Northwest residents received a bit of good news for their pockets books as of July 1.
An application by Pacific Northern Gas to lower the residential rate for natural gas was accepted by the BC Utilities Commission.
Pacific Northern Gas (PNG) cut the rate it charges for natural gas itself by 50 cents a gigajoule – from $4.06 a gigajoule to $3.56 – or 12 per cent.
That drops the overall rate to $15.027 a gigajoule or three per cent, once the delivery cost is factored in, and would be the second rate reduction this year.
The first was as of January 1 and both reductions reflect the continuing drop in the price of natural gas caused by an increase in supply.
PNG is a delivery utility and passes through what it pays for natural gas to its customers. It cannot add to the price of the gas.
There is no change to the delivery cost of natural gas in the area.
PNG has for some time been hedging the price of the natural gas it buys – essentially fixing a future price now to avoid the possibility of having to pay more if it is bought on the open market at that future date.
But the utility stopped doing that a year ago and all of its hedge agreements will be finished this fall, says PNG official Janet Kennedy.
It means PNG could apply to lower the rate it charges for natural gas itself even more as those hedge agreements end and as current prices for natural gas fall.
“The current wellhead price for gas in northeast BC is approximately $1.80/GJ and reflects supply and demand fundamentals that currently exist in the marketplace,” said Kennedy.
“PNG is not able to forecast future gas costs (which are passed on to our customers with no mark-up), but there continues to be substantial media coverage regarding the significant (and growing) supply situation of natural gas in Northeast BC and across the continent.”