If you use natural gas to heat your home or run your appliances, you can expect a gas marketer to soon appear on your doorstep.
Effective January 1, B.C.’s local gas distribution company, FortisBC, amalgamated its various operating companies into a single entity. As a result, programs previously available only on the Mainland will soon be available on Vancouver Island.
One of these programs, known as ‘Customer Choice,’ provides customers with the option of buying their gas commodity from the gas distributor, FortisBC, or from a third party gas marketer. Either way, the gas will continue to be delivered by FortisBC.
Why choose one over the other?
FortisBC makes its money by delivering gas to you. It doesn’t make any money on the gas itself. Like the gas marketers, FortisBC buys gas from gas producers. The amount you pay FortisBC for the gas you use is the same amount FortisBC pays the producers. Because gas markets are dynamic, the amount FortisBC pays for gas varies over time, and so does the rate you pay for the gas you purchase from FortisBC. Every three months the B.C. Utilities Commission sets the rate FortisBC can charge for gas at a level designed to allow FortisBC to recover the full cost of its gas purchases and no more. That is, the rate is set so FortisBC breaks even.
If you purchase your gas from FortisBC, the rate you pay for gas goes up when the market goes up and goes down when the market goes down.
If you don’t want your rate changing, you must buy your gas commodity from a third party gas marketer.
Unlike FortisBC, the gas marketers are permitted to offer consumers a fixed rate under contracts lasting from one to five years. If you enter into a contract with a gas marketer, you will pay the agreed upon rate for the entire duration of your contract, regardless of how the price of natural gas changes in the market. Either way, the price you pay to have your gas delivered will continue to be set annually by the B.C. Utilities Commission.
What should you do? Whether you are likely to benefit financially from a fixed rate contract depends on what the market does in the future. FortisBC’s current rate of $2.48/GJ is substantially lower than the $3.89/GJ to $6.39/GJ currently being offered by gas marketers. This is because FortisBC can raise your rate if its costs increase. The gas marketers won’t be able to do that, so they need to charge you more now to hedge against possible future increases. They also need to make a profit because their business is selling you gas commodity, whereas FortisBC’s business is delivering you gas commodity.
No one can predict the future, but natural gas prices are currently near historic lows and it’s probably safe to say that they aren’t likely to go much lower in the future. Most predictions are for prices to stay relatively flat at least in the medium term.
Of course, predictions have a way of turning out to be wrong.
All you can really do is decide for yourself whether you’d rather live with a variable rate or secure a fixed rate, even if the fixed rate is currently higher.
Gas marketers are required to follow a Code of Conduct which is reviewed regularly and set by the B.C. Utilities Commission. Mechanisms have been built into the Code of Conduct to attempt to guard against potential customers feeling pressured into buying gas from a marketer. If you have a complaint about the conduct of a gas marketer or a dispute with respect to your contract with a gas marketer, you may be able to obtain assistance from the BC Utilities Commission’s Customer Choice Program.
More information on this topic is available on the FortisBC website and the B.C.Utilities Commission website under the “Customer Choice Program”.
— Tannis Braithwaite is the executive director/Barrister and Solicitor with the B.C. Public Interest Advocacy Centre. E-mail: firstname.lastname@example.org.