HomeMy WebLinkAboutINS-18-032 - Natural Gas RatesREPORT TO:Council/Committee of the Whole
DATE OF MEETING:September 24, 2018
SUBMITTED BY:Greg St. Louis,Director of Utilities, 519-741-2600 ext.4538
PREPARED BY:Loraine Baillargeon, Manager, Asset Optimization, Jaya
Chatterjee, Regulatory Analyst
WARD(S) INVOLVED:All
DATE OF REPORT:September 24, 2018
REPORT NO.:INS-18-032
SUBJECT:NATURAL GASRATES
___________________________________________________________________________
RECOMMENDATION:
ThattheOntario Cap andTradecomponent of 3.8719 cents per cubic meter of the
natural gas delivery rate beremoved from all delivery customers of Kitchener
Utilities effective October1, 2018.
BACKGROUND:
The Ontario Cap andTrade Program was a provincially legislated emission trading
system launched by the Ontario Liberal Government in May 2016 to reduce the impacts
of climate change.As a natural gas distributor in Ontario, Kitchener Utilitieswas
mandated to comply with this legislation andwas required to purchase emission
compliance instruments on behalf of ourThe new provincial
government has introduced legislation to end the Ontario Cap and Trade Programand
hasinstructed the Ontario Energy Board to direct natural gas utilities to remove the cost
for consumers by October 1, 2018.
However, staff recommend the removal ofthe Cap and Tradechargeeffective October
1st to align with otherrate-regulated gasutilities as well as comply with the provincial
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, 2018.
The following are key highlights of this natural gas rate change report:
-Removal of the provincially legislated Ontario Cap and Trade component from the
delivery rateat3.8719 cents per cubic meter;
-A net reduction of $81.30 to the overall annual bill for an average residential
customer consuming 2,100 cubic meters of natural gas as a result of removal of
theOntario Cap and Trade charge;
-Kitchener Utilities is keepingdelivery ratesstable at current rates for all customers;
*** This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994 for assistance.
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-Kitchener Utilitiesisable to keepthesupplyratestable at the current ratefor
system gas customers
REPORT:
rate stability. These rates are impacted by supply, demand, and weather. Kitchener
Utilities natural gas rates have threecomponents: gas supply, gas delivery,andOntario
Cap & Trade.
Gas Supply:
The purchase price of gas was forecast to increase in 2018. Based on this the gas supply
rate was also forecast to increase to 15.5 cents per cubic metre. However,production of
naturalgas in North America rose above expectations lowering the cost to purchase.
Therefore, the gas supply rate is being held constant at thecurrent rate of 13.5
cents per cubic metre.
Gas Delivery:
The Gas Delivery charge includes all costs for delivering gas to the end user. It includes
transmission within Ontario, storage costs, pipeline infrastructure, maintenance, meter
reading, and bill processing. There are two components to the delivery charges: a daily
fixed charge, and a variable rate.There are four Delivery Rate Groups, M1, M2, M4 and
M5. These rates service customers of different volumetric requirements.
Thedelivery components of the proposed natural gas rates arebeing held constant
at current rates.(See Appendix Afor completerates).
Ontario Cap and Trade:
Since the election of the Progressive Conservative party, there have been many
regulations, acts and directives aimed at cancelling the Ontario Cap and Trade program.
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o On July 3, 2018, the cap and trade program regulationwas revokedprohibitingthe
trading of emission allowances and credits effective immediately along withthe
process to wind down the Cap andTrade program.
th
o On July 25, 2018, Bill 4 Cap and Trade Cancellation Act, 2018 was introduced, which
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cancels all allowances purchased up to July 3and outlines which types of
participants will not receive compensation. Kitchener is one of the types (natural gas
distributor) that will not receive compensation,as there is an ability to pass the cost to
customers.
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o OnAug 29,government issued adirective totheOEB to direct natural gas utilities to
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remove the cap & trade charge for consumers by October 12018.
The Ontario Cap and Trade charge includesall costs of procuring emission compliance
instruments on behalf of customers,
greenhouse gas emissions from its operations,and administrative expenses.
The Ontario Cap & Trade component of the variable delivery rateat 3.8719
cents per cubic meteris being removed.
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ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
through the delivery of core service.
FINANCIAL IMPLICATIONS:
For an average residential customer consuming 2,100 cubic meters annually, theremoval
ofthemandatory Ontario Cap and Trade chargeof 3.8719 cents per cubic meters, will
reducetheoverall annual bill by $81.30.
The Cap and Trade program is forecasttounder recover the total cost of the program.
Any remaining costs that have not been recovered through the Cap and Trade charge will
be recovered from theDelivery program.
COMMUNITY ENGAGEMENT:
Kitchener Utilities will work with the Corporate Communicationsand MarketingDivision
to ensure that media outlets are provided with a press release to inform customers. An
insert is being prepared to be distributed with utility bills in Octoberand information will
be posted ontheand City website.
INFORM
of the council / committee meeting.
ACKNOWLEDGED BY: Denise McGoldrick,General Manager,
Infrastructure Services
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APPENDIX A
CORPORATION OF THE CITY OF KITCHENER
NATURAL GAS
GENERAL SERVICE RATEM1
Applicability
To residential and non-contract commercial and industrial customersthat consume less than 50,000 m³ per year.
Rate
Daily Fixed Charge$ .7300
And
SUPPLY COMMODITY & VARIABLE DELIVERY
NET RATE
TRANSPORTATIONRATE
333
¢/m¢/m¢/m
13.50006.837120.3371
Meter Readings
Gas consumption by each customer under this rate schedule shall be determined by periodic meter readings, provided that in
circumstances beyond the control of the Corporation, such as strikes or non-access to a meter,The Corporation may estimate
the monthly consumption between the meter readings and render a monthly bill to the customer.
Effective
October 1, 2018
Policy Relating to Terms of Service
1)Gas purchased under this rate schedule shall not be resold, directly or indirectly by the customer,
2)Customers who temporarily discontinue service during any twelve consecutive months without payment of the monthly
fixed charge for the months in which the gas is temporarily disconnected shall pay for disconnection and reconnection.
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CORPORATION OF THE CITY OF KITCHENER
NATURAL GAS
GENERAL SERVICE RATE M2
Applicability
To residential and non-contract commercial and industrial customers that consume 50,000 m³and more per year.
Rate
Daily Fixed Charge$2.3000
And
SUPPLY COMMODITY & VARIABLE DELIVERY NET RATE
TRANSPORTATIONRATE
333
¢/m¢/m¢/m
13.50006.437319.9373
Meter Readings
Gas consumption by each customer under this rate schedule shall be determined by periodic meter readings, provided that in
circumstances beyond the control of the Corporation, such as strikes or non-access to a meter,The Corporation may estimate
the monthly consumption between the meter readings and render a monthly bill to the customer.
Effective
October 1, 2018
Policy Relating to Terms of Service
2)Gas purchased under this rate schedule shall not be resold, directly or indirectly by the customer,
3)Customers who temporarily discontinue service during any twelve consecutive months without payment of the monthly
fixed charge for the months in which the gasis temporarily disconnected shall pay for disconnection and reconnection.
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CORPORATION OF THE CITY OF KITCHENER
NATURAL GAS
FIRM INDUSTRIAL AND COMMERCIAL CONTRACT RATEM4
Applicability
To a customer who enters into a contract for a minimum term of one year, that specifies a daily contracted demand(CD)as follows:
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Between 4,800 mand 140,870 m.
Rate
1.Bills will be rendered monthly and shall be the total of:
i)AFixed Demand Charge:
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First8,450 mof the daily contracted demand,45.9000¢/m
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Next19,700 mof the daily contracted demand,19.8000¢/m
333
All mover28,150mof the daily contracted demand,16.8000¢/m
ii)A Variable Delivery Charge(incl. storage):
3
First 422,250 m3 delivered per month1.3000 ¢/m
3
Next volume equal to 15 days use of CD1.3000 ¢/m
3
Remainderof volumes delivered in the month1.3000 ¢/m
iii)A Monthly Gas Supply Charge:
3
Supply Commodity & Transportation13.5000¢/m
2.Over-run Charge
Authorized overrun gas is available provided that it is authorized by the Corporation in advance.The Corporation will not
unreasonably withhold authorization.Overrun means gas taken on any day in excess of 103% of contracted daily demand.
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Authorized overrun will be available April 1 through October 31, and will be paid for at the rate of 2.809041¢/mfor the
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delivery and, if applicable, totalgas supply rate of 13.5¢/m.
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Unauthorized overrun in any month shall be paid for at the rate of 6.4373¢/mfor the delivery and total gas supply charge for
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system-suppliedvolumes at the rate of 13.5¢/m.
3.Minimum Annual Charge
In each contract year, the customer shall purchase from the Corporation or pay for a minimum volume of gas equivalent to
150 days use of contracted demand.Overrun gas volumes will not contribute to the minimum volume.In the event that the
customer shall not take such minimum volume, the customer shall pay an amount equal to the deficiency from the minimum
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volume times a rate of 1.833¢/m, and if applicable, a total gas supply charge of 13.5¢/m.
In the event that the contract period exceeds one year, the annual minimum volume will be pro-rated for any part year.
Effective
October 1, 2018
Policy Relating to Terms of Service
Gaspurchased under this rate shall not be resold, directly or indirectly by the customer.
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CORPORATION OF THE CITY OF KITCHENER
NATURAL GAS
INTERRUPTIBLE INDUSTRIAL AND COMMERCIAL CONTRACT RATEM5
Applicability
To a Customer who:
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A)Enters into a contractfor a minimum term of one year that specifies a daily contracted demand between 4,800 mand 140,870
3
minclusive and,
B)Has an alternate fuel supply and combustion system available.
Rate
1.The price of all gas delivered shall be determined on the basis of the following schedules:
i)Monthly Fixed Charge$560.00
a.and
ii)Delivery Charge(incl. storage):
Daily Contracted Demand Level (CD)
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4,800 m<CD <17,000 m2.9039¢/m
333
17,000 m<CD <30,000 m2.7611¢/m
333
30,000 m<CD <50,000 m2.6859¢/m
333
50,000 m<CD <70,000 m2.6332¢/m
333
70,000 m<CD<100,000 m2.5955¢/m
333
100,000 m<CD <140,870 m2.5584¢/m
iii)A Monthly Gas Supply Charge:
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Supply Commodity & Transportation13.50000¢/m
2.Over-run Charge
Authorized overrun gas is available provided that it is authorized by the Corporation in advance.The Corporation will not
unreasonably withhold authorization.Overrun means gas taken on any day in excess of 105% of contracted daily demand.
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Authorized overrun will be available April 1 through October 31, and will be paid for at the rate of 2.809041¢/mfor the
3
delivery and, if applicable, totalgas supply rate of 13.5¢/m.
3
Unauthorized overrun in any month shall be paid for at the rate of 6.4373¢/mfor the delivery and total gas supply charge for
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system-suppliedvolumes at the rate of 13.5¢/m.
3.Minimum Annual Charge
In each contract year, the customer shall purchase from the Corporation or pay for a minimum volume of gas equivalent to
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150 days use of contracted demand which will not be less than 700,000mper annum.Overrun volumes will not contribute
to the minimum volume.In the event that the customer shall not take such minimum volume, the customer shall pay an amount
3
equal to the deficiency from the minimum volume multiplied by1.833¢/mfor the delivery charge and if applicable, a gas
3
supply charge of 13.5¢/m).
Effective
October 1, 2018
Policy Relating to Terms of Reference
Gas purchased under this rate shall not be resold, directly or indirectly by the customer.
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