Terasen Gas applies for increases in natural gas and propane commodity rates

    SURREY, BC, March 11 /CNW/ - Terasen Gas has now filed several
applications with the BC Utilities Commission (BCUC) requesting increases in
the commodity rates it charges customers for natural gas and propane. If
approved, the increases will take effect April 1, 2008.
    Terasen Gas purchases natural gas and propane on behalf of its customers
and passes its cost on without mark-up. Natural gas and propane are
commodities and traded on the open market like oil, coffee or lumber. Factors
affecting the price of natural gas include weather, supply and demand,
international events and market speculation.
    "The price of natural gas has increased since October when we were able
to offer customers a rate decrease during the cooler, winter months," said Jan
Marston, vice president gas supply and transmission. "There are two main
supply constraints impacting the price of natural gas. The first is the colder
than average winter in the east which has resulted in a larger than
anticipated drawdown of storage inventories. As well, the volume of liquefied
natural gas to be imported to North America is below original market
    "Our purchasing and hedging strategies have allowed us to soften the
increase we have to pass on to our customers. In fact, this is the first
increase in the natural gas commodity rate since January 2006," said Marston.
    Terasen Gas uses several tactics and strategies to ensure a reliable
supply of gas at a reasonable price for customers including:

    -   purchasing gas from a variety of sources
    -   locking in the price of gas through the use of futures contracts
    -   placing gas in storage when the price is lower for use at a later
        date when the demand and price are higher
    -   purchasing a portion of the supply from the spot market

    The proposed increase means a typical residential customer in the Lower
Mainland, Fraser Valley, Interior, North and the Kootenays could see their
total annual bill rise by approximately 11 per cent, or $127 to $147 per year
depending on consumption levels. This proposed Cost of Gas increase to
$8.29 per GJ will not impact the commodity rates for those customers
participating in the Customer Choice program.
    Vancouver Island, the Sunshine Coast, and Powell River are covered by a
separate regulatory agreement that includes a rate structure different from
the one that applies to other BC communities served by Terasen Gas. Customers
in this region could see their total annual bills increase by approximately
3.5 per cent, or $33 per year depending on consumption levels.
    If approved, total annual bills for Fort Nelson customers could increase
by 17 per cent or $240 per year depending on consumption levels.
    "Over the past year, propane prices have been following the steep rise in
crude oil. We've worked to mitigate the volatility for propane customers who
could see their total annual bills increase by approximately 7 per cent or
$124 in Revelstoke depending on consumption while total annual bills for
customers in Whistler could increase by approximately 5 per cent or $105 per
year," said Marston.
    The cost of the natural gas or propane commodity accounts for the
majority of the typical residential gas bill. The delivery charges which
account for the remaining portion have remained relatively flat over the past
six years.
    Terasen Gas earnings come from the delivery charges - what the company
charges to bring the natural gas to a home or business. Delivery rates are
reviewed by the BCUC once a year in December with any changes coming into
effect the following January. Every three months, Terasen Gas reviews natural
gas and propane commodity prices with the BCUC in order to ensure the
flow-through rates customers are charged are sufficient to cover the cost of
purchasing the gas.

    Terasen Gas is mainly composed of the operations of Terasen Gas Inc. and
Terasen Gas (Vancouver Island) Inc., both indirect wholly owned subsidiaries
of Fortis Inc. Fortis Inc., the largest investor-owned distribution utility in
Canada, serves two million gas and electric customers and has more than
$10 billion of assets. Its regulated holdings include Terasen Gas and electric
utilities in five Canadian provinces and three Caribbean countries. Fortis
Inc. owns non-regulated hydroelectric generation assets across Canada and in
Belize and upper New York State. It also owns hotels and commercial real
estate in Canada. 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.

For further information:

For further information: Media contact: Joyce Wagenaar, Corporate
Communications Manager, (604) 592-7682, joyce.wagenaar@terasengas.com

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