Overview
Natural gas delivery charges include consumption components (transmission and distribution) and non-energy components (local access fees).
- Transmission charges cover the cost of moving natural gas from sources of production to distribution companies and gas co-ops to supply to end-use customers.
- Distribution charges have fixed and variable components and cover the cost of delivering natural gas to customers.
Rate riders associated with distribution and transmission charges are included in the monthly energy delivery charges. Rate riders are used to reconcile previously forecasted costs that were incorporated with rates with the actual costs of operation. Rate riders may be credits or additional charges depending on if actuals were lower or higher than forecasted.
Transmission Charges
Transmission rates are set from the value of operating the assets required to deliver natural gas from producers to distribution utilities. The value of the physical assets of the two regulated natural gas transmission companies (ATCO Pipelines and NOVA Gas Transmission Ltd.) are combined into a single rate and service structure. ATCO Pipeline’s revenue requirements are approved by the Alberta Utilities Commission, whereas NOVA Gas Ltd.’s rates are approved monthly by the Canadian Energy Regulator.
The transmission charge on a natural gas bill is based on the customer’s natural gas consumption (GJ). As shown in the transmission charges graph (Figure 1), Alberta has seen an increase in transmission charges for small business customers. Around 2016, the transmission charge for ATCO North and South converged into a single rate for customers with similar consumption profiles and is approximately 30% greater than Apex Utilities Inc.
For small business customers, their consumption profile ranges from 15 GJs in the summer months to 115 GJs in the winter months. In 2023, the average small business customer paid $43.82 per month in Apex Utilities Inc.’s service area and $61.04 per month in ATCO North and South’s service areas.
Figure 1.
Source: Compiled by the Office of the Utilities Consumer Advocate based on data from ATCO Gas and Apex Utilities.
Distribution Charges
The distribution charges include the variable energy charge ($/GJ) and fixed delivery charge ($/day).
As shown in the distribution charges graph (Figure 2), distribution costs have increased for small business customers, but at a lower rate than transmission charges. In 2023, the monthly distribution charges paid by the average small business customer ranged from $94.24 in the ATCO South service area to $200.64 in Apex Utilities Inc.’s service area.
Figure 2.
Source: Compiled by the Office of the Utilities Consumer Advocate based on data from ATCO Gas and Apex Utilities.