|
U.S. Demand Drives Natural Gas Prices Up 50%
|
 |
©Provost News Photo.
| Albertans Own the Gas —But Pay North American Prices Residents throughout the town and M.D. of Provost—and across Alberta are being hit with an unprecedented jump in the price of natural gas. Atco Gas has raised its prices in the province by more than 50 percent which has been approved by the Alberta Energy and Utilities Board (EUB) EUB spokesman Bob Curran told The News from his Calgary office that the board approved the interim increase but public hearings on the matter are scheduled next month and the rate decision could change. He said that the EUB is now looking at the application closely. But he said that natural gas is a North American product and the price is being dictated by what others are willing to pay. Curran said that Albertans might not expect the price of the gas to go up because of the mild weather but if someone in Chicago wants to pay $10 per gigajoule “then we have to pay that here.” Cold weather in the eastern United States has driven up the demand for the gas. “The producer will sell (the commodity) to the highest bidder.” Curran added that the EUB is obligated to allow the higher price because of the market. Customers in Red Deer and north will now be paying $8.772 per gigajoule from $5.773 per gigajoule. Customers in southern Alberta meanwhile will pay slightly more—$9.814 per gigajoule, up from $6.496. A gigajoule is measured as energy content as opposed to volume measure but it is approximately equal to 1,000 cubic feet. On average houses will use usually less than a gigajoule per day but this can vary depending on other factors (size of house, setting of thermostat, amount of windows and other insulation factors). Curran said that legally the people of Alberta own the gas that comes out of the ground but energy companies that get it out and produce it sell it legally. The people of Alberta are compensated through royalties. The EUB says that an interim rate increase is necessary to address the deficits ATCO Gas has accumulated during the current winter heating season. These deficits have accrued as a result of the companies paying more for natural gas than they were recovering from consumers. By January 31, 2001, these deficits are projected to be approximately $155 million for ATCO Gas North and $110 million for ATCO Gas South. The board also intends to engage in a separate process to examine ATCO’s gas supply portfolio management. This process will be completed by mid-2001. Issues to be examined in this process include hedging, gas storage usage, and other related topics. The EUB regulates investor-owned utilities in Alberta, ensuring that rates consumers pay are fair and that the service provided is safe and adequate. The EUB must regulate utilities in ways that allow them to earn sufficient revenues to recover their costs. That includes the cost of the natural gas sold to customers – the costs on the free market for this gas supply that utilities must purchase. Utilities are not allowed to profit from their gas supply costs. These are flow-through costs that are passed on to consumers with no mark-up on these costs by the utilities. —See the print version in Provost News (January 31, 2001) —Want to Subsrcibe? Click here!
|