TORONTO - A rush of cold air could wash over Ontario this fall when residents get their first glimpse at natural gas bills that include higher prices which went into effect on Canada Day.
Consumers will face gas bills that are as much as 45 per cent higher than what they're used to paying, depending on where they live, and that could convince many to sign energy contracts to cut their costs.
That's good news for people like Clinton Roeder, general manager of Direct Energy, an independent retailer that specializes in long-term energy contracts that lock-in customers to a set natural gas price for one to five years.
"When you look at where the (natural gas) market's currently at, the market hasn't been this high since the months following hurricane Rita and hurricane Katrina,'' he said.
"We've seen an increase in activity of customers deciding to go with competitive contracts, and that's within all of our sales channels.''
While Roeder declined to share actual customer contract numbers, he said consumer interest surged as much as 20 per cent over the past month as more people became aware of the natural gas price hikes coming into effect.
The average household currently pays about $1,400 a year for gas used to heat their homes and water.
Last month, the Ontario Energy Board approved price increases at both regulated energy providers, Enbridge and Union Gas.
Union Gas customers could see their gas costs increase roughly 34 per cent over the previous quarter, depending on where they live in the province. Enbridge users potentially face an increase of up to 45 per cent over the previous quarter.
In theory, that could leave a significant dent in their pocketbook, adding as much as another $630 a year to their gas bill if prices remained steady.
But they probably won't hold steady for a year -- and economists are torn over whether commodities, like oil and gas, will continue to set new record highs or tumble back to stable ground.
Consumers will have to consider which move to make -- either hanging tight with regulated companies like Enbridge and Union Gas that must answer to the provincial energy board which approves any price changes before they take effect or attaching themselves to a private company with a longer term contract.
Unlike the private companies, regulated gas providers don't profit from the actual gas prices, but instead make their money off of a separate rate approved by the board.
"If you're with Enbridge gas distribution, you're paying the same price we pay for natural gas,'' Enbridge spokeswoman Lisa McCarney said.
"We review the North American market rates every three months and if prices go down, our price will come down to reflect the decrease. On the other side of that, if North American prices go up, our price goes up.''
The alternate option are the private companies, which include Direct Energy, Ontario Energy Savings Corp. and Universal Energy.
The private providers offer a level of stability to monthly bills, but they also lock into a fixed rate contract for a set period of time. That means consumers only come out winners if gas prices surge above the rate they're signed on for -- if prices plummet, they'll still be stuck with the higher bills.
Some households think they can beat the market, so they opt to sign on the for long-term, said Bryan Gormley, director of policy and economics at the Canadian Gas Association.
"The third party resellers buy and sell a lot of gas and they're probably much more sophisticated at it. Are you going to be able to outguess them?'' he said.
"I've seen people have success with the longer term contract, but the more important element that's within control of the customer is how they use the energy.''
Gormley suggested that instead of gambling on pricing, choose a more surefire way to cut costs, such as installing insulated windows.
