TORONTO, ONTARIO--(CCNMatthews - Dec. 21, 2005) - Enbridge Gas Distribution (TSX:ENB) (NYSE:ENB), a regulated utility, announced today that it has received approval from the Ontario Energy Board to adjust its prices effective January 1, 2006. The changes include an increase in the Gas Supply Charge, a new Gas Cost Adjustment refund and an increase in the Delivery Charge. As of January 1, 2006 residential customers who buy the natural gas they use from the utility will pay 41.2 cents per cubic metre for the commodity, based on the combined effect of the Gas Supply Charge and the Gas Cost Adjustment refund.
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. The changes will result in a $257 annual increase for a typical residential customer(1) who buys natural gas from Enbridge Gas Distribution, excluding the Gas Cost Adjustment refund. The change will result in an $18 annual increase for a typical residential customer who buys natural gas from a marketer.
"Our natural gas prices are based on North American natural gas market prices. Market prices have increased due to a tight balance between gas supply and demand," said Lino Luison, Vice President, Enbridge Gas Distribution. "Expectations for a cold winter in the key North American heating regions, coupled with the supply issues resulting from a severe hurricane season, are resulting in continued pressure on natural gas prices."
"While prices have increased, natural gas is still the most efficient source of energy for residential home and water heating in Ontario," said Luison. "It would cost customers more to get the same level of comfort using electricity or home heating oil."
Over the past five years, natural gas has been on average about 40 per cent less expensive than electricity and 25 per cent less expensive than oil(2).
Gas Supply Charge
As a result of an increase in market prices, the Gas Supply Charge which now makes up about 72 per cent of the bill(2) will increase by approximately 22 per cent. The utility's new residential Gas Supply Charge will increase to 43.1 cents per cubic metre from 35.32 cents per cubic metre.
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 1.9 cents per cubic metre will be in place from January 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 $59.
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 total annual Delivery Charge, which includes the costs of transporting natural gas from western Canada and delivering it through the distribution network to customers' homes, will increase by approximately $18 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.
One-time rate adjustment
The one-time refund is for gas used from October 1, 2004 to September 30, 2005 and is the result of a difference between the actual costs incurred and the amount customers paid over the past year. This includes an adjustment for both the Gas Supply, due to lower than anticipated costs, and the Delivery Charge, for higher than anticipated costs.
The one-time year-end Rate Adjustment will be a charge of approximately $2.50 for a typical residential customer who buys their natural gas from a marketer and a refund of about $10 for customers who buy their gas supply from Enbridge Gas Distribution. The one-time rate adjustment will be on the January bill.
Enbridge Gas Distribution delivers natural gas to about 1.7 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/enb1221.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 January 1, 2006.
For more information please contact:
Enbridge Gas Distribution
Manager, Media and External Relations