Natural Gas Prices Going Up In Nova Scotia
DARTMOUTH–If you are a business owner or homeowner in Nova Scotia who uses natural gas for heating, there’s a good chance you will see a jump in your energy bill this year.
Heritage Gas, a company that supplies natural gas to thousands of Nova Scotia homes and commercial properties, says they had to increase prices due to global supply and demand issues.
Other commodities, such as oil, have suffered the same fate.
“It largely relates to what has happened with the pandemic,” Heritage Gas President John Hawkins told Huddle. “When the pandemic first hit in the early part of 2020, there was a significant drop in economic activity, which resulted in a significant drop in demand for all commodities.”
“What’s been a big surprise for most people in North America and elsewhere is just how quickly the economy has recovered, certainly more dramatically than in prior economic downturns. What that meant was demand for energy commodities right across the board went up much more sharply than the producers would have anticipated.”
The company estimates that residential and small commercial customers will see an increase of 10-30 percent in their natural gas bill. Larger commercial customers may see a 15-35 percent jump.
It is difficult to come up with a firm dollar figure because of the number of variables that are used in calculating a natural gas bill. The variable that is being affected by global pressures, specifically, is the “gas cost recovery rate.”
In November, residential and small business customers paid $9.60 per gigajoule (GJ). In December, that number went up to $13.76 per GJ. Larger commercial customers have seen that same rate go up from $12.75 per GJ to $14.75 per GJ in the same timeframe.
Hawkins says Heritage Gas is not making any new profit by raising the gas recovery rate because the increase is being used to recoup their own rising costs.
The Heritage Gas president says the company was able to provide natural gas at historically low levels in 2020 and he believes natural gas will be able to compete against oil, coal, and other forms of power for a long time.
“We just came off a period in 2020, and a year or two before, of having some of the lowest natural gas prices we’ve ever had in the history of the company. Our customers were fortunately able to benefit from that,” said Hawkins.
“We believe, from our forecasts, as we go into the winter and then go through the rest of the winter season, that we will be very competitive against crude oil and propane and other energy sources because we have taken actions that have reduced costs we would otherwise have seen.”
Hawkins says that, despite Nova Scotia’s offshore natural gas sector shutting down in recent years, these pipeline agreements have secured their supply at lower cost than other transportation methods.
“I think a lot of people would be surprised to know there’s actually more capacity coming into the Maritimes, including Nova Scotia,” said Hawkins “…When the offshore declined and eventually shut down, pipeline companies responded by adding additional capacity to the region.”
“That is actually saving customers money relative to what they would have otherwise experienced.”
One group that has taken notice of the increase in natural gas prices is the Investment Property Owners Association of Nova Scotia. The group sent out a press release on January 11 to bring attention to the issue, as many landlords use natural gas to heat their buildings.
But IPOANS director Kevin Russell says they are not out to shame Heritage Gas for raising prices but to show why a two percent cap on rent increases isn’t manageable. Russell notes that natural gas is just one of several expenses to go up recently.
“Our whole (problem) is not about Heritage Gas,” said Russell. “We’re under a two percent cap and we’re getting these increases, whether it’s natural gas, insurance, and now property tax (season) is coming up, which is going to be a double-digit increase for our industry.”
“We just can’t sustain this. So, the premier has to step up and do something. That’s our whole issue: it has nothing to do with Heritage Gas raising its prices because they are under their own pressures in terms of global pricing…”
Russell predicts that, as long as the rent cap stays in place, landlords will defer a lot of maintenance and capital expenditures until they can raise rents again to recoup their costs.
“It’s basically a survival strategy until they can figure out when they can start increasing rents to cover their expenses.”
Derek Montague is a Huddle reporter in Halifax. Send him your feedback and story ideas: [email protected].