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Union Gas customers in Ontario could see $200 a year increase on bills

BY LINDSAY BRISCOE

After record cold temperatures and snow swept the country this winter, Union Gas Limited has applied to increase natural gas prices for customers across Ontario.

“Colder than normal temperatures were experienced early in the winter and are currently forecast to continue through April, “reads the Union Gas application for a price adjustment to the Ontario Energy Board (OEB), dated March 6. “Union experienced weather that was 15.5 %, 16.5 % and 18.4% colder than normal in November, December and January, respectively. The combined actual and forecast weather for February was 25.1% colder…”

At the time the application was written, Union Gas said temperatures for March were expected to be 23.7 per cent colder than normal.

“The impact of extremely colder than normal weather on customer demand and on natural gas prices resulted in higher prices for Union’s planned purchases of approximately $76 million, and in higher prices for spot purchases made to meet higher customer consumption levels of approximately $58 million.”

Under the Quarterly Rate Adjustment Mechanism (QRAM), natural gas utilities in Ontario can apply to the OEB every three months for an adjustment to the price at which they sell natural gas to their customers.

“New prices are based on a forecast of market prices over the next 12 months and take effect January 1, April 1, July 1, and October 1,” explains a video on the OEB website. “Your utility purchases your gas supply in a competitive market and passes that cost onto you with no mark-up. Gas prices change all the time in the open market. The QRAM Adjustment every three months ensures the prices you’re charged reflect as closely as possible the true costs of supplying your natural gas. The regular adjustments also allow you to pay a stable price for natural gas throughout the year rather than phasing frequently changing market prices.”

If the OEB approves the application, Union Gas Ontario North customers will pay about $190 more over a 12-month period, while Union Gas Ontario South customers will pay about $200 more over a 12-month period.

In January 2014, the OEB approved an increase to Union Gas’ gas commodity and delivery rates, and a decrease to the gas price adjustment, transportation price adjustment, storage price adjustment, and delivery price adjustment rates. These changes worked out to a total annual bill decrease of $9.16 for a typical northwestern Ontario customer.

Enbridge Gas Distribution Inc. has also applied to the OEB for a rate increase of nearly 40 per cent for Ontario customers, which would work out to an increase of about $400 over a 12-month period.

Ontario’s Energy Minister, Bob Chiarelli, has told press the province doesn’t plan to get involved in the OEB decision on whether or not to accept the proposed price increases. If approved, the new rates should come into effect April 1.

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