Lower bills expected for Kitchener natural gas customers

Kitchener Utilities’ customers can expect to pay less this year for their natural gas.

Council approved a reduction this week to the natural gas supply rate from the city-owned utility, from 16.7 cents per cubic metre to 11.63 cents per cubic metre, effective Wednesday.

That’s expected to result in a savings of about $80, or 9.3 per cent, for the average residential customer this year, a report noted.

Council also agreed that the supply rate will be reviewed quarterly against market conditions, with any needed changes brought to council for approval.

There are two different rates factored into a gas bill — supply and delivery. The supply rate reflects the purchase and transportation of natural gas to Kitchener, while delivery to individual customers is reflected in the delivery rate.

Rates were last changed in November, when the supply rate decreased. The delivery rate is not changing at this time.

Kitchener Utilities, one of only two municipally-owned natural gas utilities in Ontario, purchases gas both in advance, with fixed prices, and on the spot market, where prices change frequently.

“The blending of fixed and market price natural gas is used to reduce volatility in prices to keep rates stable for customers,” the report said.

The utility also maintains a stabilization reserve that helps to absorb sudden price increases and offset price spikes for customers.

With current market prices lower due to mild winters and good storage levels, the stabilization reserve is forecast to be over its maximum limit by the end of the year, allowing the supply rate to come down now, the report noted.

However, staff note that natural gas prices are expected to rise later this year and next, thanks to rising demand and reduced domestic supply as more North American natural gas is exported.

Council also agreed that the supply rate will be reviewed quarterly