Natural gas, electricity costs to rise in Canada this winter | Whuff News


Most Canadians who pay for natural gas or electricity can expect their bills to increase between 50 and 100 percent on average this winter, according to one energy analyst.

Some customers may see their bills increase by up to 300 per cent while others see a smaller increase, but the overall situation is clear, said EnergyRates.ca founder Joel MacDonald.

In general, Canadians are joining the global community in seeing very high electricity and natural gas bills, MacDonald told CTVNews.ca in a phone interview Friday. point of sale, but generally the answer is very high debts. “

Much of what will drive up domestic energy costs this winter is the rising cost of natural gas, which produces 8.5 percent of Canada’s electricity.

According to Statistics Canada, the majority of Canadians – 61 per cent – use conventional gas systems, such as furnaces and boilers, to heat their homes. A small proportion – 29 percent – use electric baseboard and radiant heating systems. Others use heat pumps, stoves and other heating systems.

Now, MacDonald said, natural gas prices are being pushed up by a combination of geopolitical conflicts in Europe, the global shift to renewable energy, seasonal demand, carbon taxes and cyclical fluctuations in gas prices over 20 years. supply and demand try to meet and adjust more.

Some of these things are predictable. Others, like the war in Ukraine, are not. The war reduced the world supply of natural gas, causing prices to rise. It also reduced Europe’s access to wealth. As a result, the US has increased its natural gas exports to Europe, and Canada has increased its exports to the US, further reducing Canada’s supply. Natural gas is currently five times more expensive in Europe than in Canada, MacDonald said, but as our supply dwindles, that will change.

“We’re shipping more and we’re going to start seeing the Canadian market and natural gas prices in Canada move closer to world prices than they have historically,” he said.

Driving Europe’s demand for natural gas is a gap in the continent’s electricity supply through a switch to renewable energy. It’s at a point, MacDonald said, where either its fossil fuel sector is slowing down or its growing renewables sector can meet its energy needs.

So the world’s demand for natural gas is increasing. As the days get shorter and colder into the winter months, domestic demand increases, too. Big energy bills are something Canadians look forward to every winter, but some years are more expensive than others. This winter is shaping up to be a costly one, explains Michelle Leslie, senior manager of infrastructure and major projects at Deloitte Canada.

“The forecast shows it’s going to be cold and snowy, especially in the interior and coastal provinces,” Leslie told CTVNews.ca in a phone interview Friday. “If the forecast pans out…that will drive demand for heating systems. When you look at supply and demand, as demand increases, depending on how your goods look, you could see prices increase.”

Then there’s the federal carbon tax, which applies to both natural gas and electricity generated using fossil fuels. Putting a price on carbon pollution is widely accepted as the most effective way to reduce greenhouse gas emissions and drive innovation, but it can translate into higher home heating and electricity bills.

Finally, MacDonald explained, natural gas prices tend to rise and fall over many years as the market adjusts to gaps between supply and demand. For example, the cost of natural gas in Alberta this July was $5.44 per gigajoule (GJ). In mid-2008, it rose to $9.84 before falling again. In late 2005 and early 2001 it temporarily exceeded $11.

“Natural gas from 2000 to 2010 was regularly sold at about $6 per GJ,” MacDonald said. “Then we had a very low period from 2015 to 2020, and we saw last year a return to the 6-per-gigajoule mark.”

All these factors – local, international, predictable and unpredictable – explain the increase in energy costs.

The extent and how quickly household electricity bills reflect this increase will depend on which province or territory they live in. This is because market trends in some provinces and territories are taking steps to slow or delay the increase. Energy market places in the province are regulated or unregulated. Unregulated markets tend to be more volatile, while price changes in regulated markets tend to be more controlled.

“Everybody’s prices are going to go up over time,” MacDonald said. “I think one of the biggest regional differences right now is the speed at which they’re going up, and the regulated marketplaces are a little bit slower than the unregulated ones.”

Ontario’s marketplace is technically regulated, but most customers buy from entities whose prices are regulated by the province, such as Enbridge Gas and EPCOR Natural Gas Limited Partnership. The Ontario Energy Board announced in June that it would allow Enbridge to raise natural gas prices by 20 percent, but MacDonald said the increase actually reflects the debt Enbridge was asked to absorb when the market price of natural gas rose during the pandemic, to avoid passing the pandemic. increase in customers at a time when many people were unable to work.

“Ontario asked Enbridge to take on $527 million in debt to cover the increase, so until now, the debt has not gone up,” he explained. “But now they have to start re-holding (that) case.”

Regional nuances aside, MacDonald and Leslie both agree that Canadians won’t see domestic energy prices drop again anytime soon.

“So far, there’s not much reason to think that prices will go down in the next two to three years,” MacDonald said.

Leslie explained, adding that all signs point to domestic and global demand for natural gas continuing to rise in the foreseeable future, raising prices if supply cannot continue.

“With the forecast that’s on the cards for Canada and North America this winter, with everything going on with Russia and Ukraine and European energy, I don’t expect demand for natural gas to drop,” he said. “I actually expect it to go up.”



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