Terasen Gas receives BCUC approval to lower natural gas commodity rates

Terasen Gas has received approval from the B.C. Utilities Commission (BCUC) to lower natural gas commodity rates for the majority of customers in B.C. The rate decreases will take effect October 1, 2008.

“In response to changing market prices since our rate filings with the BCUC last week, we have updated our applications, requesting lower commodity rates for our customers,” said Cynthia Des Brisay, Terasen Gas Vice President, Gas Supply and Transmission. “As a result of this additional information, the BCUC approved our request for larger commodity rate reductions than those outlined in our original filings.”

“We are pleased to offer these rates at a time of year when cooler weather approaches and consumers’ energy needs generally increase,” said Des Brisay.

In the Lower Mainland, Fraser Valley, Interior, North and the Kootenays the decrease is $2.24 per gigajoule (GJ) and works out to an annual savings of about 15 per cent or between approximately $213 and $247 per year, depending on consumption. The cost of gas decrease to $7.54 per gigajoule will not affect the commodity rate for customers participating in the Customer Choice program.

In the Fort Nelson area, the decrease is $2.07 per gigajoule, and works out to a savings of approximately 17 per cent, or $332 on the total annual gas bill, based on an average annual consumption of 160 GJ per year.

Changes do not apply to customers on Vancouver Island, the Sunshine Coast and Powell River, since they are covered by different regulatory agreements. Propane rates for Whistler and Revelstoke are also unaffected.

Terasen Gas purchases natural gas on behalf of its customers and passes the cost on without mark-up. Natural gas is a commodity traded on the open market like oil, gold or lumber. Its price is affected by weather, supply and demand, international events and market speculation.

Favourable North American market conditions, including strong production levels in the US, a cooler summer across most of the continent and a hurricane season that has not resulted in significant gas production disruptions to date have enabled storage balances to rebound and prices to fall from the highs of early July.

Terasen Gas uses several tactics and strategies to ensure a reliable supply of natural gas at a reasonable price for our customers including:

– purchasing gas from a variety of sources;
– locking in the price of gas through the use of futures contracts;
– placing gas in storage during the summer for use at a later date when the demand and price are typically higher, and
– purchasing a portion of the supply from the spot market.

“We encourage customers to use energy wisely all year round and currently have an application before the BCUC to expand our programs aimed at helping customers save energy and money, while reducing greenhouse gas emissions,” said Des Brisay.

The cost of the natural gas or propane commodity accounts for the majority of the typical residential bill. The delivery charges, which account for the remaining portion, have remained relatively flat over the past six years.

Terasen Gas earnings come from the delivery charges – what the company charges to bring the natural gas or propane to a home or business. Delivery rates are reviewed by the BCUC once a year in December with any changes coming into effect the following January. Every three months, Terasen Gas reviews natural gas and propane commodity prices with the BCUC in order to ensure the flow-through rates customers are charged are sufficient to cover the cost of purchasing the gas.

Natural gas is competitive with electricity and remains the best energy source for space and water heating and overall home comfort.

Terasen Gas delivers natural gas and propane through three companies that make up the Terasen Gas group: Terasen Gas Inc., Terasen Gas (Vancouver Island) Inc. and Terasen Gas (Whistler) Inc. The companies share common Terasen Inc. ownership and are indirect wholly owned subsidiaries of Fortis Inc. Fortis Inc., the largest investor-owned distribution utility in Canada, serves two million gas and electric customers and has more than $10 billion of assets. Its regulated holdings include Terasen Gas and electric utilities in five Canadian provinces and three Caribbean countries. Fortis Inc. owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns hotels and commercial real estate in Canada. Fortis Inc. shares are listed on the Toronto Stock Exchange and trade under the symbol FTS. Additional information can be accessed at http://www.fortisinc.com/ or http://www.sedar.com/.