Natural Gas Frequently Asked Questions (FAQ)
- What costs make up my gas bill?
- What choices do I have?
- Why would I buy from a marketer?
- How do I choose the best deal?
- How long does it take to transfer to a gas marketer?
- Who will the bill come from?
- Is there a risk of not having gas supply?
- I've signed a contract. Can I cancel it?
- What happens if I move, or sell the house?
- How do I complain about what happened to me?
- Does all of this apply to my business?
- Is there a risk in signing with any supplier?
- Will marketer's contract prices come down because the utility prices are lower?
- Gas terms explained.
What costs make up my gas bill?
||The gas commodity that flows through the pipes. The rate is either set by the utility, or the gas marketer, depending on who you buy from.
||The cost of delivering the gas from a central pipeline to your home or business. This pays for the construction and maintenance of the pipelines and systems. It is a regulated rate payable to the utility.
(in some areas)
|This is a separate charge line only in some utilities. In others it is combined with delivery. It is the cost that your gas supplier has to pay to the pipeline company to get the gas from where it is pumped out of the ground. It is a regulated rate payable to the utility.
(some areas only)
|Some utilities may also have a storage line on their bill. This is a regulated charge to store the gas until it is needed. If you are not in a gas contract, this is the responsibility ofthe utility. If you are in a contract, it may be the responsibility of your supplier.
||This is a fixed monthly charge to compensate the utility for the cost of making sure that you always have access to gas. It pays for the cost of connecting and billing.
What choices do I have?
Buy your gas from the utility.
If you do this, you will continue to pay the variable gas rate charged by the utility. This rate reflects the utility's cost of gas, plus their administrative costs in buying and supplying that gas. The utility is not allowed to make any profit from this gas supply. They just recover their cost. This rate is reviewed and approved by a government body.
The tricky part is that this utility rate can change at any time, though most utilities have a quarterly schedule for doing this. To change rates the utility applies to the regulator to show that their costs are either higher or lower than they are charging customers. The utility can also charge retroactively. If they find that it has cost more to serve you than they have collected from you, you will be charged the difference, either as a lump sum at the end of the period, or as a surcharge on gas over a period of several months.
Buy from a gas marketer
Marketers offer a variety of short and long term contract options. If you choose a fixed-price for your natural gas over a fixed period of time, you will know your future gas costs for that time period. The marketer buys gas for the same term as they sold to you. A fixed price allows you to budget and know what your expenses are.
If you choose to purchase from a marketer, your gas will continue to be delivered to your home by the utility. The utility will also continue to provide you with emergency response services. There is no risk of being without gas, as long as you pay your bill. The bill will still likely be sent to you by the utility, though in some areas the marketers have the option to bill instead of the utility.
Why would I buy from a gas marketer?
Either because you want to be sure what your gas price will be month to month, or because you think gas prices are going up. Marketers provide you with choice. You have a choice between short or long terms and sometimes are offerred other incentives or extras such as rebates, credits on your bill or air miles. Utilities cannot offer fixed term gas contracts. If you choose a variable term from a gas marketer, you will likely benefit from lower overheads and operating costs. Marketers offering a variable rate often give a guarantee of a certain percent below the utility's rate.
Natural gas prices have been rising for over 15 years and are now about triple what they were in 1998. Most analysts expect that trend to continue. As a result, if you can sign a contract at or below the trend line on the graph, you will likely save money over the long term.
How do I choose the best deal?
- Think about your budget, your risk tolerance and your goals.
- Decide whether you want to wait for the lowest possible price but as a result risk having a higher price, or whether you want to know exactly what you are going to pay for your gas.
- Think about, or consult expert advice, about where gas prices might go. If prices are likely to go up, then consider a fixed term contract.
- Look at the prices and incentives offered. Decide on the best deal for you, and sign up online.
How long does it take to transfer to a gas marketer?
If you are not currently in a contract, it takes about 8-12 weeks to transfer your gas supply. The process is:
This means that the marketer won't be sure that they can have you for about 2 months, and might not take over your supply for even 3 months. The contracted price won't start untill then either.
- You agree to an offer with the marketer
- the marketer sends the contracts to the utility, often batching contracts received at month end
- the utility "scrubs" the accounts, ensuring that the names and account numbers match and that you have paid your bill
- about 4 - 6 weeks later, the utility sends the results back to the marketer saying that you can switch
- you will then be switched at the beginning of the next billing period
If you have a contract with a marketer, be very careful about signing with another marketer. If you sign a second contract, the holder of the first contract will be informed of your desire to switch. They will tell you about termination fees you will be charged if you proceed with the switch. It is not likely that you will be able to switch with no termination fees.
So, be careful when signing a contract if you think you may already be in one. The sales pitch may be door-to-door, by phone or by mail. Be careful if you receive a cheque from a gas marketer. Often, if you endorse and cash that cheque, you have agreed to a 3 or 5 year contract. Make sure that's what you want to do.
Who will the bill come from?
At present, the bill will still come from the utility. Marketers have the option of taking over the billing for their customers, but none have done that yet for residential consumers. The marketer tells the utility how much to charge their customers, and utility forwards the money to the marketer. The name of your marketer will appear in the body of the bill, along with a contact phone number.
Is there a risk of not having gas supply?
No. The utility in your area is responsible for ensuring that you have a supply of natural gas, as long as you pay your bill. If the gas marketer that you choose happens to go out of business, you will still have gas supplied to you. You might revert to the utility's gas supply price, or you might be required to sign with a different marketer. However, you don't have to worry about being without gas.
I've signed a contract. Can I cancel it?
Maybe. Here are your options. (Not valid for accounts over 2,000 GJs/yr.)
You will receive a confirmation letter from Terasen Gas which will give you a date by which you must respond to your gas marketer if you plan to opt-out of the agreement without penalty.
a) If you signed up over the Internet, reaffirmation is not required and there is no cooling off period.
b) If you signed through door-to-door or outbound telemarketing.
If you signed a contract with a door-to-door marketer, or as a result of a telemarketing call that you received, you have additional opportunities. In these cases the marketer must re-affirm your intent to enter a contract with them. This must be done between 10 and 60 days after your original contract signing. The re-affirmation can be by a physical signature, by electronic submission over the internet or by recorded telephone call. If you refuse to reaffirm, or if they cannot contact you, the contract will be cancelled.
c) At the end of the contract period.
At the end of your agreement, your contract will be automatically
renewed or you can advise the marketer that you will be
cancelling the agreement. Your Consumer Agreement should clearly set out the
renewal provisions, including those for default rollover.
a) The gas marketer is required to give you no less than
90 days notice prior to the renewal date.
b) After receipt of written notice from the gas marketer,
you are given 30 days to select renewal terms or cancel
c) If you choose to cancel the agreement and return to the
utility, the gas marketer must notify FortisBC within two
business days of receiving notice from the consumer.
d) Termination Clauses
Most marketers have a termination clause in their contract. Read the contract carefully. These clauses include an exit fee. Calculate the fee and see if it makes sense to cancel. Compare the exit fee to what you would save over the contract term by getting a new contract at a lower rate. Remember that this fee will charged if you sign with another marketer before the end of your contract.
What happens to the contract if I move and sell my home or business?
These clauses differ greatly between marketers. Some contracts say nothing about this, and some say you must contact the marketer 30-60 days before you change posession of the home/business. They will then advise you what they will do for you/to you. Check the specific wording in the contract.
How do I complain if I have a problem with a marketer?
- First, contact the marketer. They should have the first opportunity to respond. You can get their contact number from your bill. Failing that, check for the number on the British Columbia Utilities Commission web site.
- Second, contact the BCUC. They are responsible for the dispute resolution process to which all marketers are required to belong.
British Columbia Utilities Commission
Do all the rules apply to my business?
Most of the above information applies to businesses as well, except for any extended consumer protection act clauses. Current licensing codes are for the protection of customers that consume 2,000 GJs or less annually.
Customers that consume more that 2,000 GJs of natural gas annually usually have very tailored contracts specific to their needs. Please contact Contact us for more information.
Is there a risk in signing with any supplier ?
If you sign up with a supplier, there is no risk of not receiving gas.
- The utility will always supply you with gas, even if the supplier goes bankrupt (as long as you continue to pay your utility bill)
- If the supplier goes out of business, they have historically sold their contracts to another supplier, who continues the gas contract at the same price. This has happened with at least 6 suppliers in Ontario in the past decade. The customer hardly notices the change.
- Once you lock in, the market price of gas does not affect either you OR the supplier. To sell you a 5 year supply of gas, they buy a 5 year supply, and make their money on the difference between the two prices. The supplier is not at risk if market prices rise.<
- If a supplier really messes up and doesn't match up their buying with their selling, the worst that can happen is that you would be put back to utility supplied gas, and the same price as you would have paid if you had never signed up.
However, if you are already in a contract, there is a risk of signing a second contract. You will likely be charged termination penalties by the holder of your first contract.
Will marketer's term prices come down because the utility's gas price is low?
No. It's actually the other way around. If marketer prices are above the utility price, that utility price will likely rise in the next quarter. The marketer term prices are a better reflection of current gas prices since they change weekly or daily as the wholesale gas market price changes.
Utlity prices on the other hand change every 3 months, and that price is set about a month before the beginning of the new quarter. So gas prices can be as much as 4 months out of date. That is why there is frequently a surcharge or credit on the utility gas bill. When the gas price is out of synch with the market, a surplus or deficit accumulates and has to be reconciled.
Gas Terms Explained.
m3- Cubic metre. The unit of measurement for sales of natural gas in Ontario and Manitoba.
GJ - GigaJoule.The unit of measurement for sales of natural gas in Alberta and New Brunswick, and in the wholesale market.
ABM- Agent, Broker, Marketer. These are the three names for any company or individual who is in the business of selling gas or electricity to individual homeowners or businesses. Typically, they sign up customers to an energy supply term, then source that gas in one or more contracts with a gas producer. They charge you only for the commodity itself.
Agent- See ABM above.
Broker- See ABM above.
Commodity- The natural gas itself. This refers to any product that is essentially undifferentiated. This means that there is no difference in the product regardless of which company you buy from. Milk is generally said to be a commodity. As long as the product meets the provincial health guidelines for milk, there is really no difference between producers or sellers.
Default Supply- This is your supply of gas if you do nothing and don't choose a deregulated marketer. It will be provided by the local utility. The utility is obliged to pass along their costs of purchasing gas without marking it up, except for administrative costs.
Delivery- Gas is delivered to your home or business through a pipes. Delivery charges pay for the construction and maintenance of those fixed links, and any costs associated with bringing the product to you.
Marketer- See ABM above.
Spot Market/Spot Price- This is a North American market for purchasing natural gas. It's a commodity market where natural gas trades like soy beans or pork bellies. The price is set based on supply and demand for gas required immediately. The spot price is the price one day's worth of natural gas at that point in time. The price varies extensively in times of extreme heat or cold. In 2001, this gas spot price ranged from 52 cents/m3to 7 cents/m3. This price doesn't have all that much to do with what a person or business can expect to pay. It is an indicator of the direction and magnitude of market moves. However, the utility and marketers price based on longer term prices.