Terasen Gas receives approval to adjust natural gas and propane rates

Customers still have some of the lowest prices in years

SURREY, BC, Dec. 14 /CNW/ - Terasen Gas has received approval from the British Columbia Utilities Commission (BCUC) to adjust commodity and midstream rates for some customers in the province. The changes will take effect January 1, 2010 .

Terasen Gas purchases natural gas and propane on behalf of its customers and passes that cost on without mark-up, so customers pay what Terasen Gas pays. Midstream rates are what Terasen Gas pays other companies to store, transport and manage the gas delivered to customers. This cost is also passed onto customers without mark-up. Natural gas and propane are commodities traded on the open market like oil, coffee or lumber. Factors affecting the price of natural gas include weather, supply and demand, international events and market speculation.

"Today's decision means customers will still be enjoying some of the lowest rates in more than five years, even with the increases in commodity and midstream rates for customers in some of our service regions," said Cynthia Des Brisay, Vice President of Gas Supply and Transmission, Terasen Gas. "Since October, when we were able to offer customers in most of our service regions a commodity rate decrease, several factors have affected the price of natural gas, including rising demand and colder weather. Our purchasing and hedging strategies have allowed us to soften the increase we have to pass on to customers."

For customers in the Lower Mainland, Fraser Valley, Interior, North and the Kootenay service areas, commodity rates will remain unchanged, following an approximate nine per cent decrease to customers total annual bills in October. Customers in these regions will see an increase of $0.71 to $0.73 per gigajoule (GJ) in midstream charges, or approximately $55 to $67 per year, depending on consumption. The adjustment in midstream rates is a result of an increase in fees paid by Terasen Gas to store and transport gas.

Commodity rates for customers participating in the Customer Choice program will not be affected, as they purchase the gas commodity from a licensed gas marketer, however changes in the midstream rate applies to all customers.

Fort Nelson customers will see about an eight per cent increase in their total annual bill, reflecting both an increase in the commodity price of gas and a slight decrease in the delivery component of rates, as determined by the BCUC in a previous application. This works out to an overall increase of approximately $95 per year for a residential customer consuming 140 GJ per year.

The BCUC recently approved Terasen Gas ( Vancouver Island) Inc.'s negotiated settlement for its revenue requirement and rate design application. This means rates will remain unchanged for a two-year period, starting January 1, 2010 , for residential and commercial customers on Vancouver Island, the Sunshine Coast , and Powell River.

For customers in Whistler and Revelstoke, Terasen Gas is awaiting a decision by the BCUC on previous applications for the determination of rates, effective January 1, 2010 .

Terasen Gas is also waiting for a decision on an application before the BCUC that, if approved, will complete all of the information required to determine delivery rates for customers in the Lower Mainland, Fraser Valley, Interior, North and the Kootenays, which will be reflected on customer bills beginning January 2010 .

Every three months, Terasen Gas reviews natural gas and propane commodity rates with the BCUC in order to ensure the flow-through rates customers are charged are sufficient to cover the cost of purchasing the gas, while midstream rates are reviewed by the BCUC once a year in December with any changes coming into effect the following January.

Terasen Gas is mainly composed of the operations of Terasen Gas Inc. and Terasen Gas ( Vancouver Island) Inc., both indirect wholly owned subsidiaries of Fortis Inc. Fortis Inc., the largest investor-owned distribution utility in Canada , serves more than two million gas and electric customers and has total assets approaching $12 billion . Its regulated holdings include Terasen Gas and electric utilities in five Canadian provinces and three Caribbean countries. Fortis Inc. owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns hotels and commercial real estate in Canada . Fortis Inc. shares are listed on the Toronto Stock Exchange and trade under the symbol FTS. Additional information can be accessed at www.fortisinc.com or www.sedar.com

For further information: Media Contact: Kirsten Walker, Communications Specialist, Terasen Gas Inc., Phone: [phone], Email: [email protected]