Price correction sees natural gas way up

By MEDICINE HAT NEWS on May 3, 2022.

https://www.medicinehatnews.com@MedicineHatNews

Monthly natural gas rates for May shot up above $8 per gigajoule across the province on Monday because major distributors undercharged in April compared to actual prices, and it could have been worse.

The default price in Medicine Hat, which is based on provincial average, was set at $8.55 per gigajoule of gas, nearly double the rate of $4.59 offered locally in April to those without fixed rates.

That spike is the result of a “gas cost recovery rate” adjustment, commonly known as a “true-up,” which allows companies to recover losses or pay back consumers when price forecasts miss low or high, respectively.

Apex Utilities, formerly known as Altagas, stated in filings to the Alberta Utilities Commission that its low-cost estimates built into rates at the beginning of April resulted in a $1.2-million loss for the company.

It applied to have $1 million of that deferred to future months, and was approved to have its floating rate set at $8.89 in May.

Direct Energy will charge default rate customers $8.24 per gigajoule, which would see it recover about one-fifth the $8.2 million it lost off the price difference last month.

Since less gas is sold in warmer months, the rate change to collect the same amount of money on smaller volume can be exaggerated in the spring and summer.

Medicine Hat, which is also an importer of gas from outside the city, doesn’t apply true-ups, but since it uses the average of companies that do, the effect is the same, but only affects those customers on default rate pricing.

Locally, a fixed rate price of $4.35 per gigajoule is offered to Medicine Hat gas customers who agree to stay on the rate for at least six months.

Similarly, the city’s fixed price for power of 8 cents per kilowatt hour remained below the local default electricity price of 10.18-cents based on the average of four rates in the province.

Enmax had the low default rate at 9.97 cents, while the high rate was 10.46 cents offered by Epcor in Edmonton.