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Canadian Regulators Move to Unbundle Gas Rates

Fortnightly Magazine - September 1 1995

After reviewing gas supply and related matters as part of a general rate case for Centra Gas Ontario, Inc., the Ontario Energy Board has directed its technical staff to develop a mechanism to separate the utility's commodity sales from its transportation and distribution functions. The Board said the move was necessary because competition in the sale of natural gas and the introduction of indexed pricing had made regulation of the utility's existing tariffed services difficult. The Board further noted that the advent of gas-supply contracts based on indexed prices had rendered the company's cost of gas more volatile, resulting in more frequent rate changes. These frequent changes had led, in turn, to a lack of symmetry among the prices paid to buy/sell customers and system gas customers and the market price of gas. Accordingly, the Board approved a quarterly rate adjustment mechanism on a trial basis. Re Centra Gas Ontario, Inc., E.B.R.O. 489/E.B.R.L.G. 34-14, June 16, 1995 (Ontario E.B.).

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