Canadian Manufacturing

Enbridge applies for major natural gas rate hike in Ontario

Distributor looking for nearly 40 per cent hike in energy rates it charges customers in province

OTTAWA—Enbridge Gas Distribution Inc. has applied to Ontario regulators for a nearly 40 per cent hike in the energy rates it charges customers.

The move comes just one month after predicting that its massive storage capacity should mute any price increase.

But it has been so cold, for such an extended period, that the utility says it was forced to buy more natural gas—at a much higher cost—than expected.

“For a customer that does burn 3,000 cubic metres of gas a year, the increase for them is going to be in the order of $400,” said Enbridge Gas Distribution’s energy supply and policy director Jamie LeBlanc.

Normally, such a household would typically pay roughly $1,000 annually for natural gas.

If approved by the Ontario Energy Board (OEB), the rate increase would take effect April 1.

But once taxes are added, the price increase is closer to 50 per cent, says former Liberal MP and energy market watcher Dan McTeague, who advocates capping taxes on home-heating fuels.

“My estimate is that, within a year … the federal government will have probably pocketed an additional half billion dollars from the misery of Canadians trying to keep themselves warm,” he said.

“And that to me is outrageous.”

Other gas utilities in central Canada are expected to follow suit.

Union Gas Ltd. said it had also applied for rate increases.

For its southern Ontario customers the requested hike would amount to an additional $17 per month on gas bills, or about $200 annually, said company spokesperson Carrie Dudley-Tatsu.

Union’s northern and eastern Ontario customers could see their bills increase by around $190 over a 12-month period, with the utility requesting a rate of 20 cents per cubic metre.

Dudley-Tatsu noted, however, that rates are still lower than those seen a decade ago.

Utilities were charging customers in the range of 27 cents per cubic metre for natural gas in April 2004.

Households heating with propane and oil have already experienced a price shock this winter.

Propane customers in eastern Ontario and western Quebec saw their home heating bills nearly double in January and February compared with what they were paying in November.

Even those with fixed-price contracts have seen their bills go up because they’ve been using more energy.

Natural-gas prices in Ontario are set every three months, and Enbridge said it doesn’t expect prices to remain high.

“We don’t believe that this is a long-term natural gas event,” said LeBlanc.

“A typical winter we wouldn’t see this type of pricing.”

But that’s cold comfort for people on fixed incomes, such as seniors, who have had to absorb the energy price increases by spending less on other necessities including food, as well as cutting back on non-essential purchases.

“People are suffering,” said McTeague.

Enbridge and other utilities have energy assistance programs available for low-income households, as well as payment plans to spread out the cost of heating over a longer period of time.

They also offer tips for conserving energy by turning down thermostats, reducing hot water use and, as a longer-term solution, retrofitting homes for better efficiency.

Earlier this week, a preliminary report to the federal ministers of natural resources and industry predicted that a propane shortage that hit Ontario and Quebec would continue until temperatures warm up.

“Given current production, storage, transportation and export trends, tight supply and high prices are expected to continue for the remainder of the high-demand winter season,” said the report.

“Consumers of propane, including households that cannot easily switch to other fuels, will continue to be significantly impacted.”

The federal government asked the National Energy Board (NEB) and Competition Bureau to review the propane market after supplies dried up and prices skyrocketed.

The report said there were four main factors for the shortage: a colder-than-normal winter across eastern Canada and the United States; exceptional use of propane to dry wet crops in the U.S. midwest; an already-low inventory before the peak winter season; and “rapidly growing” U.S. propane exports to overseas markets.

But it offered no recommendations on how to mitigate shortages and energy price shocks in the future.

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