Bringing a common natural gas rate to Fort Nelson
FortisBC is applying to the British Columbia Utilities Commission (BCUC) to integrate natural gas rates for our Fort Nelson customers with our provincial natural gas customer base, so all customers pay the same rate for natural gas. This integration is revenue-neutral for FortisBC. On August 12, 2021, FortisBC filed the application with the BCUC. It is pending their review and approval.
What are the benefits of a common natural gas rate to Fort Nelson customers?
We’re actively upgrading our natural gas infrastructure in Fort Nelson to continue to deliver safe and reliable energy to our customers. Delivery rates for Fort Nelson customers have been increasing to cover the upgrade costs. As these upgrades continue, the costs are covered by approximately 2,400 customers in Fort Nelson. By merging Fort Nelson into our larger customer base, the cost of these upgrades will be spread out over a million customers.
Your questions answered
On April 27, 2021 we hosted a virtual town hall session to answer questions and gather feedback about the common rates application. We've included the Fort Nelson Common Rates Application presentation from the virtual town hall session, as well as answers to questions that we received, in the FAQ below.
Will storage and transport rates, and delivery rates remain unchanged for Fort Nelson customers?
We are applying to the regulator to move Fort Nelson customers to common rates with the rest of FEI’s service areas. Until we receive the British Columbia Utilities Commission’s ruling, we cannot confirm if the rates will remain unchanged or not.
Why are Fort Nelson customers paying the same rates as everyone else, when the natural gas comes from Fort Nelson?
Your natural gas bill includes a delivery component and a commodity component. The delivery portion of the natural gas bill is not influenced by Fort Nelson's proximity to natural gas production, it is instead related to FortisBC's recovery of the costs of our operations such as our distribution assets, labour, and facilities in Fort Nelson. This delivery portion of Fort Nelson customer rates has historically been more volatile compared to the larger FortisBC service area and has been steadily increasing in recent years due to the cost of infrastructure upgrades for safety and reliability purposes.
The benefit for Fort Nelson customers paying the same rates as everyone else will be the lessened future rate impact since the costs of these upgrades for safety and reliability purposes will be spread over all of FortisBC’s million plus customers instead of just Fort Nelson’s approximately 2,400 customers. We are exploring a number of common rates options and are looking at potential options which recognize the current differences in Fort Nelson’s commodity related charges. Additionally, and depending on the common rate option being considered, commercial customers may experience savings in their bills as a result of moving to common rates.
What are the benefits to Fort Nelson customers for having the same rates as all other FortisBC natural gas customers?
FortisBC is upgrading its natural gas infrastructure in Fort Nelson in order to continue to deliver safe and reliable energy to its customers. Rates for Fort Nelson customers have been steadily increasing to cover the cost of these upgrades. As these upgrades continue, the cost of these upgrades are currently covered by approximately 2,400 customers in Fort Nelson. By merging Fort Nelson into our larger rate base, the cost of these upgrades will be spread out over a million customers. By spreading the cost of future upgrades across a larger rate base, future rate increases may be lessened.
Will Fort Nelson customers be paying more overall?
While natural gas rates for Fort Nelson customers may increase in the immediate future, this decision will benefit customers in the long term.
This change will spread future costs of upgrading our natural gas infrastructure in Fort Nelson over the entire FortisBC natural gas customer base versus approximately 2,400 customers in Fort Nelson.
If this change were not made, Fort Nelson customers can be expected to see continual increases to rates over the next several years.
Is FortisBC planning more system improvements in the area?
There are several upgrades that our system in Fort Nelson requires over the coming years. That is why this common rates application makes sense, so Fort Nelson residents are not forced to bear the financial burden of these upgrades on their own.
With this proposed rate change, will FortisBC make more money?
The move to common rates is revenue-neutral for FortisBC.
While rate changes may be smoother - currently if we look at 2021 rates Fort Nelson is about 25 per cent less than the Mainland based on the same usage. What is planned that would bring that gap closer?
Currently, natural gas rates (including delivery, cost of gas, and storage & transport) for Fort Nelson residential customers are about 25 percent lower than the rest of FortisBC customers while small and large commercial customers’ rates are about two percent and seven percent lower than that of FortisBC customers. FortisBC is exploring a number of different common rates options in order to mitigate the difference in rates between Fort Nelson customers and the rest of FortisBC.
FortisBC is upgrading its natural gas infrastructure in Fort Nelson in order to continue to deliver safe and reliable energy to its customers. Rates for Fort Nelson customers have been steadily increasing to cover the cost of these upgrades. As these upgrades continue, the cost of these upgrades are currently covered by approximately 2,400 customers in Fort Nelson. By merging Fort Nelson into our larger rate base, the cost of these upgrades will be spread out over a million customers. By spreading the cost of future upgrades across a larger rate base, future rate impacts for Fort Nelson customers may be lessened.
If the application is approved, do customers need to do anything or will the change be reflected on their bills? Will bills look any different?
Fort Nelson customers won’t need to do anything differently. Everything will work the same way and bills will look the same. The only difference customers will see are different rates on the bill that aligns them with the rest of our customers.
Why is the delivery charge for business higher here than for other FortisBC customers? We are lateral from the plant.
Delivery charge is the portion of the natural gas bill where FortisBC recovers the costs of the natural gas system and our daily operations. It is set independently between the FortisBC service area and Fort Nelson service area, and the costs allocated to the commercial rate classes will depend on a number of factors such as demand, customer mix, and number of customers. Fort Nelson has a different customer mix between different rate classes than FortisBC and at the moment, no industrial customers, which could lead to Fort Nelson commercial rate classes having higher a delivery charge than other FortisBC commercial customers.
So to go to common rates we are looking at ~30 per cent increase for residential?
This will depend on the options of common rates for Fort Nelson. If common rates is for delivery charge only, the bill impact to residential customers is estimated to be around $100 per year but commercial customers will see savings in their bill ranging from around $300 to $2,000 per year, depending on the consumption level. If common rates is with all three components of the natural gas bill (i.e. delivery, cost of gas, and storage & transport), then the bill impact to residential customers is estimated to be around $280 per year.
I feel that my bill has been much larger than the forecasted $280/year increase - just for this past year. I am very concerned about the current costs this winter already. Can you elaborate more on why our FortisBC costs were so high?
Natural gas bills are correlated to how much energy you use. We do have programs in place to help our customers use less energy. We encourage our customers to visit our website to learn more about their energy efficiency and rebate options.
We are hearing about the possible advantages - what are the possible disadvantages? Will there be further public information sessions?
In the short term, Fort Nelson customers will see an increase to their gas bill due to aligning their rates with the rest of our customer base. However, the move to common rates is expected to benefit Fort Nelson customers in the long term.
If we receive more public inquiries and its clear that another information session is required, we will happily organize another one.
Does this add any benefits for any rebates or green house building upgrade?
This application is not related to rebates or building upgrades; however, we encourage our customers to visit our website to learn more about our energy efficiency and rebate programs.
Where does Fortis store the natural gas that Fort Nelson customers consume? How much does that cost Fortis?
Although the charge to Fort Nelson has the same name as the charge for FortisBC, which is “Storage and Transport” Charge, there is no physical storage of the natural gas that is supplied to Fort Nelson, and therefore, there are no storage costs charged to Fort Nelson customers. The “Storage and Transport” Charge for Fort Nelson customers only includes the costs of transportation, which is the cost to physically move the natural gas from the Fort Nelson plant to Fort Nelson. For 2020, the transportation costs for Fort Nelson are approximately $20,000.
Is there a program to help with high bills such as a payment plan?
Absolutely. Our customer contact centre is available to help our customers, and we’ll work with you to find a solution tailored to your needs. Our natural gas customers can call us at 1-888-224-2710 or email us at [email protected].
How does this work if the customer uses a different gas suppler?
FortisBC is the natural gas supplier for the region. Our customers do have the option of working with third-party natural gas marketers through our Customer Choice program. Whether you choose to purchase natural gas from an independent gas marketer or from FortisBC, we’ll continue to deliver the gas to your home through the pipelines we own and operate. We also read natural gas meters and provide 24-hour emergency service for all natural gas customers.