FortisBC has received approval from the BC Utilities Commission (BCUC) to increase propane commodity rates for Revelstoke customers starting April 1.
“Propane prices have increased significantly this winter,” Cynthia Des Brisay, vice-president of energy supply and resource development, said in a statement released on Friday, March 14.
“The persistent and extreme cold weather in the eastern parts of Canada and the U.S. has resulted in increased continental demand for propane. Furthermore, prior to the start of the cold weather, increased propane demand by farmers for crop drying lowered inventories going into the winter. The combination of these factors has led to extremely high propane prices.”
She said the company had acted to “lessen the impacts of market price volatility on customers” by pre-purchasing a portion of its propane in the summer when prices are typically lower.
“This has helped to mitigate the recent run up in propane prices,” she said.
Residential customers receiving piped propane will see a commodity rate increase of $4.290 per gigajoule (GJ). The average residential customer using approximately 50 GJ per year of piped propane will see an increase of approximately $215 per year.
The statement said the factors affecting the market price of propane and natural gas in North America include weather, supply and demand, transportation constraints and economic conditions. Propane prices are also more directly influenced by global oil markets than natural gas.
It said that in recent years, natural gas prices have trended much lower relative to propane due to increased supply availability resulting from advancements in production technology. However propane prices have remained more closely connected to oil prices and have experienced much tighter markets due to increased demand and less infrastructure connecting supply to market. This has increased the premium paid for propane over natural gas prices.
Every three months, FortisBC reviews propane and natural gas commodity rates with the BCUC in order to make sure the rates passed on to customers cover the cost of purchasing the propane and gas on their behalf. The next review of natural gas and propane commodity rates will take place prior to July 1.