Dear Members,
Dear Members,
Over the last few weeks, we have received several calls regarding “locked-in” rates, and we would like to explain why we do not offer this to our members.
Gas Co-ops are not regulated by the Alberta Utilities Commission, partly because we are owned and controlled by our member-owners, not shareholders. The elected Board of Directors (who are members) approve rates put forth by management that are fair to the members while reflecting the needs of the co-op to maintain the system. Any excess revenue at the end of the year is invested back into the system for future capital replacement.
Predicting gas prices months out is highly dependent on the weather and we know predicting the weather is difficult, if not impossible. This makes fixed rate pricing very risky and a double edge sword because in a co-op you are the customer and the owner.
SANG Co-op is a major shareholder in Gas Alberta Inc. which purchases gas on our behalf. We have asked Paul Dunsmore, President and CEO of Gas AB. Inc. to offer some insight on fixed rates.
“Gas Alberta’s mandate is to procure reliable natural gas supplies for its shareholders at rates that are lower than the average of Alberta’s regulated retailers, namely Direct Energy Regulated Services (DERS) and Apex Utilities. Similar to the regulated retailers, our natural gas portfolio consists of a mix of indexed supplies that is actively managed on a day-to-day basis. We also maintain a prudent hedging program that serves to limit our shareholder’s exposure to price volatility that arises from constantly changing supply & demand fundamentals. All hedging activity at Gas Alberta is performed by highly experienced natural gas traders who focus on low-risk market opportunities that have a high probability of success. Per the chart below, Gas Alberta has outperformed the average of DERS’ and Apex Utilities’ natural gas rates 80% of the time since July 2018. In addition, since 1999 our natural gas procurement strategies have resulted in over $88 million in combined gas rate savings and annual shareholder rebates, which have greatly benefitted our shareholders’ end-use consumers.
Over the last few weeks, we have received several calls regarding “locked-in” rates, and we would like to explain why we do not offer this to our members.
Gas Co-ops are not regulated by the Alberta Utilities Commission, partly because we are owned and controlled by our member-owners, not shareholders. The elected Board of Directors (who are members) approve rates put forth by management that are fair to the members while reflecting the needs of the co-op to maintain the system. Any excess revenue at the end of the year is invested back into the system for future capital replacement.
Predicting gas prices months out is highly dependent on the weather and we know predicting the weather is difficult, if not impossible. This makes fixed rate pricing very risky and a double edge sword because in a co-op you are the customer and the owner.
SANG Co-op is a major shareholder in Gas Alberta Inc. which purchases gas on our behalf. We have asked Paul Dunsmore, President and CEO of Gas AB. Inc. to offer some insight on fixed rates.
“Gas Alberta’s mandate is to procure reliable natural gas supplies for its shareholders at rates that are lower than the average of Alberta’s regulated retailers, namely Direct Energy Regulated Services (DERS) and Apex Utilities. Similar to the regulated retailers, our natural gas portfolio consists of a mix of indexed supplies that is actively managed on a day-to-day basis. We also maintain a prudent hedging program that serves to limit our shareholder’s exposure to price volatility that arises from constantly changing supply & demand fundamentals. All hedging activity at Gas Alberta is performed by highly experienced natural gas traders who focus on low-risk market opportunities that have a high probability of success. Per the chart below, Gas Alberta has outperformed the average of DERS’ and Apex Utilities’ natural gas rates 80% of the time since July 2018. In addition, since 1999 our natural gas procurement strategies have resulted in over $88 million in combined gas rate savings and annual shareholder rebates, which have greatly benefitted our shareholders’ end-use consumers.
When comparing fixed price options for natural gas it’s important to note that fixed prices have rarely been the most economical option over time. In fact, history has shown that Gas Alberta’s natural gas rates have been significantly lower than fixed price options as shown in the following chart. Although current forecasts indicate that fixed prices may become more competitive than market rates in the short term, this trend is expected to reverse relatively quickly. As can be seen in the chart, natural gas consumers have been much better off by remaining with market prices in the long run, which is precisely how Gas Alberta procures its supplies. Since November 2018 the average rural end-use consumer has saved approximately $1,200 through Gas Alberta’s rates as compared to the average of fixed rate options over the same period.”
Regards,
Paul Dunsmore, President and CEO
Contact
If any Member requires more information or if you have questions, please feel free to call the office or contact me directly via email.
Sincerely,
Kevin Ouderkirk, CEO, Member
780-967-2246