Why Your Heating Bills Aren't Down A Lot More

Melody Campagna is thinking of adding more insulation in her attic before winter really sets in.

The Keswick resident wants to do everything she can to save money on her heating bill this winter. After living in an older energy-inefficient home for years, she's bought a newer home that's saving her money.

Even though the price of natural gas adjusted for inflation is 65 per cent lower than it was in 2006, the retired daycare worker is still looking for ways to push her monthly bill lower.

Before moving into her home this summer she had energy-efficient windows installed and is placing additional insulation around the ones in her basement. Her programmable thermostat keeps the house at 16C at night and 20C during the day.

"We pile on the extra blankets when we sleep and wear a sweater during the day. It saves money."

Her efforts have paid off. The heating bill at her new home (with a gas furnace) is already significantly lower than her old home (with an oil furnace) that was a similar size and also in Keswick.

What sort of savings? Her oil bills used to be over $200 a month, sometimes $300. Her gas bills these days are typically $100 a month, with a high of $141.

Why has the price of gas been falling? New natural gas discoveries and better technology to extract it have led to a huge increase in reserves and thus lower prices.

You might think your home heating bill would have dropped by an equal amount. But, according to Enbridge Gas, the decline adjusted for inflation in the same five-year period is only 39 per cent.

Union Gas, the other main gas distributor in Ontario, says its bill has fallen by only 30 per cent since 2007.

Both Union and Enbridge say the HST has tempered the price decline. We now pay 13 per cent tax on our gas bills, compared to 8 per cent before June 2010.

But the good news is prices will remain low because there's still ample supply, says Scotiabank commodities specialist Patricia Mohr. She forecasts prices will remain steady until early 2013. After that, it's anybody's guess.

Energy consultant Ian McClellan, whose website Energyshop.com provides comparative rates across North America, says natural gas prices have bottomed. He estimates supply could start tightening by the middle of next year.

McClellan sees the price of gas rising as demand rises when the economy bounces back.

Enbridge and Union say the price decline hasn't been more noticeable because the cost of gas is only about 42 per cent of your bill, compared to 70 per cent five years ago.

Other costs such as transportation, delivery and consumer charges to cover meter reading and emergency response have gone up and now make up a larger portion of your bill. There's nothing you can do to reduce them.

The Ontario Energy Board regulates costs, such as how much distributors like Enbridge and Union Gas can charge for distribution, transmission and storage of natural gas, as well as how much they can charge for the commodity. The National Energy Board regulated the tolls charged by the TransCanada Corp., which carries the gas through its North American pipeline network.

That's what gets in the way of customers achieving a steeper discount in what they're charged for having natural gas in their home, says Bryan Gormely, an analyst with the Canadian Gas Association.

It complicates the process of providing natural gas to customers, he says.

Campagna is looking forward to a winter of lower heating bills. She enjoys paying less than five years ago and plans to stick with her money saving ways, "Not a chance that I'm changing, no matter how cheap gas gets I will never be wasteful."

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Tips to lower your bill this winter

  • Reduce the temperature in your home, especially when you’re away.
  • Clean or replace your natural gas furnace filter regularly.
  • Install energy-efficient shower heads or aerators.
  • Conserve hot water.
  • Don’t block the sun: open up your curtains and drapes during the day.
  • Fix leaky hot water faucets.
  • Check the house insulation and seal any cracks to eliminate drafts.
  • Keep heating vents and registers clean and clear of obstruction.

Source: Enbridge