Natural gas rates up roughly 20 per cent in parts of Ontario
War in Ukraine, supply and demand stoking increase
Natural gas customers in Ottawa and other parts of Ontario may be in for a shock next time they receive their bill after a rate hike took effect Friday.
The rate most customers pay for natural gas in Ontario rose as of July 1, with an approximately 20 per cent increase for Enbridge customers in this corner of the province.
Some will see an increase as high as 23.2 per cent.
"People will feel it on their bills," said Warren Mabee, a professor at Queen's University in Kingston, Ont., who has expertise in Canada's energy system and the intersection of technologies and policies.
"This is the sort of thing where you'll spend potentially a few hundred more over the course of the year above and beyond what you have normally budgeted for heating."
The Ontario Energy Board (OEB) approved the rate increase several weeks ago, along with a "rate mitigation strategy" proposed by Enbridge, one of the largest distributors of natural gas in the province.
"Natural gas prices remain high because of sustained global demand for North American liquefied natural gas and uncertainty in the global energy landscape," according to the OEB.
The board said the International Energy Agency has warned of "continued significant upward pressure on prices beyond this quarter," with North American natural gas production unable to keep up with demand.
Natural gas storage levels in North America have also "remained below the five-year average," the OEB said.
War in Ukraine partly fuelling increase
Mabee said the issue comes down to the fundamentals of rising demand and tightening supply. He said companies often look at the long-term weather forecast, among other factors, while working out anticipated demand and stock up accordingly.
In a statement on its website, Enbridge said that by implementing a change during the summer months, when gas use is at its lowest, it hopes to moderate the impact on household energy costs.
It also said the conflict in Ukraine and demand pressures are fuelling the hike.
While international demand for natural gas has been rising over the last few years, Mabee agrees the war in Ukraine only exacerbated the situation.
"Natural gas supplies have become a bargaining chip or a leverage point in this war," Mabee said.
"And the fact that Russia controls huge amounts of natural gas and can turn off pipelines means that we have countries in Europe that are now on the market trying to build up their stocks."
Enbridge said over the next three months, this rate hike will amount to roughly $5 a month per customer, at least between July and September.
That increase puts the region in line with other parts of Canada, which have also seen similar raises, Mabee said.
And while this increase is significant, Mabee said it likely won't be as painful as what people are experiencing at gas stations.
"Knowing that the costs are going up means that you can plan ahead," he said. "You can check your thermostats."