Ontario natural gas rates are regulated to give consumers the benefit of a stable and fair price for their natural gas usage.
In Ontario there are three regulated natural gas providers, these being: Union Gas, Enbridge Gas, and Natural Resource Gas. Consumers in Ontario are able to choose whether they would like to have their natural gas provided to them at a competitive rate through a retailer or from their local utility. Though there are only three regulated natural gas providers, there are many competitive retailers to choose from. The Ontario Energy Board (OEB) are who regulate the Ontario natural gas rates. The OEB has developed a code of conduct for gas retailers which provide consumers with a level of protection on the energy market. They also determine the cost associated with transmitting, storing, and delivering the natural gas. The price of natural gas is affected by a variety of factors and it can change based on the time of year, the market, weather patterns, major weather events, etc.
How are Ontario natural gas rates calculated?
Natural gas is a commodity which is traded on North American markets meaning that supply and demand affect its market price. The Ontario Energy Board uses the market conditions as well as future market projections for the following year to set Ontario natural gas rates.
The seasons also affect rates as natural gas is more expensive in the winter months. Utilities will purchase natural gas in the summer when it is at its cheapest, store it until winter, and deliver it to consumers when it’s needed during the winter. Weather patterns can be unpredictable which can have a significant impact on rates. If a particular winter season is colder than expected, the utility will have to buy additional natural gas at a higher price which means that they will also need to charge the consumer a higher rate. Although, if the price is lower than forecasted then consumers will be credited the difference in price. Natural gas rates will also be affected by major weather events which are most often unexpected.
Prices are readjusted every three months and come along with a Gas Price Adjustment. The Gas Price Adjustment takes the difference between what the consumer previously paid and the real cost of gas at the time. The difference between these amounts is either debited or credited to the customer’s account.
The OEB does not allow for utility companies to earn a profit from the sale of natural gas. The price that utility companies pay for natural gas on the market is the price that you pay them as a consumer. Natural gas purchased from a utility company does not have a markup in its price.
The advantages of choosing a natural gas retailer
Natural gas retailers provide competitive rates in order to attract consumers and will provide enticing offers, such as fixed rates for 1, 3, or as long as 5 years. Having a fixed natural gas rate for an extended period of time gives consumers the benefit of not having to guess what their next utility bill will look like. Fixed natural gas rates give consumers a sense of security in their expenses. Natural gas retailers take the risk of providing fixed rates in order to acquire and satisfy customers for long periods of time. This means that even in situations where rates have gone up tremendously, your natural gas rate will remain the same if you choose a competitive retailer. Competitive retailers also provide the additional benefit of discounted rates when bundling your gas and electricity contracts.
The advantages of choosing a regulated natural gas rate provider
Regulated natural providers give consumers a stable and fair price for their natural gas. Ontario natural gas rates are adjusted every three months, as opposed to monthly, so that consumers can anticipate any change that is coming and adjust their expenses accordingly. The quarterly adjustments are a great benefit to consumers as they provide a level of stability to customers’ household expenses.
It’s a great thing that as a consumer you are offered plenty of choices in the market for utilities. The choice between a competitive retailer or a regulated natural gas provider is yours to make. The best choice is the one that is most advantageous for the needs of your household. Before making the decision make sure to do your research and have a sufficient understanding of the plan, its term length, and rate structure.