NORTHWESTERN B.C. natural gas rates are on the rise.

NORTHWESTERN B.C. natural gas rates are on the rise.

Northwestern B.C. natural gas rates on the rise

Cost of delivering gas is the reason for the rate increase

  • Oct. 14, 2016 5:00 a.m.

Pacific Northern Gas (PNG) has received approval to raise what it charges for delivering natural gas to residential customers by 4.4 per cent for this year and by a further 3.2 per cent next year.

The regional utility had already received approval as of Jan. 1 for an interim rate hike until its regulator, the BC Utilities Commission, set final rates last month which became effective Oct. 1.

Information filed by PNG indicates this year’s increase works out to $35 per year for a typical residential customer consuming 67.5 gigajoules of gas and will mean a further $27 in 2017.

The utilities commission approved the increases based on PNG’s rising costs to deliver the commodity.

As it is, northwestern natural gas consumers pay nearly three times what natural gas consumers do elsewhere in the province to have the fuel delivered to homes and businesses.

That’s because PNG no longer has any large-scale customers needing capacity within its 10-inch-around pipeline serving the northwest.

Without those large-scale customers, residents and smaller businesses and enterprises have to shoulder the entire burden of maintaining the line.

But what PNG customers won’t have to pay more for yet is the price of natural gas itself. The utility buys gas on behalf of its customers and cannot add an additional charge to its customers.

But once its rates are set, it has the ability on a regular basis later on to charge more if the price has increased in the meantime to make up for any gap or they can credit back a portion of what it has collected should the price have dropped.

That’s done under the watchful eye of the utilities commission and this fall there hasn’t been enough of a natural gas price variance to trigger a change, says PNG official Verlon Otto.

PNG applies for rates based on 12 month periods and prices are expected to continue to be low over that time period, he said.

But while PNG’s customers here have avoided an increase in the price of natural gas, that isn’t the case with customers of FortisBC, the large natural gas utility on the lower mainland. As of Oct. 1, it raised its natural gas charge by 90 cents a gigajoule or 80 per cent.

That’s because Fortis calculates its rates on a 24-month basis and not the 12-month period used by PNG.

“Market forecasts suggest prices will increase more over the next 24 months than over the next 12, and this fact was the primary trigger for FortisBC to have a rate increase and not PNG,” said Otto.