Gas Alberta Inc.’s staff is experienced in all aspects of managing natural gas supplies, from contracting with gas suppliers through to delivery to our customers. The Company and its customers, gas suppliers and transmission pipeline companies have a proven record of providing a seamless network from producers to end-users.
Diversified gas suppliers. We contract with over thirty gas suppliers to avoid risks associated with limited supply sources. Our major gas suppliers are large, well-financed organizations that recognize the underlying value of doing business with Gas Alberta.
Excellent creditworthiness. We actively pursue additional credit for Gas Alberta with existing and prospective gas suppliers for our purchasing and hedging activities. The majority of our gas suppliers do not require that Gas Alberta post financial security mainly due to the following:
- Our gas suppliers value the straightforward, low-risk utility operations carried out by Gas Alberta and its customers.
- Our exclusive Gas Supply Agreement provides full cost recovery and joint liability with our customers.
- Our customers’ agreements with their end-use consumers provides full cost recovery.
- Our customers have combined assets exceeding $450 million and carry minimal debt.
Customized rate design. The Company’s gas rates are designed and managed to maximize benefits for our customers as follows:
- All customers are charged the same common-pooled (“postage stamp”) rate regardless of their location in Alberta or size of their organization.
- We maintain a summer/winter rate structure to recognize the seasonal energy requirements of end-users, such as irrigation and grain drying activities in the summer months and heating load requirements during the winter periods.
- Any gains or losses are returned to or recovered from customers through the Company's rate design process.
Fixed-price purchases. Gas Alberta may decide to contract fixed-price purchases in future winter periods as part of its gas supply portfolio. Management closely monitors forward prices to ensure that a longer term strategy is in the best interests of our customers.
Our customers primarily operate in low populated areas that require high capital costs for gas system infrastructure. Despite a high-cost environment, these utilities are able to maintain competitive rates through economical gas supplies from Gas Alberta, steady consumer growth and cost-effective programs to operate and upgrade their gas distribution systems.
As natural gas costs represent approximately 80% of our customers’ total costs, the rates we charge must be competitive with other energy providers in Alberta to assist our customers in retaining and expanding their consumer base.
Daily gas management. By actively managing our gas supply portfolio, we are able to generate short-term gains and lower our supply costs by taking advantage of gas price fluctuations in the market.
Hedging program. We maintain a prudent hedging program to reduce our exposure to price volatility and minimize our gas costs. Our hedging strategies include physical and financial exchanges, options and gas storage, and focus on low-risk opportunities with a high probability of success. All hedges are recorded in our Risk Management System to track our mark-to-market exposure and ensure we remain within the risk tolerance levels approved by our Board of Directors.
Gas Alberta’s rate performance over the years has proven that a balanced approach to purchasing and managing gas supplies is effective under all types of market conditions.
Since the Company began operations in 1998, we have generated cumulative gas rate savings in excess of $75 million for our customers as compared to equivalent gas supplies from regulated retailers in the province.