BC Gas Utility has applied to the British Columbia Utilities Commission for a rate increase that will add approximately 16% to the typical residential customer’s total gas bill, about 6% less than the wholesale cost the distributor believes it may have to pay over the next 12 months.

The utility estimates the full impact of increased commodity prices would add almost 22% to the typical residential customer’s bill. Most of the company’s current gas contracts expire at the end of this month and it is in the market for supplies going forward.

“We are asking to pass on only part of the increased cost of the commodity at this time so we can maintain the economic advantage of natural gas relative to electricity rates which remain frozen by provincial legislation. The proposed rates remain very attractive compared to propane or home heating oil, whose costs have escalated significantly in past months,” said Randy Jespersen, BC Gas Utility president.

Undercollections would go into a deferred gas cost reconciliation account to be collected at a later date, which means that if gas prices go down, customers won’t see their bills decline until the deferred account has been paid off. “We’re helping to shelter our customers a little from the volatility of the marketplace,” spokesman Dean Pelkey said. The prices for competing electricity have been frozen at an artificially low level since 1993, but will be uncapped next year. Conceivably, next year the higher gas bills would be competing with higher electric bills.

“We have held the line on commodity costs as long as possible thanks to our gas purchasing strategy where we locked in the majority of our gas supply for the winter at lower prices,” Jespersen said. BC Gas maintained the lower prices by purchasing storage gas ahead, signing some 12-month fixed price contracts and hedging. The company’s gas supplies come from within the province and from Alberta.

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