Natural gas customers in Ottawa and other parts of Ontario may suffer a shock the next time they receive their bill after the tariff increase went into effect Friday.
The rate that most customers pay for natural gas in Ontario increased from July 1, with an increase of approximately 20% for Enbridge customers in this corner of the province.
Some will see an increase to 23.2%.
“People will feel it on their bills,” said Warren Mabee, a professor at Queen’s University in Kingston, Ontario, who has experience in Canada’s energy system and the intersection of technologies and policies.
“That’s the kind of thing you’ll potentially spend a few hundred more over the course of the year beyond what you’ve normally budgeted for heating.”
The Ontario Energy Board (OEB) approved the tariff increase several weeks ago, along with a “tariff mitigation strategy” proposed by Enbridge, one of the province’s largest natural gas distributors.
“Natural gas prices remain high due to sustained global demand for US liquefied natural gas and uncertainty in the global energy landscape,” according to the EPO.
The council said the International Energy Agency has warned of “significant continued upward pressure on prices beyond this quarter”, with US natural gas production unable to keep up up to date with demand.
Natural gas storage levels in North America have also “remained below the five-year average,” the EPO said.
The war in Ukraine partly drove the rise
Mabee said the problem boils 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 on projected demand and sourcing accordingly.
In a statement on its website, Enbridge said that with the implementation of a change during the summer months, when gas consumption is lowest, it expects to moderate the impact on household energy costs.
He also said that the conflict in Ukraine and demand pressures are fueling the increase.
While international demand for natural gas has been rising in recent years, Mabee agrees that the war in Ukraine only aggravated 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 large amounts of natural gas and can close pipelines means we have countries in Europe that are now on the market trying to increase their stocks.”
Enbridge said that over the next three months, this rate hike will amount to about $ 5 a month per customer, at least between July and September.
This increase puts the region in line with other parts of Canada, which have also experienced similar increases, Mabee said.
And while that increase is significant, Mabee said it probably won’t be as painful as what people are experiencing at gas stations.
“Knowing that costs are rising means you can plan ahead,” he said. “You can check your thermostats”.