Dick Chapman
Toronto Sun
March 2, 2001

Want a hedge against rising natural gas prices? Don’t sign that fixed-price contract, says the non-profit research group Energy Probe.

Energy Probe spokesman Tom Adams said yesterday consumers should be wary of long-term contracts like one offered by the newest natural gas player, Toronto Hydro Energy Services.

It’s like trying to decide if a five- or three-year mortgage on your house is wiser than a one-year deal, he said. Energy suppliers like to have some insurance when they lock in long-term buying gas supplies.

Hydro’s current 26.5 cents-per-cubic metre offer – open until March 12 – may look good compared to yesterday’s new spot market price of 32.2 cents, which is a 6 cents hike.

Adams cautioned Hydro and competitors Enbridge, Sunoco and Direct Energy Marketing likely are betting that natural gas prices will drop.

A supplier’s portion of monthly gas bills only concerns the “commodity” price, amounting to two-thirds its total. The other third is costs for transporting the gas through pipelines and other charges. Those are regulated by government agencies.

Adams figures natural gas will fall back to 25-30 cents per cubic metre by spring. Prices peaked in December and then fell “significantly,” he noted.

To buffer gas price hikes, says Adams, consumers might consider buying energy stocks. If gas goes up, they could make money on rising stocks.