TORONTO, ONTARIO--(CCNMatthews - March 24, 2005) -
Price decreases to take effect on April 1
Enbridge Gas Distribution, a regulated utility, announced today
that it has received approval from the Ontario Energy Board
(Board) to adjust its prices effective April 1, 2005. The changes
include decreases in the Gas Supply Charge and the Delivery Charge, a
Gas Cost Adjustment refund, as well as a one-time Rate Adjustment
refund. As of April 1, 2005 residential customers who buy the natural
gas they use from the utility will pay 23.29 cents per cubic metre for
the commodity, based on the combined effect of the Gas Supply Charge
decrease and the Gas Cost Adjustment refund.
The impact of the changes will vary based on the amount of gas used and
whether customers buy their natural gas from the utility or a natural
gas marketer. The changes will result in a $116 annual decrease for a
typical residential customer(1) who buys natural gas from Enbridge Gas
Distribution, excluding the Gas Cost Adjustment refund and the one-time
Rate Adjustment refund. The change will result in a $16 annual decrease
for a typical residential customer who buys natural gas from a marketer.
"Our natural gas prices reflect the price of natural gas in the North
American market," said Lino Luison, Vice President, Enbridge Gas
Distribution. "When natural gas market prices decline, our gas supply
prices follow suit. The opposite is also true."
"While we don't control the price of gas, we do try to minimize
volatility for customers through quarterly adjustments and our gas
purchasing practices," added Luison. "We also proactively work with the
industry to encourage continued investment in bringing new gas supply to
market to help reduce price volatility."
Gas Supply Charge
The utility's Gas Supply Charge represents the actual cost of the
natural gas and is passed on to customers without mark-up. Customers pay
the same price that Enbridge Gas Distribution pays for the natural gas
supply on the competitive market. As a result of a decrease in market
prices, the Gas Supply Charge will decrease by approximately 10 per cent.
The utility's new residential Gas Supply Charge will be 27.80 cents per
cubic metre. The current price is 31.0561 cents per cubic metre.
The Gas Supply Charge is based on a forecast of what the Company expects
to pay for natural gas supply for the next 12 months. This forecast is
reviewed quarterly and, if necessary, adjusted. If there is a difference
between the forecast prices charged to customers and the actual amount
paid by the Company, the difference is collected from or reimbursed to
customers.
Customers who buy their natural gas from a marketer will continue to pay
the price specified in their contract with that marketer.
Gas Cost Adjustment Refund
A new Gas Cost Adjustment refund of 4.51 cents per cubic metre will be
in place from April 1, 2005 to September 30, 2005. This replaces the Gas
Cost Adjustment refund of 1.28 cents per cubic metre that went into
effect on January 1, 2005. The refund is a result of the difference
between the actual natural gas costs and the amount collected from
customers through the Gas Supply Charge. For the typical residential
customer who buys their natural gas from the utility, the refund will
amount to approximately $33.08.
Delivery Charge
The total annual Delivery Charge, which includes the costs of
transporting natural gas from western Canada and delivering it through
the distribution network to customers' homes, will decrease by
approximately $16 for the typical residential customer. This decrease is
due to a reduction in the cost of transporting natural gas from western
Canada.
As a regulated utility, Enbridge Gas Distribution earns an approved rate
of return on the capital it has invested in the distribution system.
This is included in the Delivery Charge.
One-time Rate Adjustment
Customers will also see a one-time rate adjustment refund on their April
bill. It will be about $1.50 for the typical residential customer. The
refund reflects an adjustment to the sharing of fiscal 2004 earnings
achieved by the Company that were above the Board-approved rate of
return.
Natural gas continues to be the best choice for Ontario consumers. Over
the past five years, natural gas has been on average about 39 per cent
less expensive than electricity. (2)
Enbridge Gas Distribution delivers natural gas to about 1.7 million
customers in its franchise area. Of those customers, about 60 per cent
buy their gas supply from the utility. About 40 per cent of the
utility's customers buy their gas supply directly from marketers.
Please see the attached backgrounder for more information about Enbridge
Gas Distribution prices.
http://www2.ccnmatthews.com/database/fax/2000/enb324.pdf
(1) A typical residential customer uses 3,064 cubic metres of natural
gas a year for home and water heating.
(2) Based on the annual bill for a typical residential customer who buys
their natural gas from the utility. Updated based on annualized rates
effective April 1, 2005.
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