Want help understanding why natural gas costs what it does in Alberta and how much of your money goes to things other than energy? This article will help you understand your next bill.
How utility charges work in Alberta
Your natural gas bill is split into three main charges:
- Energy charge – A charge for energy consumed during your billing period, excluding costs for delivery and administration. This goes up the more natural gas you use.
- Delivery charges – The charge for transporting this energy to your home. This includes a fixed charge and a variable charge (the cost to install and maintain pipelines and meters). You’ll find more details on this in the breakdown below.
- Taxes and fees – Charges that are neither energy nor delivery, such as federal taxes, administration and transaction fees, and municipal franchise fees and taxes.
Components of your natural gas bill
Energy Charge
Charge for how much energy you used during your billing period. This is calculated in price per gigajoule (GJ) according to your rate.
Administration Fee
The charge from your provider or retailer for the cost of billing and customer service. This charge is set by your retailer and is a fixed rate (monthly or daily). It does not depend on your consumption.
Delivery Charges
- Transmission Charge: The transmission charge covers the cost of transporting natural gas from its source (such as a production site or storage facility) through high-pressure pipelines to local distribution networks or rural gas co-ops. In Alberta, this fee is regulated and typically passed through to the consumer via the energy provider.
- Distribution Charge: Costs for delivering natural gas from those distribution companies to your home. This includes maintaining and operating the local pipeline network. In Alberta, the distribution charge is regulated and varies depending on the location and the utility company providing the service.
Rate Riders
The Alberta Utilities Commission (AUC) regulates the natural gas market in Alberta. It uses tariffs (Transmission and Distribution charges noted above) to cover the cost of services.
When the expected costs of the set tariff don’t match the actual costs, rate riders are added to bills as a way to account for the differences. These additional charges or refunds are passed onto consumers as part of their natural gas bill.
There are quite a few different rate riders that might come up on your bills from time to time. The AUC has a full list of rate riders and more details how each rate rider is set.
Municipal fees
Energy providers pay local governments for the right to operate within that area and use its infrastructure, such as roads and public lands, to deliver natural gas services to customers. This fee is typically passed on to consumers as part of their utility bill. The fee helps municipalities cover the costs of maintaining infrastructure and providing services that support the delivery of natural gas.
Federal Fuel Charge/Carbon Tax
Often listed as ‘Federal Carbon Tax’ on your natural gas bill, the Federal Fuel Charge is based on your consumption and incurs a charge per tonne of carbon dioxide equivalent (CO2e) emissions for fuel used to heat your home.
GST
A federal tax applied to most goods and services in Canada, including natural gas. The 5% is calculated based on the total amount of your natural gas bill, including all other charges.
Bring clarity to your utility bills
Want help decoding your natural gas bill to see how it stacks up against the provincial average? Request access to the Jotson™ app and connect your utility provider to see a detailed breakdown of the taxes and other embedded costs that impact your energy expenses.
You can also read our breakdown of electricity charges to learn more.
