Gas Cost Recovery Rate FAQ

High natural gas prices have led to many customer questions about the factors behind the higher prices and ways of reducing the impact on individual natural gas consumers.

We hope this information is both informative and useful.

The Gas Cost Recovery Rate

  1. Does the higher price of natural gas benefit AltaGas Utilities?
  2. Why is the price of natural gas rising?
  3. What am I paying for?
  4. How do I know that I'm being treated fairly?
  5. Aren't Albertans entitled to cheaper gas?
  6. What is the market price?
  7. Do we benefit by being close to the gas?
  8. Can't AltaGas Utilities influence prices?


More about the Monthly GCRR

  1. Why have a monthly Gas Cost Recovery Rate?
  2. What will I see on my bill as a result of the monthly GCRR?
  3. If I provide my meter reading for the first day of the month, will it be used to calculate the charges on my bill?
  4. Are you going to read my meter every month with each rate change?
  5. Why are there two lines for the 'Gas Cost Recovery Charge'?
  6. How do I keep track of what I am being charged when the rate keeps changing?
  7. How do you estimate gas consumption on months my meter isn't read?


More...

  1. Energy Saving Tips

The Gas Cost Recovery Rate

1. Does the higher price of natural gas benefit AltaGas Utilities? Top
We do not benefit from changes in the price of natural gas. We do not produce the natural gas we deliver to you. We purchase the gas you consume from producers. The cost of purchasing the natural gas is the same amount we charge for the gas.

2. Why is the price of natural gas rising? Top
At times of rising natural gas prices, the demand for natural gas is increasing faster than can be met by available supply. Natural gas has become the preferred energy source across Canada and the United States. In addition to its traditional use in space heating, natural gas is also being used today in the generation of electricity and in industrial processes. Today, there is a very strong demand for natural gas for heating in the winter and electricity generation year-round across North America.

3. What am I paying for? Top
Through our Gas Cost Recovery Rate, our customers pay the cost of purchasing the natural gas they use. Primarily, this is the price paid to gas producers for the gas; but also includes costs such as gas-supply management costs. We do not apply any mark-up for the gas.

4. How do I know that I'm being treated fairly? Top
The Alberta Utilities Commission (AUC) reviews and approves all of our rates and charges. This regulatory process involves experts from customer interest groups who review our information and data to ensure it is accurate, factual, and reliable.
Some of the customer interest groups are:

  • The Consumers Coalition of Alberta,
  • The Municipal and Gas Co-op Intervenors,
  • The Public Institutional Consumers of Alberta,
  • The Urban Municipalities Association of Alberta, and
  • The Office of the Utilities Consumer Advocate.

5. Aren't Albertans entitled to cheaper gas? Top
As a result of deregulation in the 1980's, the price for natural gas for Albertans is based on the market price, as determined by supply and demand. That is the situation today.


6. What is the market price? Top
The market price, as it applies to gas we purchase, is the average price at which natural gas is bought and sold on the Alberta Energy Company index. While there are other indexes used in North America, this Alberta-based index provides the best reference for the daily or monthly market price of natural gas in Alberta.


7. Do we benefit by being close to the gas? Top
Yes. Gas produced in Alberta and sold to markets outside of our province must be transported lengthy distances to reach its destination. The cost outside markets pay to transport the gas long distances is a cost Albertans avoid having to pay.

8. Can't AltaGas Utilities influence prices? Top
Our customers use less than one percent of the natural gas produced in Alberta. The amount of gas we purchase on behalf of our customers is too small to influence market prices.

 

More about the Monthly GCRR

1. Why have a monthly Gas Cost Recovery Rate? Top
The monthly rate is the result of a decision by the Alberta Utilities Commission (AUC). The AUC has concluded that monthly rates will show customers the true cost of gas by adjusting more quickly to market prices. The AUC also believes that a monthly GCRR will prevent a recurrence of the situation that arose in the winter of 2000-2001, when a substantial rise in the price of gas led some utilities to accumulate very large deficits that eventually had to be collected from customers.


2. What will I see on my bill as a result of the monthly GCRR? Top
To ensure that the right Gas Cost Recovery Rate is applied to the gas you consume, we will use actual weather data to split your gas consumption between months. Bills for periods that include portions of two months will show two lines for the Gas Cost Recovery Charge - one line for each month.

3. If I provide my meter reading for the first day of the month, will it be used to calculate the charges on my bill? Top
We are unable to process readings provided between normal meter reading dates.

4. Are you going to read my meter every month with each rate change? Top
Normally we read your meter every month. For most customers, the billing consumption period usually starts in the previous month and ends in the current month. That is, their billed consumption spans two months. AltaGas Utilities uses current weather data to allocate the gas consumed between months. Prorating or allocating consumption based on weather data is a generally accepted practice with natural gas utilities in Canada. The weather data we use is provided by Environment Canada.

The reason why estimating and prorating based on weather temperature data is effective is because, for the most part, the amount of gas we require to heat our homes and businesses is tied directly to the weather we experience.

5. Why are there two lines for the 'Gas Cost Recovery Charge'? Top
Bills having a consumption period that spans two months will show two lines for the Gas Cost Recovery Charge - one line for each month.

The first line calculates the charge for consumption for the period between your previous bill and the last day of the prior month.

The second line calculates the charge for consumption for the period between the first of the current month to the last day of the consumption period.

For example, if your last bill was for consumption to May 18 and your current bill is for consumption to June 17:

  • The first line will be for consumption from May 19 to May 31; and,
  • The second line will be for consumption from June 1 to June 17.

6. How do I keep track of what I am being charged when the rate keeps changing? Top
Keeping track of a rate that changes will require some effort. Like buying milk from the grocery store or gasoline at the pump, commodity prices tend to fluctuate over time. Some important points to know:

  1. The Alberta Utilities Commission continues to regulate all our rates.
  2. Switching over to our Budget Payment Plan can reduce month-to-month fluctuations in your gas bill.
  3. To find more information about our rates and rate history, please refer to the Rates & Rules section of our website.

7. How do you estimate gas consumption on months my meter isn't read? Top
Normally, we read your meter every month. However, for those exceptions when your meter is not read, estimated consumption based on actual historic consumption and current weather data is used. The actual historic consumption we use is based on the consumption history of the service site or premise, not the account. For example, if you change places of residence, an estimate for your new residence will be based on consumption history of the previous occupants until you have a full year of consumption history of your own.

Estimating based on weather data is a generally accepted practice used by natural gas utilities across the country. Using weather temperature data is effective because, for most homes and businesses, the amount of gas required is tied directly to the weather we experience.

Energy Saving Tips Top

  • Turn the heat down. One degree in additional heat can represent 3% more in heating costs.
  • A programmable thermostat can turn down the heat at night and while you are away from home.
  • Consider upgrading your furnace to a high-efficiency model.
  • Humidity helps retain heat. Between 20 and 40 percent relative humidity is usually appropriate.

 

Last updated 2013/06/30