FortisBC encourages education about Customer Choice program on the Island

SURREY, B.C. – With the launch of the Customer Choice residential program in Whistler, Vancouver Island, the Sunshine Coast and Powell River beginning in November, FortisBC is encouraging customers to take their time and make the choice that’s right for them. Part of this decision is reviewing information about Customer Choice – either from the guide the gas marketer is required to provide customers or from the FortisBC website.

“We encourage customers to ask the marketer questions about the terms of the contract, including the length of the contract, the price of natural gas throughout the duration of the contract, and what happens if you move,” said Roger Dall’Antonia, executive vice president, customer service & regulatory affairs, FortisBC. “Gas marketers are required to provide this information, and customers can find more questions to ask on our website.”

Through the Customer Choice program, licensed natural gas marketers began selling long-term, fixed price natural gas contracts to residential natural gas users in Whistler, Vancouver Island, the Sunshine Coast and Powell River as of August 1, 2015. Contracts signed now will take effect after the program begins in November. Customer Choice in these regions was brought about through amalgamation of our three natural gas companies January 1, resulting in all customers having access to the same programs and services across our service territories. The program has been available to natural gas customers in the Lower Mainland, Fraser Valley, Interior and Kootenays since 2007.

Details about the Customer Choice program and questions to ask a gas marketer are available at fortisbc.com/choice. Customers may also consider the following information when deciding if Customer Choice is right for them:

  • Gas prices quoted by marketers are not regulated by the BC Utilities Commission (BCUC), however, the BCUC is responsible for licensing gas marketing companies and ensuring they adhere to a code of conduct.
  • Most gas marketers have the discretion to allow customers to return to the FortisBC variable rate on the anniversary date of the contract. Penalties and stipulations that arise from the early termination of contracts vary. FortisBC does not charge any fees if a customer chooses to return to the variable rate.
  • If customers have a problem with their gas marketer agreement, they should first contact the marketer to resolve the matter. If the issue is not resolved, customers can log a dispute about their gas marketer agreement with the BCUC. Visit fortisbc.com/choice for the link to do this online or contact FortisBC customer service.
  • If customers do not have a contract with a gas marketer but wish to log a complaint about a gas marketer’s business practices, they can do so on bcuc.com.

All parties involved in the Customer Choice program work together to improve the program continually. Each year, the program is reviewed by FortisBC, the BCUC, various customer groups and all licensed gas marketers. The review process identifies opportunities to improve the program for current and future customers, and involves a workshop to discuss the business rules of the program, systems solutions, and customer protection and education. Based on the workshop discussion, FortisBC submits recommendations for changes and improvements to the BCUC in the form of a report describing what should be approved and implemented. The most recent report was filed by FortisBC in August, and a decision is expected by the BCUC this fall. The report is available on fortisbc.com and bcuc.com.

See backgrounder for more information on the Customer Choice program.

Customer Choice backgrounder

In 2002, the B.C. provincial government laid the groundwork for increased consumer choice in its 2002 Energy Policy, with a statement about its desire to provide more choice for small volume natural gas consumers. Small volume consumers include residential and many commercial users. Around the same time, research conducted by FortisBC (then Terasen Gas) revealed that customers wanted help to manage their gas costs with options that included long-term, fixed-rate contracts.

In 2004, a portion of B.C.’s natural gas market was opened to competition, allowing many commercial customers to purchase gas from companies other than FortisBC. In 2006, the B.C. Utilities Commission took the final step in introducing greater customer choice by allowing residential customers to purchase natural gas from companies other than FortisBC. Residential customers in the Lower Mainland, Fraser Valley, Interior and Kootenays have been able to sign contracts with gas marketers since May 1, 2007. Residential and commercial customers can choose to buy natural gas from gas marketers or they can continue to buy natural gas from FortisBC. Gas marketers are allowed to offer fixed price contracts for a minimum duration of one year, and in one-year increments, up to a maximum of five years.

Independent gas marketers were permitted by the BCUC to sell gas door-to-door in Whistler, Vancouver Island, the Sunshine Coast and Powell River beginning August, 2015, as part of amalgamation of the gas utilities in those service areas. Contracts signed with a gas marketer for these customers will take effect after November 1, 2015.

Gas marketers are independent companies that sell natural gas directly to customers. They make money by selling natural gas under different pricing terms and conditions related to pricing. They use a variety of buying strategies to source their gas and then sell it using different pricing arrangements that allow them to earn a profit. The FortisBC variable rate is a flow-through cost to customers, meaning customers pay what we pay for the gas. FortisBC does not earn a profit from the sale of the natural gas commodity.

Some questions to ask a gas marketer before you sign a long-term supply contract:

Cover the basics:

  • What is your price in Canadian dollars per gigajoule of gas?
  • How long is the term of this contract?
  • Is the price per gigajoule of gas fixed over the entire term of the contract or can it vary?
  • How does your gas price compare to other gas marketers’ fixed prices and FortisBC’ variable prices?
  • What will happen to my gas supply contract if I move?

Understand the terms of the contract:

  • What is the start and end date of this contract?
  • What are the contract’s renewal provisions?
  • If I am not satisfied with the agreement and want to cancel within the 10-day cancellation period, what is the best way to contact you?
  • After my 10-day cancellation period has ended, what are the rights and penalties for early termination of the agreement?
  • Does this contract end at the expiration date, or will it roll over into another contract if you receive no further direction from me?
  • What are the benefits of signing a fixed-term contract?

Clarify what you’re committing to:

  • What are the financial obligations I’m committing to when I sign this contract?
  • What are the additional charges that could potentially arise from signing this contract?
  • What happens to my gas supply if your business fails?
  • Does signing this contract commit me to receive other utility services, such as electricity, telecom or cable?

FortisBC has no role in overseeing the actions of the gas marketers. The BCUC is responsible for licensing gas marketers and ensuring they adhere to a code of conduct. For more information about the code of conduct, and for a list of gas marketers licensed to do business in B.C., visit fortisbc.com/choice or bcuc.com

After signing an agreement with a gas marketer:

Residential customers receive a confirmation letter from FortisBC that provides a summary of the agreement entered into with the gas marketer. The letter also provides a deadline date by which time consumers must call the gas marketer if they want to cancel the agreement. This is the 10-day cancellation period mandated by the BCUC.

Most gas marketers have the discretion to allow customers to return to the FortisBC variable rate on the anniversary date of the contract. Gas marketer contract penalties and stipulations that arise from the early termination of contracts vary. FortisBC does not charge any fees if a customer chooses to return to the variable rate.

Customers who wish to return to the FortisBC variable rate should check their contract for details and should contact their marketer at least 90 days before the anniversary date of their contract if they want to terminate it.

If customers have a problem with their gas marketer agreement, they should first contact the marketer to resolve the matter. If the issue is not resolved, customers can initiate logging a dispute about their gas marketer agreement by contacting FortisBC. To contact FortisBC customer service, call 1-888-224-2710.

 

2015 Outlook Spotlight: Oil Price Volatility

We’re highlighting some of the guest posts featured in our 2015 Outlook here on the blog. The following excerpt discusses some of the factors driving oil price volatility this year and beyond. To access the full Outlook study please click here.

Oil Price Volatility

Currently, world oil supply is outpacing world demand for a number of reasons, many of which are well-known and include the significant U.S. production increases associated with hydraulic fracturing.

Oil supplies began to overtake demand sometime around Q1 of 2012 and have remained firmly above demand since late 2013, largely because of economic stagnation in Europe and economic slowing in China. Demand for oil is still increasing but not as fast as was once forecasted. In short, when demand does not keep up with growing supply, prices decline.

Supply has reached historic levels, in part, spurred by recent $100 oil prices and the use of hydraulic fracturing to tap oil resources that were previously uneconomical to recover. In the past, large oil producing countries would cut back on supplies to offset declines in demand, but the Organization of Petroleum Export Countries (OPEC) has been unwilling or unable to limit production by its members. Furthermore, much of the recent growth in supply is outside of OPEC’s control.

There are also a variety of geopolitical factors that some analysts believe are influencing the price of oil (e.g., some believe the Saudi’s are trying to drive smaller oil producing countries and U.S. shale producers with higher costs out of the market). This analysis will leave those matters aside except to agree that world events and concerns over the stability of some oil producing countries will always play a key role in the volatility of oil supplies and pricing.

Over the long-term, oil demand is likely to increase
as economic growth returns to more normal levels and economic activity picks up. As has been the case in recent years, the developing countries led by China and India will likely lead the way in driving oil demand. The developed countries, including the U.S., are not expected to experience much growth in overall levels of petroleum use.

Boom and bust in the oil industry is nothing new. In fact, since 2009, the oil markets have been fairly volatile. While it may not be possible to predict where prices will settle in the short-term, some analysts believe that the current levels could put a temporary halt on new production as producers find it difficult to justify going after new supplies with oil below $60 a barrel. There
is also the likelihood that today’s prices and reduced revenues will lead to consolidation in the oil industry, which could further drive down future production.

According to the International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA), oil markets may turn the corner sometime in late 2015, as that is when these agencies are predicting that oil demand and supply will cross back over.

Source: NGVAmerica, Oil Price Volatility, January 2015

Intermountain Gas Company files annual PGA

BOISE, IDAHO – – Intermountain Gas Company filed its annual Purchased Gas Cost Adjustment (PGA) application with the Idaho Public Utilities Commission to change its prices by an overall average decrease of 5.69%, or $15.3 million. If approved, the decrease would be effective Oct.1, 2015. The primary reason behind the proposed decrease is a decline in the price of natural gas that Intermountain purchases for its customers. With this proposed decrease, Intermountain’s combined residential and commercial prices would be 35% lower as compared to 2005. Intermountain’s earnings will not decrease as a result of the proposed change in prices and revenues.

If approved, residential customers using natural gas for space and water heating will see an average decrease of 6.11%, or $3.12 per month. Customers using natural gas for space heating only will see an average decrease of $1.36 per month, or 3.56%, based on average weather and usage. Commercial customers, on average, would see a decrease of $12.15 per month or 5.66%.

“Hart has shown great leadership ability in his previous positions with the company and I look forward to his continued success in this new role,” said Scott Madison, executive vice president and general manager for Intermountain Gas. “His extensive natural gas operational experience will be a great fit on our executive team.” The company is also proposing to eliminate the temporary surcharges and credits that have been included in its current prices during the past year. Newer temporary surcharges and credits will be included going forward.

Scott Madison, Executive Vice President and General Manager of Intermountain said, “The decrease in the cost of natural gas is mainly a supply and demand issue, and natural gas supplies remain plentiful. Additionally, last winter’s warm weather in the western U.S reduced demand on natural gas storage levels in our region, adding to the availability of natural gas heading into next winter. We continue to see increased domestic natural gas production, and we anticipate prices will remain fairly stable in the coming year.”

Even with this proposed price decrease, Intermountain continues to urge all its customers to use energy wisely. Conservation tips, information on government payment energy assistance, and programs to help customers level out their energy bills over the year can be found on the company’s website,www.intgas.com.

A Purchased Gas Cost Adjustment application is filed each year to ensure the costs Intermountain incurs on behalf of its customers are reflected in its sales prices. The request is a proposal, and is subject to public review and approval by the Idaho Public Utilities Commission. A copy of the application is available at the Commission’s office and on its homepage at www.puc.idaho.gov as well as at the bottom of this article via the link titled “Rate Case – Full Filling Document – August 07, 2014”.

Rate Case – Full Filing Document – August 07, 2014

What We’ve Been Reading This Month

Each month numerous natural gas related stories cross our desks, here are a few that piqued our interest:

  • In late July Colorado State University rolled out a study measuring methane emissions from the natural gas transportation and storage sector, part of a series being performed in partnership with the Environmental Defense Fund. The study found nationwide emissions from this sector to be 27% lower than EPA estimates. Don Santa, President of the Interstate Natural Gas Association of America, explains what that means for the industry going forward.

 

  • Dr. Michael Levi, a top energy thinker for the Council on Foreign Relations, authored an interesting long-read, “Fracking and the Climate Debate.” The article delves into the history of shale gas in the climate conversation: from partnerships between producers and the Sierra Club’s “Beyond Coal” campaign, to the role of natural gas in climate policy, and concluding with the potential for increased producer regulation.

 

Avista Requests Natural Gas Rate Decrease for Oregon Customers in Annual Cost Adjustment Filing

SPOKANE, WA-  Avista’s approximately 98,000 customers in Oregon could see an overall decrease of 13.3 percent in their natural gas rates effective Nov. 1, 2015, if the Public Utility Commission of Oregon (PUC) approves the company’s annual Purchased Gas Cost Adjustment (PGA) and related filings.

If the requests are approved, Avista residential customers using an average of 46 therms a month could expect their bill to decrease by $7.55, or 12.1 percent, for a revised monthly bill of $54.92 beginning Nov. 1, 2015. Avista’s natural gas revenues would decrease by $13.8 million to cover the decreased natural gas costs. The company does not mark up the cost of natural gas purchased to meet customer needs, so there is no impact on company earnings.

PGAs are filed each year to balance the actual cost of wholesale natural gas purchased by Avista to serve customers with the amount included in rates. This includes the natural gas commodity cost as well as the cost to transport natural gas on interstate pipelines to Avista’s local distribution system. The primary driver for the company’s requested decrease is a reduction in natural gas commodity costs due to a warmer than normal winter, an abundance of natural gas held in storage, and continued high production levels of natural gas.

In addition to the PGA request, Avista also proposed two smaller rate adjustments related to demand side management program funding and intervener funding.

About 40 percent of an Avista natural gas customer’s bill is the combined cost of purchasing natural gas on the wholesale market and transporting it to Avista’s system. These costs fluctuate up and down based on market prices. The costs are not marked up by Avista. The remaining 60 percent covers the cost of delivering the natural gas — the equipment and people needed to provide safe and reliable service.