Northwest B.C. natural gas rates to drop April 1

But Terrace and area gas customers will still be paying some of the highest overall rates in the province

The area’s natural gas supplier is lowering its rates as of April 1 based on the continuing fall in the price of the commodity.

Pacific Northern Gas’s (PNG) reduction from $4.378 a gigajoule to $3.209 a gigajoule works out to nearly 27 per cent.

The utility will also end charging customers a separate amount that was placed in a special account meant to balance over time what the utility was paying for gas and what it actually cost.

Gas costs have been less than what the utility has estimated, meaning it will now start repaying customers out of that account in what will be an additional rate reduction, PNG official Verlon Otto said March 19.

All told, PNG says its new commodity rate, after receiving approval from the regulator BC Utilities Commission March 19, will be 34 per cent less on April 1 then it is now.

“Like other utilities, we look at the forward price for gas and it’s below our projections,” said Otto of the lower rates. “The price is a matter of supply and demand on the world market and right now, there’s a glut. There’s been a lot of media about oil and this is simply the same, there’s a glut of gas.”

“For the consumer, this is good news,” Otto added of the new rates.

He noted that the pricing situation is a lot different than even five years ago when the cost of a gigajoule of gas was more than $10.

PNG is a gas delivery utility and earns its income from delivering gas, not selling it. As a delivery utility, it is not permitted to mark up the price of gas it purchases and then provides to customers.

Provided a house uses 72 gigajoules of natural gas a year, which is the average consumption PNG uses in its calculations, its occupants will save $114.85 a year.

Even with the price of gas dropping, however, northwestern gas customers will still be paying some of the highest overall rates in the province.

That’s because residential, commercial and other northwestern gas users began shouldering more of the burden of paying to maintain PNG’s gas line through the area after large industrial gas users began closing down over the past two decades.

Without the income from those large users, including one pulp mill in Prince Rupert and another in Kitimat, rates to maintain the line for remaining users began to climb.

PNG’s northwest residential customers, for example, pay a delivery charge of $11.867 a gigajoule compared to Vancouver customers of Fortis, a large gas utility, who pay a combined delivery and storage rate of just $4.881 a gigajoule, approximately one-third of the rate paid in the northwest.

When all of PNG’s commodity and delivery rates are calculated, residential customers will pay $18.628 a gigajoule as of April 1.

That’s a reduction of 7.9 per cent from what the  total gigajoule cost is now.

The total rate includes the provincial government’s carbon tax of $1.49 a gigajoule.

For an average residential user, that tax amounts to $107.27 a year.

The one hope for lower northwestern PNG rates rests with a plan by its parent, AltaGas of Calgary, to pump gas through its northwest line for a small liquefied natural gas plant at Kitimat.

AltaGas is a partner in this project which would see gas liquefied on a barge for export.

Income from pumping gas through the PNG line would then go to maintaining the line and bring lower rates for existing PNG customers.