Who supplies your residential natural gas service?
Natural gas utility companies provide a service that combines the purchase of natural gas on your behalf and its delivery to your home through the pipeline system. In some cases, the same company provides both the purchase of natural gas and the delivery of that gas; in other cases, it is two separate companies – a gas supplier and a pipeline owner. Energy costs and delivery costs may be billed by separate entities.
In Alberta, natural gas service may be provided by:
- Investor-owned gas utility companies regulated by the Alberta Utilities Commission (AUC). For example, ATCO Gas North, ATCO Gas South, AltaGas Utilities. As of June 2004, consumers served by ATCO received their AUC-regulated gas supply service and billing from Direct Energy Regulated Services.
- Municipally owned gas utilities owned and regulated by a municipality. For example, the City of Medicine Hat; the county of Smoky Lake; the town of High Prairie; or village of Boyle.
- Rural gas co-operatives owned by the members they serve and regulated by the elected co-op board members. For example, Ankerton Gas Co-op Ltd. and Little Bow Gas Co-op Ltd.
- Competitive retailers offering natural gas contracts. Service Alberta licenses retailers under the Fair Trading Act. The terms and conditions of the sale are set in the contract. If you purchase gas from a competitive retailer, the gas is still delivered by the gas distribution company who owns the pipeline system that delivers the natural gas to your house. Examples of competitive retailers are ENMAX Energy Corp. , Direct Energy and Just Energy Alberta.
What are the components of a typical residential Alberta natural gas bill?
Meters record how much natural gas you used during the billing period and are read at regular intervals, usually every second month. For the months that your meter is not read, monthly consumption is estimated. The government does not require gas companies to base their bills strictly on meter reads. Estimates are allowed, provided they are reconciled to actual consumption as soon as possible. Your bill will state whether the current charges are based on an estimate of your consumption or an actual meter reading.
This is the cost of natural gas consumed during the billing period, typically expressed in dollars per gigajoule ($/GJ). Since 1986, wholesale prices for natural gas in Alberta have been set in the North American marketplace by market forces, not the government. Differences can occur between the rates set by regulators, reflecting variations in transportation costs, gas management costs, storage, and other factors.
- Investor-Owned Gas Company
The Gas Cost Recovery Rate (GCRR) or Gas Cost Flow-Through Rate (GCFR) is a flow-through rate designed to represent the projected monthly market cost of natural gas. The GCRR or GCFR is the forecast of what the regulated cost of gas is expected to be for a month. To ensure only the actual cost of the gas is being passed on to the consumers, the GCRR or GCFR also includes any true-up of actual costs compared to forecast costs for the previous two months.
- Municipally-Owned Gas Utility
You should contact your municipal utility directly to determine how the energy charge is set.
- Rural Gas Co-Operative
Most gas co-operatives acquire their natural gas supply from Gas Alberta Inc., a brokerage operation owned by the co-ops. To determine how the energy charge is set, contact your gas co-op directly.
- Competitive Retailer
Competitive retailers offer contracts with a variety of terms, typically at fixed prices. Fixed prices make budgeting easier and provide certainty with regard to prices.
- Administration Charge
This charge may be broken out on bills. It is intended to cover the provider’s costs for billing, customer services, call centre and other administrative services.
- Municipal Franchise Fee
The gas company, on behalf of local government, collects this fee to access municipal land to construct, maintain and operate distribution systems serving the residents of the city, town, or village. The local government council establishes the rate. In some cases, the Municipal Franchise Fee is calculated as a percentage of the utility's energy and delivery charges, resulting in a corresponding adjustment in the fee when the gas prices change. In other cases, the fee is based only upon delivery costs and is therefore not subject to gas market price fluctuations. The authorization for such fees falls under the Municipal Government Act.
- Goods and Services Tax (GST)
The five per cent federal GST calculation is based on the total cost on your bill.
These charges are the regulated cost of transporting natural gas to consumers. Consumers have always paid for the costs of receiving natural gas from the distribution system. These systems are fully regulated by their regulator, which approves their tariffs. Some rural gas co-operatives and municipally owned gas utilities combine the delivery charges with the energy charges in their bills.
More detailed delivery charges may be shown on your bill as:
- Fixed Delivery Charge
This delivery charge covers the cost of building and maintaining the distribution system to deliver natural gas to consumers. It is not based on consumption and is typically charged at a fixed monthly rate.
- Variable Delivery Charge
This delivery charge covers the cost for the operation of the distribution system, and is based on the amount of energy consumed.
A rider is a temporary credit or charge approved by the regulator of the gas company. Riders occur when the actual costs incurred by a gas company to provide natural gas service to their customers differ from the rates approved by their regulator. Energy rate riders are associated with the cost of the actual energy, and delivery rate riders are associated with distribution costs.