natural gas

You may want to scale back that Canada Day barbecue you were planning. Starting July 1, the price of natural gas in Ontario could jump as much as 23 per cent.

On June 16, the province’s regulator for electricity and natural gas, the Ontario Energy Board (OEB), approved Enbridge Gas Inc.’s application for a price increase. The natural gas distribution company said that the ongoing Russian conflict paired with strong domestic demand and increased global demand for U.S. liquefied natural gas exports has resulted in historically high natural gas market prices. North American production hasn’t been able to keep up with demand as natural gas storage levels currently sit below the five-year average.

All of Ontario’s Enbridge Gas customers and Union Gas customers—which amalgamated with Enbridge in January 2019—will be affected by the price increase; a total of 3.8 million. Customers should expect to see the increase reflected in their next billing cycle following July 1. How much a customer’s bill will increase depends on the amount of natural gas they use and which rate zone they fall under.

Enbridge customers are broken up into four rate zones: Enbridge Gas Distribution, which includes the Greater Toronto Area, Niagara, and Ottawa; Union South, which stretches from Windsor to Mississauga and Mississauga to Orillia; Union North West, which includes Kapuskasing to Kenora; and Union North East, which stretches from Orillia to Kapuskasing, North Bay to Sault Ste. Marie, and Port Hope to Cornwall.

Photo Courtesy of Enbridge Gas Inc.

Based on the average annual consumption of 2,200 cubic metres to 2,400 cubic metres of natural gas, the rate zones will see between an 18 to 23 per cent jump in prices. At that level of consumption, Enbridge Gas Distribution customers should expect an annual bill increase of $247.53, Union South $251.81, Union North West $239.99, and Union North East $244.25.

These prices would have been higher but the OEB approved a rate mitigation plan proposed by Enbridge. The company is using a 24-month period to pass the increased cost of natural gas on to customers, as opposed to the usual 12-month period. This will temporarily shield Enbridge customers from the full impact of the skyrocketing market prices, keeping bill increases to about $5 a month over the July 1 through September 31 adjustment period, says Andrea Stass, a spokesperson for Enbridge, in an email.

Without the rate mitigation plan, a customer’s annual natural gas bill would have jumped between 21 to 29 per cent, an increase of $270 to $315, depending on the rate zone, says the OEB.

With OEB review and approval, Enbridge adjusts the cost of its natural gas every three months to reflect market prices. The next adjustment is in October, but don’t expect a sudden decrease in your bill. Stass says Enbridge anticipates high natural gas market prices to continue for some time.

Cottagers who rely on a furnace for warmth should prepare for a heating bill hike this winter. While many people have been watching the eye-watering surge in gasoline prices, propane and furnace oil have also experienced price increases.

The price of propane, a byproduct of natural gas processing and oil refining, has jumped by 296 per cent over the last year in North America. According to the U.S. Energy Information Administration (EIA), prices have risen from approximately $0.50 USD per gallon in October 2020 to $1.40 USD per gallon in October 2021.

A predicted shortage in the U.S. could put a strain on some families this winter.

Compared to last year, the EIA said that to warm their homes U.S. citizens will spend 54 per cent more for propane, 43 per cent more for heating oil, 30 per cent more for natural gas, and 6 per cent more for electric heating—and these numbers could be higher if the weather is colder than expected.

“As we have moved beyond what we expect to be the deepest part of the pandemic-related economic downturn, growth in energy demand has generally outpaced growth in supply,” said EIA acting administrator Steve Nalley, in a press release. “These dynamics are raising energy prices around the world.”

Despite a healthy supply of propane, Canada is also feeling the crush of this price increase. Edmonton, Alta. and Sarnia, Ont., Canada’s two propane hubs, are producing necessary amounts of the fuel, yet it’s the industry’s tie to the world market that’s driving up the price at home, said Allan Murphy, senior vice president of government relations for the Canadian Propane Association.

“There’s an increased demand globally, especially in Europe and Asia, and that’s really driving the price up,” Murphy said. “We’re a net exporter of propane in Canada. A lot of people don’t realize that we export about half of the propane we produce into the United States and now into Asia.”

Murphy said he doesn’t expect the price increase to last. “Probably early spring next year we’ll see the price come back down to normal. The challenge for everybody…is that we have to get through the winter.”

Rural communities, like cottage country, may be hit the hardest. “A lot of people in rural areas depend on propane,” Murphy said. “They need energy for transportation more than they would in the city.”

To help combat the price hike, the Canadian Propane Association is lobbying the federal, provincial, and territorial governments to help mitigate the rising energy prices.

“The federal government has a leadership role to play in helping Canadians offset the increased costs for energy,” said Nancy Borden, chair of the Canadian Propane Association, in a press release.

“It must turn its attention to developing policies and programs in conjunction with provinces and territories that will offer relief to Canadians from high energy costs. This could be done through such actions as introducing or enhancing home energy rebates, particularly for lower-carbon fuels such as propane.”

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