Current prices for natural gas remain at historically high levels even after futures markets in North America experienced a 40-per-cent drop over the past three weeks.Larry MacDougal/The Canadian Press
Inflation is creeping into residential bills for natural gas as distribution companies raise rates charged to consumers to reflect spikes in the industry’s prices this past spring.
Most customers won’t get sticker shock this summer because their furnaces won’t be running, although they will still be using natural gas for cooking and baking, as well as for their hot-water tanks.
The reality of higher commodity prices is expected to hit consumers to a much greater extent this winter, when they will likely receive eye-popping fuel bills for residential use, notably as home heating cranks up. Current prices for natural gas remain at historically high levels even after futures markets in North America experienced a 40-per-cent drop over the past three weeks.
“We realize it is never a good time to have a rate increase and we understand that we are facing very challenging times with the increasing cost of living everywhere,” FortisBC spokesperson Diana Sorace said on Tuesday.
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Quarterly rates levied by FortisBC, British Columbia’s largest distributor of natural gas to homes, surged 31 per cent effective July 1, compared with the previous quarter in the Vancouver region. The FortisBC rate has skyrocketed 107 per cent over the past year to $5.90 per gigajoule, a unit used in the field to measure energy.
In Ontario, Enbridge Gas raised quarterly rates for the commodity by as much as 23 per cent effective July 1. Enbridge Gas estimates that the impact on the total bill will be an extra $5 a month over the summer.
After COVID-19 pandemic restrictions began easing in 2021, global demand for natural gas gradually picked up and then rose further because Russia’s invasion of Ukraine in February reduced supplies to Europe.
“The continuing Russian conflict, paired with our domestic demand, has really increased our rates this year,” said Enbridge Gas spokesperson Leanne McNaughton.
Since the commodity itself is one component of a bill, the typical charge in the Vancouver region for use from July through September would average $38.25 a month, including taxes. The total would be a 6-per-cent hike from the previous quarter and a 23-per-cent jump compared with a year earlier.
For B.C. consumers, that translates into an extra $7.07 a month for July through September, compared with the same period in 2021. Other items on a bill include a basic delivery charge.
Options vary from province to province when it comes to signing up for fixed-price plans with natural gas marketers, and consumers need to check the fine print of any contract, such as having the flexibility to go back to variable rates. Alberta has more options for fixed-price contracts than British Columbia, for example.
Futures prices for natural gas at Henry Hub in Louisiana, the U.S. benchmark, are up nearly 45 per cent since early 2022, as Russia massed troops near Ukraine.
In early June, futures prices surpassed $9.30 per million British thermal units, but have fallen sharply over the past three weeks as domestic supplies of natural gas rose after a fire damaged Freeport LNG, a Texas terminal for exporting liquefied natural gas. A gigajoule is about 0.95 million British thermal units of natural gas.
Freeport LNG is expected to be shut down for at least three months, although a full recovery could take until late 2022 or early 2023.
If Freeport LNG bounces back to full production this winter, it would reduce supplies of natural gas within the United States as exports of LNG resume, including to Europe.
Concerns linger about storage levels in the United States and Europe. “Natural gas storage in the European Union and the United States ended the 2021-22 heating season with inventory levels well below the five-year average,” the International Energy Agency said in a report on Tuesday.
Europe has been seeking to reduce its dependence on natural gas from Russia, but faces a variety of challenges, including a strike this week by energy workers in Norway that has crimped fuel supplies to the European Union.
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Brent Jang