Centra Gas Manitoba Inc. is the local distribution company that provides natural gas service to over 240,000 customers in the province. Natural gas utilities exist as monopolies, and are regulated by the Manitoba Public Utilities Board. In addition to other matters, the Board oversees the cost of service and sets the rates for sales and transportation service.
Utilities are granted exclusive rights to construct facilities and to provide service to customers in defined geographic areas known as franchises. In exchange for these exclusive rights, these companies submit to the oversight of a regulating agency, which serves to provide the balance that a competitor would provide in a free market system.
Over time, it became apparent that some aspects of the utility's operation could be better served by the competitive market. The trend to open up previously monopolistic services to competitive options gathered momentum in the mid- 1980's. This trend is known as "deregulation".
The gas supply function was the first area to experience the transition to a competitive market. Until the mid- 1980's, utilities purchased all of their natural gas requirements directly from the pipeline company, at regular prices.
A series of accords signed in 1985 effectively deregulated the wellhead price of natural gas in Canada and set in motion, at the interprovincial level, the steps to separate the purchase of natural gas from the transportation of the commodity. This initial deregulation and subsequent separation opened the door for the development of a competitive natural gas market for the large industrial user market.
In 1991, the direct purchase market was opened for residential and commercial customers in Manitoba. The Manitoba Public Utilities Board approved the creation of the "Western Buy/Sell" Service that is in use today. This service provides customers with the flexibility to select their supplier, by entering into agreements with natural gas agents, brokers or marketers to obtain supplies of natural gas in Alberta. These supplies are sold to the utility at Empress at the Alberta/Saskatchewan border and become part of the utility's overall gas supply.
The monthly unit price paid for supply, known as the Reference Price, is the same for all western Canadian supplies. While the unit price paid by the utility is the same to all suppliers each month, customers attempt to realize a cost saving between their acquisition cost from the producer and the Reference Price paid to them by the utility.
Customers selecting this direct purchase option receive service from the utility in exactly the same manner as all other sales customers. The utility provides the sales service customer with natural gas at their building, ensures the system is safely maintained, reads the meter, issues the bills and responds to requests for service in the same manner.
Deregulation continued through the 1990's. By 1995 it became apparent in Manitoba that further improvements could be made to the direct purchase system, to use a simpler pricing method and to provide better price discovery. As a result, the Manitoba Public Utilities Board convened a proceeding to hear views on direct purchase matters, and on the future role of the utility in the procurement, transportation and storage of natural gas in the province.
New Options Approved The Board issued its findings in February of this year. Amongst other things, the Board ordered the development of an additional new direct purchase option called the Western Bundled Transportation Service, or "Bundled T".
Under Bundled T Service, a customer's gas supplier will provide natural gas to the utility at Empress as they would under the Western Buy/Sell arrangement. The difference is that the supplier will not sell the gas to the utility. Rather, the supplier will retain ownership of the commodity for the duration of its journey.
The utility will transport, store and balance the supplies of gas by way of utility-owned contracts and assets in the same manner that gas is handled today. In effect, the customer purchases its gas from the supplier, and pays the utility to deliver it to the customer's premises.
This service will enable customers and suppliers the opportunity to develop supply contracts with better and more timely price transparency than is available under the existing Western Buy/Sell.
This new service is currently under development, and is anticipated to be available for November 1, 1998. While this new service provides one more alternative for direct purchase in Manitoba, it is important to understand that the existing Western Buy/Sell service will continue. Those of you currently with brokers may wish to discuss this service with them, but you are under no obligation to change any service options. If you would like more information about this new service, please call me at (204) 925-0597. 1 would appreciate your feed back as to the value of the information contained in this article, and would like to know what other kinds of information you require about the natural gas business.
The article "Residential Tenancies Commission ... provides the opportunity for a fair hearing" which appeared on the front page of the May issue (and which appears below) gave the reader an excellent backgrounder as to ot the makeup and the operation of the Commission.
Unfortunately due to a technical error, the reference to the 12 part time landlord representatives who serve on the Commission was omitted. This may have led some readers to conclude that the Commission is heavily weighted with tenant representatives.
This is of course not so.
In addition to the Chief Commissioner and the Nine Deputy Commissioners, there are presently 12 part time landlord representatives and 12 part time tenant representatives.
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