2006 sees less revenue for PNG

You might find it hard to believe as the natural gas bills arrive in the mailboxes of Podunk this week, but 2006 saw the Northwest gas provider make less money than in years past.

This despite rate increases to local homeowners and colder temperatures; perhaps we’ve all put on an extra sweater.

Obviously there’s quite a bit more involved in the gas business and on Monday The Daily News examined the varying factors involved in the bottom line at PNG.

COLDER WEATHER FAILS TO TRANSLATE FOR PNG
By Leanne Ritchie
The Daily News
Monday, February 26, 2007
Pages one and three

It may have been colder in 2006 than it was in 2005, but natural gas customers aren’t jacking up the heat, according to a quarterly report from Pacific Northern Gas (PNG).

The company, the sole supplier of natural gas in the Northwest, announced its fourth-quarter results last week.

According to PNG, overall gas deliveries in 2006 were up by one per cent compared to 2005.

“Increased deliveries in the commercial sector were offset by decreased deliveries in the residential sector,” said the company, in a press release.

“Weather in 2006 was four per cent colder than in 2005, accounting for a portion of increased deliveries to the commercial sector, however residential usage declined due to a small net loss of residential customers as well as strong conservation efforts the company believes are due to higher delivered gas prices for its Western system.”

Pacific Northern Gas also made less money in 2006 than it did in 2005, operating revenues decreased from $160 million in 2005 to $138.8 million in 2006.

This was largely due to the fact that company only bought as much gas as was needed for its current customers and didn’t sell gas back in to the market through off-system gas sales.

PNG does not mark up the cost of gas to its customers on its transmission system, but rather makes its money from fees it charges for transportation.

In 2005, the company brought more gas than the customers on its system needed, and made additional money by reselling that gas back into the volatile natural gas market.

However in 2006, the company made $23.4 million less because it didn’t buy as much excess gas.

In the meantime, the amount the company made for transporting gas to homes and businesses was reduced by $9.7 million in 2006 in comparison to 2005 because of the closure of Methanex in Kitimat.

However, the company did receive a contract termination payment from Methanex in February 2006 for $5.6 million.

PNG rates have gone up significantly since the Methanex closure, more than 15 per cent, outside any fluctuation in natural gas prices.

And last week, the provincial Minister of Energy and Mines announced customers for both B. C. Hydro and PNG can expect to see another increase on their utility bills are part of the provincial government’s green plan.

Energy Minister Richard Neufeld confirmed that the B. C. government plans to slap a surcharge on all public utilities to build its “Innovative Clean Energy Fund,” promised as part of an ambitious plan to cut greenhouse gases laid out in last week’s Throne Speech.

“I can tell you it would be less than on per cent… on domestic consumer utility bills, “ Neufeld said in an interview, noting it will likely require approval from the B. C. Utilities Commission.

Neufeld said the move will affect electricity producers BC Hydro and Fortis as well as natural gas producers including Terasen Gas and Pacific Northern Gas.

He said his ministry is talking to all these utilities about “how we can move this forward to get enough from their revenue to cover the $25 million a year.”

In the Feb. 13 Throne Speech, the government promised to cut current levels of greenhouse gas emissions in British Columbia by one third by 2020. It also promised to establish the new Innovative Clean Energy Fund to “encourage the commercialization of alternative energy solutions and new solutions for clean remote energy.”

The news that a utility surcharge would be used to build the fund came as a revelation as B. C. Finance Minister Carole Taylor met reporters before delivering her new provincial budget Tuesday.

“The fund was mentioned in the Throne Speech, it will be funded, it will be in the energy plan when it is released,” said Taylor. “And the minister is currently looking at the notion of a small surcharge on all public utilities.”

Opposition NDP energy critic John Horgan said it is a stretch to announce a fund in the Throne Speech that people would assume was a government initiative, only to find it will be paid for by consumers.

“There’s not a thing wrong with having a fund for innovative, clean energy now and into the future,” he said. “But if you are going to make it a user fee, then call it a user fee,” he demanded.

With files from CP