does Heritage Gas buy the natural gas it supplies to its customers?
Heritage Gas has typically acquired its natural gas
supply from Nova Scotia Offshore reserves. As the gas is close to our customers, the cost has been lower than
transporting natural gas in from other sources across
America. This winter we
will be acquiring a combination of natural gas from Sable Offshore Energy
natural gas fields and
New England markets.
does Heritage Gas charge its customers for natural gas supply?
The cost Heritage Gas pays for the gas supply commodity
is what is charged to our customers – it is a ‘pass through’ charge meaning
there is no additional mark-up applied by us. This cost is charged to you on your bill as “gas cost” and is changed
each month to reflect the actual cost to us.
Click here for a graph of the historical Gas Cost
Recovery Rate (“GCRR” or “gas cost”) which represents the gas supply portion on
3. What are the expectations for natural gas prices over the winter in Nova Scotia?
Last winter we benefited from the lowest natural gas
winter supply pricing in our history. (This
is illustrated on the chart with link above.) This was not only because of the
ample supply of
Nova Scotia gas flowing from
natural gas fields, but also because it was quite a mild winter throughout
North America. Heritage
Gas anticipates that there is the potential to see a temporary increase in the
monthly gas cost this winter due to changing market factors, including:
- The Sable Offshore Energy natural gas fields are
expected to operate at reduced production levels from their normal daily output
for the remainder of the winter.
- Reduced imports of liquefied natural gas (LNG)
into our region due to higher price attracting LNG shipments to other parts of
- The Deep Panuke natural gas supply basin in Nova
Scotia’s offshore has had start-up delays in their production and is not expected
to have gas flowing until mid-2013.
These factors are likely to temporarily increase
the market price of natural gas in
once Deep Panuke natural gas supply from
Scotia’s offshore is in the market prices should
is the longer term outlook for natural gas prices here in
Scotia is part of a large natural gas market which is
affected by supply and demand factors like any other commodity market. The cost goes up and down based on market
Scotia we are most directly impacted by the
England market because we are most closely connected to that area. We can’t predict commodity market prices. However, based on our understanding of the
market we expect that once the Deep Panuke supplies are on line, costs are
likely to return to the levels we have seen in the past couple of years.Heritage Gas is committed to actively seek
competitively priced natural gas in the market with the goal of continuing to
provide the lowest priced fuel choice for our customers.
natural gas still good value?
Yes – Until new supply from Deep Panuke comes on
stream, we expected to see a temporary increase in the monthly gas cost this
winter. Despite the potential increase
to the gas cost to our customers over the winter months, natural gas is still
significantly less expensive when compared to alternatives, such as oil. Click here for a chart showing the gas cost
compared to the wholesale oil equivalent for the past few years.
is Heritage Gas doing to help customers get the best deal on natural gas?
Heritage Gas holds competitive Requests for Proposals
and assesses the value of gas it acquires for its customers. Heritage Gas
through a market assessment will enter into bilateral contracts, a contract
between a “seller” – Gas supplier and a “buyer” – Heritage Gas, securing gas
supply for customers. Heritage Gas is seeking ways to improve future
pricing for Nova Scotians through improvements in pipeline tariffs (tolls) and
potentially acquiring future gas storage capacity, when available, to ensure increased
security of supply and to minimize seasonal price increases.
there a risk of running out of natural gas?
– There is an abundance of natural gas in
connected by pipeline infrastructure throughout
America. Here in
Nova Scotia, Heritage
Gas is connected to the North American pipeline grid through the Maritimes and
Northeast Pipeline, which is in turn connected to a number of other
transmission pipelines. Analysts
(including the U.S. National Petroleum Council) have estimated that there is
enough natural gas reserves in
for more than 100 years, meaning natural gas will continue to flow for all of
Heritage Gas’ customers.
On November 24, 2011 Heritage Gas received approval from the Nova Scotia Utility and Review Board (“NSUARB”) related to its June 15, 2011 general tariff application (“GTA”). The approved rate increases will allow the company to match billed revenues to the cost of providing its service. Being able to recover the full cost of service in rates is critical to the continued healthy growth of the distribution franchise. These rate increases will allow Heritage Gas to deliver more gas to more Nova Scotians at a price that is still expected to be substantially cheaper than oil.
To read a summary of the approved rate changes, please click here.
To read the NSUARB decision, please click here.
Please click here for full document. Should you wish to read the content of the General Tariff Application submitted to the Board on June 15, 2011 please click GTA.
For Immediate Release
Natural gas retains its substantial cost advantage over other fuel sources
Halifax, Nova Scotia (June 15, 2011) – Heritage Gas is filing a general tariff application (“GTA”) today
with the NSUARB. The GTA is required under the Gas Utilities Act of Nova Scotia when Heritage Gas is
asking for an increase in rates charged to its customers to cover the cost of delivery service.
Heritage Gas bills to customers have two components. The delivery service portion covers the cost of
building, operating and maintaining the natural gas distribution system. The bill also includes the cost
of natural gas supply, which is at cost without markup. Natural gas supply charges on the bill are not
regulated by the NSUARB.
Since the company’s inception in 2003, distribution rates have been set at levels that are less than what
is required to recover the full cost of service, with the shortfall in the recovery of the revenue
requirement being deferred to a Revenue Deficiency Account (“RDA”). This RDA mechanism allows time
for Heritage Gas’ “greenfield” distribution system to develop. This mechanism has been used in other
jurisdictions where, like in Nova Scotia, the development of distribution infrastructure has been
financed by mainly private rather than public investment.