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
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
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
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.