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By Josh Hall (Twitter: @Vancan19)

more than 2x last summer's rate

Relief coming as Alberta natural gas rates spike due to war

Jul 6, 2022 | 1:59 PM

Global conflict is causing natural gas rates to increase, according to Direct Energy Regulated Services.

The supplier, whose rates apply to customers who haven’t chosen a competitive supplier within the ATCO Gas North or South service territories, just set its July 2022 rates.

The North territory includes those living in Red Deer and north, while the South territory is those living south of Red Deer.

In January, before the Russia-Ukraine war began, rates were set at $3.893 per gigajoule (GJ), then went to $4.842 in February.

In March, it was $4.758, then $5.281 in April, before jumping to $6.399 in May, and $8,037 in June, before arriving at $8.324 for July.

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In August 2021, the rate per GJ was just $3.328, and peaked in November at $5.328 before falling and climbing again to its latest high point.

“Rather than inflation directly causing higher commodity prices, higher commodity prices contribute to inflation, as energy is a key input for goods and services. Changes to global supply and demand are reflected in the ups and downs of the price of gas,” Dan Smith, Direct Energy spokesperson.

“The regulated rate reflects current market prices and conditions and is updated on a monthly basis. The main driver of the higher gas prices customers are currently experiencing is the Russia-Ukraine War. This has increased the global price for natural gas, as more deliveries of liquified natural gas (LNG) are being shipped from North America to Europe.”

In each territory, rates are going up from $8.037 per gigajoule (GJ) to $8.324 per GJ. In the North, the typical residential gas bill, based on 2 GJ of consumption (average July usage), is $92. In the South, it’s pegged at $79.

Smith says the disparity is caused by different transmission and distribution fees, adding that these rates also apply when a customer selects a competitive supplier.

This is not the highest historical price for Direct Energy Regulated Services, which has been the default supplier since 2004, he adds.

The highest rate was set in January 2006 at $15.04 per GJ.

It was also exceptionally high when Alberta experienced relatively high gas prices from 2005 through 2008, with an average price of $7.28 per GJ over those four years, Smith explains.

“As a result of market forces, we have seen the price of gas increase over the past several months, as compared to the very low prices we’ve seen in the last several years. For comparison, from 2015 to 2021, Direct Energy Regulated Services’ gas rate averaged $2.31 per GJ,” he elaborates.

“Although pricing forecasts can change, future market prices are indicating that gas prices won’t be sustained at the higher levels seen in recent months. To provide further assurance, customers will be protected from rates above $6.50 per GJ when gas consumption is highest by the Government of Alberta’s natural gas rebate program, which will run from October 2022 to March 2023.”

For reference, residential customers use on average 20 GJ of gas in January, compared to the July’2 average of two.

The Government of Alberta said in recent days it is implementing two programs to ensure utilities remain affordable while providing stability for Albertans over the next nine months.

Along with a new electricity rebate, there will also be a natural gas rebate prompted by the price hikes.

“We are stepping up to provide more and more relief for Albertans as prices remain high,” said Dale Nally, Associate Minister of Natural Gas and Electricity, on June 29. “This rebate will provide price protection for millions of Albertans using natural gas, kerosene, propane and other fuels next winter. It will help families, farms and businesses manage high heating costs in the upcoming winter to keep life affordable in Alberta.”

The natural gas rebate is scheduled to begin in October, and run through March 2023, if prices remain high.

Additional details are still to be released by the government.