Natural gas prices soared earlier this year. This led Ontario's two major utilities to put through hefty rate increases on July 1.
But both Enbridge Gas Distribution and Union Gas say they expect prices to start dropping – at least a little – by Oct. 1.
This is good news for customers who haven't locked into a long-term gas contract at a fixed price.
A 20 per cent boost in gas bills may be tolerable in summer, but can cause great pain when you turn on your furnace in the cooler months.
Natural gas prices had been pushed up by the rising price of crude oil on commodity markets even though the supply and demand for gas is mainly in North America, rather than worldwide.
Gas started falling, along with oil, early last month. But gas has plunged more than oil because of excitement about drilling results in the southern United States.
"There's been very robust natural gas activity and the unlocking of some gas resources, such as shale plays in Texas," says Malini Giridhar, director of energy policy and analysis for Enbridge Gas.
This is causing downward pressure on natural gas prices, she says, since production could increase by up to 5 per cent over the next three to four years.
Mild summer weather and an absence of hurricanes that cut production have also depressed natural gas, with the spot price dropping to $8 (U.S.) a gigajoule from more than $13 in early July.
"I would definitely call it a very bearish outlook," Giridhar said.
Customers won't see the impact of falling commodity prices on their gas bills right away, however.
Utilities bought gas in early July at higher prices to put into storage. They still haven't passed along those increases to customers.
Enbridge's posted gas price is 39.01 cents (Canadian) a cubic metre, while Union Gas charges 37.83 cents. Both utilities have a retroactive adjustment that brings down their prices by about one cent.
This compares with the 30 cents utility customers were paying last spring and 27 cents last winter.
Union Gas also anticipates a decrease in its Oct. 1 rate application that will go to the Ontario Energy Board next week.
"Our storage positions for gas are returning to more normal levels. There was a fear we wouldn't be able to replenish the storage," said Andrea Stass, a Union Gas spokeswoman.
Even at today's rates, which may not last through the winter, the utilities are charging less than what you'd pay for a price protection plan from an unregulated retailer.
The current price is 39.9 cents to 45.9 cents a cubic metre for a five-year deal, according to Energyshop.com.
The best deal is from Canadian RiteRate Energy, which sells gas on the Internet and not door to door, at 37.4 cents for five years.
The utilities have not noticed an increase yet in customers opting for contracts.
"Maybe in the winter, when gas consumption is higher, we'll see more," Stass said.
The risks of hedging energy prices in a fast-moving market became clear last month when SemGroup LP went bankrupt.
It was the parent of Wholesale Energy Group Ltd., which had been an active licensed retailer of gas and electricity contracts in Ontario.
Universal Energy Group bought Wholesale Energy's contracts and is now administering them.
With gas prices starting to come down again, I'd advise staying with your utility.
Make sure you're on an equal billing plan that spreads your payments throughout the year – and look for incentives on products that improve your home's energy efficiency.
You'll save more money that way than by locking in a gas price at a high level for years to come.
