In this article:
- How Ontario’s natural gas market is structured
- The role of the Ontario Energy Board in regulating utilities
- How regulated natural gas rates are calculated and adjusted
- The Gas Price Adjustment and how it affects your bill
- Benefits of staying with a regulated provider
- Advantages of choosing a competitive natural gas retailer
- Key factors to consider when selecting a natural gas plan
Since the early 1990s, 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, the primary regulated utility in the province is Enbridge Gas, along with smaller local distributors such as Natural Resource 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 forecasted market conditions, incorporating projections of the market’s expected behavior over the coming months.
- 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 between the rate and the actual cost 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 some rural areas of Ontario, the only provider of natural gas in the area may be the local utility, or natural gas service may be limited. This again demonstrates the role of regulated providers in supporting access to reasonably priced natural gas where available.
The Benefits of Choosing a Natural Gas Retailer
- The rates charged by regulated providers are designed to reflect forecasted supply costs and maintain stability.
- Competitive retailers are motivated by the desire to acquire customers and, as a result, may offer guaranteed fixed rates for 1, 3, or even 5 years. Although this is a risk on their part, it gives consumers the opportunity to increase the predictability of their gas costs and hedge against the potential for higher 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, choosing a regulated provider or a retail provider depends upon the consumer’s priorities and specific needs.
Key takeaways:
- Ontario’s natural gas market allows consumers to choose between regulated utilities and competitive retailers.
- Regulated rates are based on forecasted market conditions and adjusted quarterly.
- The Gas Price Adjustment ensures customers are credited or charged for differences between forecasted and actual costs.
- Regulated plans offer stability and predictability, while retail plans may offer fixed pricing and additional flexibility.
- Natural gas access and provider options may vary depending on location.
- The best option depends on your preference for price stability, flexibility, and long-term cost management.
