TORONTO, ONTARIO--(CCNMatthews - June 22, 2006) - Enbridge Gas Distribution (TSX:ENB) (NYSE:ENB), a regulated utility, announced today that it has received approval from the Ontario Energy Board to reduce its prices effective July 1, 2006. The Gas Supply Charge and Delivery Charge will be reduced and a new Gas Cost Adjustment refund will be implemented. Based on the combined effect of the Gas Supply Charge and the Gas Cost Adjustment refund, effective July 1, 2006 residential customers who buy the natural gas they use from the utility will see their commodity price decrease from 33.8 to 27.9 cents per cubic metre or 17.5 per cent.
The impact of the changes will vary based on the amount of natural gas used and whether customers buy their natural gas from the utility or a natural gas marketer. For the typical residential customer(1) who buys natural gas from Enbridge Gas Distribution, the changes, excluding the Gas Cost Adjustment, will result in a $48 or 3 per cent decrease on the total annual bill.
For the typical residential customer who buys their natural gas from a marketer, the change in the Delivery Charge will result in a $7 annual decrease. The price they pay for the Gas Supply Charge is based on their contract with their marketer.
"Due to the warm winter, natural gas storage levels are higher than normal. The high volume of gas in storage has led to lower market prices, sustaining a downward trend which has existed all year," said Lino Luison, Vice President, Enbridge Gas Distribution. "Our natural gas prices reflect North American market prices. While prices fluctuate, using natural gas has persistently been less expensive than electricity and oil, providing our customers with great value."
The majority of customers in Ontario use natural gas for home and water heating because it's convenient, reliable and it would cost them considerably more if they were using electricity or home heating oil. Over the past five years, natural gas has been on average about 41 per cent less expensive than electricity and 23 per cent less expensive than oil.(2)
Gas Supply Charge
The utility's new residential Gas Supply Charge, or the natural gas price, will decrease to 34.1 from 35.4 cents per cubic metre, a decrease of about 4 per cent.
The utility's Gas Supply Charge is passed on to customers without mark-up. The price customers pay is the same as Enbridge Gas Distribution's costs to purchase the natural gas.
The Gas Supply Charge is based on a forecast of what the Company expects to pay for natural gas supply for the next 12 months. This forecast is reviewed quarterly and, if necessary, adjusted. If there is a difference between the forecast prices charged to customers and the actual amount paid by the Company, the difference is collected from or reimbursed to customers through a Gas Cost Adjustment.
Customers who buy their natural gas from a marketer will continue to pay the price specified in their contract with their marketer.
Gas Cost Adjustment Refund
A Gas Cost Adjustment refund of 6.24 cents per cubic metre will be in place from July 1, 2006 to December 31, 2006. For the typical residential customer who buys their natural gas from the utility, the refund will amount to approximately $71.
The refund is a result of the difference between the actual natural gas costs incurred by the utility and the amount collected from customers through the Gas Supply Charge.
The Delivery Charge, which includes the costs for transporting natural gas through North American pipelines and the costs for delivering it through the distribution network to customers' homes, will decrease by approximately $7 a year for a typical residential customer.
As a utility regulated by the Ontario Energy Board, Enbridge Gas Distribution earns an approved rate of return on the capital it has invested in the distribution system. This is included in the distribution charges.
Enbridge Gas Distribution delivers natural gas to about 1.8 million customers in Ontario communities including Toronto, Ottawa, Barrie and Niagara Falls. Of those customers, about 60 per cent buy their gas supply from the utility. About 40 per cent of the utility's customers buy their gas supply directly from marketers.
Please see the attached backgrounder for more information about Enbridge Gas Distribution prices: http://www.ccnmatthews.com/docs/enb622.pdf
(1) A typical residential customer uses 3,064 cubic metres of natural gas a year for home and water heating.
(2) Based on the annual bill for a typical residential customer who buys their natural gas from the utility. Updated based on annualized rates effective July 1, 2006.
For more information please contact:
Enbridge Gas Distribution Inc.
Manager, Media and External Relations