for an average residential customer in Lower Mainland, Fraser Valley, Interior, North, Whistler and the Kootenays using approximately 90 GJ.
- $58 per year for an average residential customer in the Vancouver Island, Sunshine Coast and Powell River service area using approximately 45 GJ.
- Customer Choice program participants will not be affected by changes to the commodity rate.
- Residential customers will see a decrease to the commodity component of rates of $1.68 per GJ, meaning the commodity component will change from $4.259 to $2.579. The average residential customer using approximately 140 GJ of natural gas per year will see a decrease of approximately $235.
- Residential customers receiving piped propane will see a commodity rate decrease of $4.513 per GJ meaning the commodity rate will change from $15.347 to $10.834. The average residential customer using approximately 50 GJ per year of piped propane will see a decrease of approximately $226 per year.
Every three months, FortisBC reviews natural gas and propane commodity rates with the BCUC in order 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.
In January, FortisBC introduced a three-year phased-in approach to common natural gas delivery rates across the province, meaning a majority of customers will pay the same for natural gas no matter where they live.
For more information about FortisBC and rates, visit www.fortisbc.com/rates.
FortisBC is a regulated utility focused on providing safe and reliable energy, including natural gas, electricity and propane. FortisBC employs more than 2,200 British Columbians and serves approximately 1.1 million customers in 135 B.C. communities. FortisBC owns and operates two liquefied natural gas storage facilities and four regulated hydroelectric generating plants, approximately 7,150 kilometres of transmission and distribution power lines, and approximately 46,000 kilometres of natural gas transmission and distribution pipelines. FortisBC Inc. and FortisBC Energy Inc. do business as FortisBC. FortisBC is indirectly, wholly owned by Fortis Inc., a leader in the North American electric and gas utility business. Fortis Inc. shares are listed on the Toronto Stock Exchange and trade under the symbol FTS. Additional information can be accessed at www.fortisinc.com or www.sedar.com.
Backgrounder on Natural Gas Commodity Rates
Natural gas is a commodity traded in the North American marketplace, like oil, gold or lumber. Through our commodity rates, we pass on the price of natural gas to our customers without markup; they pay what we pay.
- Weather, Gulf of Mexico hurricanes, natural gas competitiveness with other forms of energy such as coal, economic conditions, and supply and demand are all factors that can impact commodity rates.
- FortisBC does not profit on natural gas commodity charges; the price FortisBC pays for the commodity (the gas itself) is a flow through cost.
- Flow through means that FortisBC purchases natural gas on behalf of its customers and passes the costs through to customers without markup. Customers pay what FortisBC pays for the gas itself.
- Our return is included in our delivery rates, which reflects the cost to deliver natural gas through our pipeline system to homes and businesses.
- Commodity rates are reviewed and approved each quarter by the BC Utilities Commission and are based on a forecast of what our costs to purchase gas will be over the next 12 to 24 months, based on forward prices set by the market.
Below is a sampling of historic FortisBC natural gas commodity rates for the Lower Mainland, Fraser Valley, Interior, North and the Kootenays as of April 1 for each noted year:
2005: $7 per gigajoule
2007: $7.66 per gigajoule
2009: $5.96 per gigajoule
2011: $4.57 per gigajoule
2013: $2.98 per gigajoule
2015: $2.49 per gigajoule
For further information: MEDIA CONTACT: Michael Allison, Corporate Communications Advisor, FortisBC, Phone: 604-592-7536, fortisbc.com, twitter.com/fortisBC, youtube.com/fortisBC