PNG’s Christmas present – rates to drop

After years of increases, some of

them in double digits, Pacifi c Northern

Gas (PNG) is reducing its overall rate.

After years of increases, some of

them in double digits, Pacifi c Northern

Gas (PNG) is reducing its overall rate.

In fi lings made to the BC Utilities

Commission, PNG wants to drop its

overall residential rate by 1.1 per cent

next year.

That works out to approximately 20

cents a gigajoule or $13.69 a year for the

average residential user.

And that is despite the fact that the

delivery charge PNG levies is actually

going up.

Natural gas bills are basically made

up of three components.

The fi rst is the monthly fi xed charge

which remains the same no matter how

much or how little gas you use.

Second is the delivery charge, what

you pay PNG to deliver the gas to your


The charge is a fi xed rate per gigajoule

of gas delivered – so your total delivery

charge will depend on how much

gas you use.

These two combined essentially cover

what it costs PNG to run its business.

Finally there is the commodity

charge, the amount you pay for the gas

itself. PNG is not allowed to make any

money on this – it can only charge you

what it paid for the gas.

For more than a decade delivery

charges have been steadily increasing as

one after another PNG’s industrial customers

– Skeena Cellulose, Methanex

and Eurocan – closed, shifting the burden

on to the remaining customers.

In fact delivery charges now run

about three times the cost of the actual

gas delivered.

Based on fi lings, the utility’s delivery

rate for residential consumers will

increase by approximately 2.6 per cent

or 33 cents a gigajoule.

That’s needed to overcome an overall

revenue defi ciency of $886,000.

But that is partly offset by changes

in the delivery charge deferral account.

The deferral account is set up so that if

in any one year PNG’s revenues are less

than forecast when the BCUC set the

rates, PNG can book that shortfall into

the account for future recovery from customers.

The same applies if PNG’s revenues

are higher than expected, except of course

in that case there would be a future credit

for the customer.

And the latter is exactly what happened

this past 12 months. PNG offi cial

Craig Donahue explained, “We received

more revenue than we budgeted for because

of the cold weather.”

So instead of paying 15.6 cents a

gigajoule into the deferral account as residential

customers have this year, come

January they will be getting a credit of

4.7 cents/gj, said Donohue.

And that reduces the overall delivery

charge hike to about 13cents/gj.

But that is more than offset by the

sharp drop in the commodity charge of

52 cents/gj to $4.09/gj – that’s the lowest

gas price in many years and refl ects

the fact that supply is far outstripping demand

in North America.

Hence the overall 1.1 per cent drop.