New year rings in higher rates for natural gas

January 02, 2010 12:00 PM Morning Star:

Natural gas users in British Columbia can expect their home heating bills to climb 10 per cent in the new year. Terasen Gas says rate changes approved by the B.C. Utilities Commission will work out to an annual increase of $81 to $101 for the typical household. The new rate structure came into effect Jan. 1.

The change isn’t due to the actual price of natural gas, which fell in 2009. Instead, Terasen has been given approval to increase its delivery rate by three per cent and its midstream charges, which are related to storage of gas, by seven per cent. The rate hikes also apply to customers who buy their natural gas from independent gas marketers, because they must still pay Terasen to deliver the gas. Some consumers signed up to long-term contracts that locked them in at prices of around $10 per gigajoule and they haven’t benefitted from the big slide in natural gas prices. Terasen’s fluctuating gas rate, which most customers pay, has fallen 35 per cent over the past year to $4.95 per gigajoule. Natural gas is also subject to B.C.’s carbon tax, which rises again in July.

In approving the new rates, regulators decided Terasen’s profit margin should rise from 8.47 per cent to 9.5 per cent, which is less than the 11 per cent rate of return on equity the utility had requested. Officials with the corporation say that they need the higher rates to maintain the company’s high credit rating and also to meet British Columbia’s climate action goals. The utility is promising to provide more energy conservation assistance to its customers, as well as improved options, like online bill payments.

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Don Quixote Note:

The 3.09% Franchise Fee that Terasen Collects and remits to your local municipality is applied not only to Natural Gas but also delivery and midstream costs. The City of Vernon's franchise fee was budgeted for $581,400 but collected 659,567 in 2009. (a surplus of $78,167) The budget for 2010 remains at $581,400. The city of Vernon actually gets paid the Franchise Fee in November 2010 for the money collected from Jan 1 ,2009 to December 31, 2009.

You can find the details and history since 1957 of the Franchise Fee at A HIDDEN TAX in your GAS BILL.

Vernon's share of 3.09% BC GAS FRANCHISE FEE
2000 $290,331
2001 $398,823
2002 $501,972
2003 $472,388
2004 $487,013
2005 $492,625
2006 $550,000
2007 $570,000
2008 $579,000

2009 $659,567)

2010 $581,400(est.)

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And in case I haven't already made your day the Feds come along and tag their 5% GST on not only the hike but on the 3.09% franchise fee also. On July 1, 2010 the HST will kick in and will be applied to the Franchise Fee at a 11% rate. Talk about a TAX on a Tax on a Tax. (The HST also will apply to the B.C. Carbon Tax.)