Since 1992, Ontario residents have had the option to obtain their natural gas from a retail provider that offers competitive natural gas rates, rather than from their local utility. While there are many retailers, there are only three regulated providers in the entire province: Enbridge Gas, Natural Resource Gas, and Union Gas. The natural gas rates charged by these companies are regulated by the Ontario Energy Board, which also determines the cost of transmission, distribution, and storage of natural gas.
How Regulated Natural Gas Rates are Calculated
The Ontario Energy Board sets the regulated rate for natural gas based upon current market conditions, and incorporates projections of the market’s expected behavior over the next year. These prices are readjusted every three months, and are accompanied by the Gas Price Adjustment, which calculates the difference between the rate that customers previously paid, and the actual cost of gas during that time. This difference is credited or debited to the consumer’s gas bill.
The Benefits of Staying With a Regulated Rate Provider
The purpose of regulated natural gas rates is to give consumers a fair price for natural gas based upon market conditions, while providing a certain amount of stability, which is why the regulated rate is adjusted quarterly, rather than every month. Consumers have the ability to anticipate rate changes months ahead of time, and can budget accordingly. This is a very attractive benefit for many consumers.
In addition, in more rural areas of Ontario, the only provider of natural gas in the area may be the local utility. This again demonstrates the purpose of regulated providers, to maximize access to reasonably priced natural gas.
The Benefits of Choosing a Natural Gas Retailer
The rates charged by regulated providers must, by design, minimize the potential risk for the utility. On the other hand, competitive retailers are motivated by the desire to acquire customers, and as a result will offer guaranteed fixed rates for 1, 3, or even 5 years. This is a risk on their part, but gives consumers the chance to maximize the predictability of their gas costs, and hedge against the potential for high gas rates in the future.
In addition, some retailers offer additional features and benefits, such as discounts when you bundle your electricity and natural gas contracts.
Ultimately, the decision of choosing a regulated provider or a retail provider depends upon the consumer’s priorities and specific needs.