Manitoba residential gas bills are set to drop significantly in the coming year, and a recently axed furnace replacement program has a lot to do with it.
Typical residential customers are in line to see their natural gas bills drop by 18.7 per cent, amounting to $127, says Darren Christle, the secretary and executive director of the Public Utilities Board. The new consumer rates will come into effect Nov. 1, following the completion of the first general rate application hearings for natural gas in the province since 2013.
The bulk of those savings will come from the estimated $17.7 million in excess funds in the Centra Gas furnace replacement program. The provincial government recently passed regulations ordering no further money be allocated to the program starting April 1, 2020. During the latest hearings, the utilities board directed Centra to discontinue funding the furnace program and redirect the surplus to customers in the small general service class, which includes residential customers.
In 2007, the utilities board had ordered Centra to develop the furnace program, which was aimed at making it more affordable for lower-income dwellings to purchase and install higher efficiency furnaces, resulting in reduced energy burdens and, in the long-term, reduced costs. The program was funded through rates charged to residential and small commercial natural gas customers.
"Over time, we collected more funds than was required to operate the program, and so that excess is being returned to customers in the form of lower natural gas rates over the next year to bring everything back into balance," said Scott Powell, a spokesperson for Manitoba Hydro, of which Centra is a wholly owned subsidiary.
Christle said that based on stakeholder testimony during the hearings, the program has "pretty well gone to its end," meaning the leftover money is being redistributed to residential consumers.
The termination of the furnace replacement program came under scrutiny by the opposition NDP earlier this month. "It's a bad move, because this is going to mean a bigger carbon footprint for our province," leader Wab Kinew said. At the time, Conservative Jeff Wharton, the new minister of Crown Services, didn't explain the government's reasoning in ordering the end of the program.
Christle said the hearing also identified other trends that resulted in the bill decrease: lower market prices on gas, lower pipeline transportation costs, and lower interest rates. Generally speaking, Christle added, rates on natural gas are flat, and he called the decrease "a kind of unusual occurrence."
The decrease will only occur to residential gas bills, Christle said. Business and industrial bills will not see the 18.7 per cent drop. Other customers, including Transportation Services customers in the high volume firm and main line classes, the special contract class, and the power station class will experience annual bill increases, according to a board order issued Thursday.
The utilities board also announced an increase in the primary gas rate from $0.0852 per cubic metre to $0.0910 in that board order. Primary gas rates for customers who've signed fixed term, fixed price contracts with either Centra or a private broker are not affected, a utilities board release stated.