Changes may be coming to Kitchener's natural gas purchasing strategy

May 5 2014

Councillors say they're keeping customers' demands for stability in mind as they propose slight changes to the way in which natural gas is purchased.

Kitchener Utilities, owned by the city, currently uses a "blended" system to purchase natural gas, buying fixed-price gas on contract for up to five years and buying market or variable-rate gas when warranted. Its rates are set once a year.

Most utilities, such as Union Gas, charge customers the market rate, and adjust prices quarterly.

A Record comparison of the two approaches showed the average customer in Kitchener paid about $1,150 more in gas supply costs over the past five years compared to Union Gas customers.

Now, councillors are proposing that the blended system be maintained, while perhaps purchasing fixed-price gas on contracts of only one or three years. Shorter fixed-price contracts would still offer stability, officials say, but would not lock the utility in for as long a period.

"It's kind of the middle of the road approach," said Coun. Kelly Galloway-Sealock.

Adopting this modified approach was approved at the committee level on Monday. Councillors John Gazzola, Scott Davey, Yvonne Fernandes and Zyg Janecki voted against the idea.

Staff are expected to report back to councillors with more information and specific policy details before the change is ratified by council.

The move comes on the heels of a recent survey which asked Kitchener Utilities customers how natural gas should be purchased.

A majority of residents said they preferred stable rates, but they weren't asked if they were willing to pay a premium for that stability.

"There needed to be a fair comparison between the two rate structures," Trysha Wharton told councillors on Monday. "I would suggest this (survey) was not done on an unbiased basis."

 

Source:

Davis, Brent. "Changes May Be Coming to Natural Gas Purchasing Strategy." Editorial. The Record. The Record, Web. 02 May 2014. <http://www.therecord.com/news-story/4489274-changes-may-be-coming-to-natural-gas-purchasing-strategy/>.

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