Cost of gas rate changes due to volatile natural gas market

Jul 17, 2020

Total bill impact for majority of FortisBC customers estimated to be six dollars per month

SURREY, B.C., July 17, 2020 – FortisBC Energy Inc. (“FortisBC”) has received regulatory approval from the British Columbia Utilities Commission (BCUC) to modify the cost of natural gas rate for the majority of its customers beginning August 1. The cost of natural gas is only one component of the overall FortisBC natural gas bill and the next scheduled review is October 1.

“We strive to provide a safe and reliable supply of natural gas at the lowest reasonable cost,” said Diane Roy, vice-president of regulatory affairs. “Even with the current cost of gas increase, natural gas prices in British Columbia remain among their lowest levels in almost 15 years.”

For residential natural gas customers except those in Fort Nelson, monthly bills will increase by approximately six dollars per month, or nine per cent. This is based on an average household consumption of eight gigajoules (GJ) of natural gas per month.

As an energy solutions provider regulated by the BCUC, FortisBC reviews the costs of natural gas and propane rates with the BCUC to make sure the rates passed on to customers are fair. FortisBC acquires natural gas and propane at market-based prices and factors like supply and demand and economic conditions affect the price of natural gas and propane in North America. Recently, the price of natural gas has risen due to a drop in North American natural gas production as well as the worldwide impacts of the COVID-19 pandemic.

This rate change follows an earlier application to the BCUC which approved a one month delay to changing the cost of gas rate to allow the economic recovery of the province to advance further. The rate change is to the cost of gas component only and not to other line items on customers’ bills. FortisBC does not mark up the cost of natural gas or propane; the cost that FortisBC pays is what is passed on to its customers.

As of August 1, 2020:

Mainland and Vancouver Island (including North and South Interior)

• For all customers, the cost of natural gas will change by $0.730 from $1.549/GJ to $2.279/GJ.

Fort Nelson

• For all customers, the cost of natural gas will change by $0.647 from $1.048/GJ to $1.695/GJ.

Revelstoke

• For residential customers, the cost of propane will change by $0.542 from $11.180/GJ to $11.722/GJ.

For more information about rates, and what components make up a natural gas or propane bill, visit: fortisbc.com/rates.

BACKGROUNDER

Historical data for Mainland & Vancouver Island (including North and South interior)

Rates at a glance

Below are the rate changes for each region effective August 1, 2020.

Items on a residential customer’s bill

Daily or monthly basic charge
The basic charge is a flat fee that partially recovers the fixed costs of our system, whether or not you are using any natural gas, as long as you are connected to the system. The basic charge is reviewed by the British Columbia Utilities Commission (BCUC) annually.

Effective August 1, 2020, FortisBC received approval from the BCUC to implement a Clean Growth Innovation Fund. This fund will be reflected in the daily or monthly fixed basic charges on customers’ bills (depending on the applicable rate schedule 1 to 27), which will have an overall impact of approximately five dollars per year per customer.

Delivery charge
The delivery charge is based on consumption and pays for the cost of safely and reliably delivering natural gas through our system to your home or business. This helps cover the costs of maintaining our natural gas distribution system, earn a return on the amounts invested in our business and fund improvements to meet customers' needs. Delivery charges are reviewed by the BCUC annually.

Storage and transport
Storage and transport reflects the prices we pay to other companies to store and transport natural gas through their infrastructure. We do not mark up these costs, and they are reviewed quarterly and set annually by the BCUC.

Cost of gas
Every three months, FortisBC reviews the cost of natural gas and propane rates with the BCUC to make sure rates passed on to customers cover the cost of purchasing the natural gas and propane on their behalf.

• Factors affecting the market price of natural gas and propane in North America include weather, supply and demand and economic conditions.
• Propane prices are also influenced by global oil markets.
• FortisBC does not mark up the cost of natural gas or propane. Customers pay what we pay.

Other charges and taxes
Other charges and taxes include the B.C. carbon tax, Clean Energy Levy, goods and services tax (GST) and, in some municipalities, a municipal operating fee. These charges are set by various levels of government and collected by FortisBC on their behalf. FortisBC does not gain revenue from these charges.

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