Many homes and businesses in Alberta depend on natural gas for heating, hot water, cooking and so on. Questions about gas bills are common:

• How are natural gas prices set?  
• What’s the best gas deal for my home or business?
• Should I choose a regulated rate or a competitive retailer?
• Should we use our electricity retailer for gas too?

You’ll find everything you need to know about how Alberta natural gas rates and prices are determined and what your options are below.

Quick guide

• How are natural gas rates are determined?
• What is the difference between competitive retailers and Regulated Rate Option (RRO)?
• Understanding distribution and transmission charges
• Understanding the carbon tax and its impact on natural gas prices
• Your options with ATCOenergy

How are Alberta natural gas prices determined?

Natural gas is drilled from wells and refined at processing plants before being delivered at pressure to homes and businesses in Alberta.

The delivery of natural gas is a fully regulated service in Alberta. Costs and rates are reviewed and approved by the Alberta Utilities Commission (AUC), which is an independent agency associated with Alberta Energy.

The involvement of the AUC ensures that customers pay fair and appropriate costs for their energy. The commission holds rate hearings to make sure safe, reliable services are delivered to households at reasonable costs.

Companies providing natural gas in Alberta have their terms and conditions and Code of Conduct Compliance Plans approved by the AUC.

How is natural gas measured?

Natural gas is a blend of methane, ethane, propane, butane and other compounds. Gas rates are charged at dollars per gigajoule (GJ).  

One GJ is equal to one billion joules and, as a guideline, 4.2 joules is the amount of energy required to raise the temperature of one gram of water by one degree Celsius at standard pressure.

So what does that mean in real life? One gigajoule of natural gas is equivalent to the energy received from:

• Around 27 litres of fuel oil
• Around 39 litres of propane
• Around 26 litres of gasoline, or  
• Around 277 kilowatt-hours of electricity

Your monthly bills

When you receive your bill each month, there are two main charges detailed on it:

• Consumption: the cost of natural gas consumed. This details how much gas you actually used that month.

• Distribution: the cost of delivering (distributing) this natural gas to your home. A small portion of this charge is tied to consumption, but it's largely a fixed charge each month. It covers the cost of installing, operating, and maintaining the infrastructure needed to get the fuel to your home (e.g., pipes and compressor stations).

Your distributor is determined by where you live in Alberta. So, your monthly bills will be influenced by both your location and your consumption.  

Even if you receive e-bills and pay by direct bank debit each month, make sure you check your bill regularly. According to the Natural Gas Billing Regulation, your bill must show all credits or charges as separate line items.

The basic costs detailed on your bill each month will be:

• Energy charges – how much natural gas is used (in GJ) multiplied by your plan rate.
• Administration fee - costs related to billing for electricity and providing customer service.
• Delivery charges - based on the cost of operating the distribution system and delivery of energy to your home or business (approved by the AUC).
• Municipal Franchise Fee - set by your municipality as a charge for natural gas facilities on municipal property.
• Rate Riders - temporary credits or charges approved by the AUC to adjust for over or under collection of approved costs.
• Federal carbon tax – a federal charge imposed since January 2020.

What is the difference between competitive retailers and Regulated Rate Option (RRO)?

To bring natural gas energy to your home requires a distributor and a retailer.

Just like with electricity, there are natural gas distributors that specialize in delivering natural gas to your home and retailers (like ATCOenergy) who purchase gas and sell it to you. 

The distribution company is responsible for delivering natural gas to your home, measuring consumption, and sending the charges to retailers to pass on to you.  When someone comes to read your meter, it’s someone from your distributor, not your retailer.  

Retailers receive consumption information from the distribution company and bill customers monthly.

Some of these providers provide both natural gas and electricity to homes and businesses in Alberta.  ATCOenergy is one such provider.

Since 1988, there have been two ways for homeowners in Alberta to be billed for natural gas:

1. Variable regulated gas (RRO)

The Regulated Rate Option (RRO) is the default option for those who haven’t chosen a retailer or don’t qualify for one. It ensures every Albertan can access natural gas, regardless of credit standing. The Alberta Utilities Commission (AUC) sets these rates, which can fluctuate based on market conditions and economic factors.

If you haven't opted for a competitive retailer, your natural gas will be supplied by the default regulated company in your area.

Each month, the regulated retailer must file a monthly application to the AUC to determine their natural gas rate in compliance with the approved energy price-setting plan. This is determined based upon price projections for the month ahead.

While natural gas rates fluctuate, the RRO offers a dependable option for those who need it, even if it lacks the flexibility and potential savings of competitive plans.

2. Competitive retailer rates

When it comes to selecting a natural gas provider in Alberta’s deregulated market, competitive retailer rates offer appealing options with the freedom to choose plans that best suit your energy needs.

With most competitive retailer rates, you have the option of a “guaranteed rate” (“fixed rate”) or a “variable gas rate” (sometimes called a “floating rate”). ATCOenergy also offers an ATCO Advantage Plan, which is a wholesale rate plan. Let’s dive into the various rate types available:

2.1 Guaranteed natural gas price (or fixed rate)

This is a stable rate (fixed rate) option that keeps consumption prices the same regardless of market fluctuations. Your bills remain predictable for the term of your plan.

The only change to your bill each month will be the total charge based on your monthly usage of natural gas – the rate you’re charged per GJ stays the same.

2.2 Variable Natural Gas Price (or floating rate)

This allows you to access pricing based on the monthly market fluctuations in both natural gas charges and consumption rates.

This option is more flexible as prices are based on a weighted average flow-through of the market price of natural gas (plus a retail service charge markup).

It is considered a riskier option but, when market prices are lower, it can lead to monthly savings.

2.3 ATCO Advantage Plan (or wholesale rate)

In 2020, ATCOenergy introduced another option: the ATCO Advantage Plan.

Similar to a variable rate, this option fluctuates with market prices. However, instead of the retail markup added to variable rates, the ATCO Advantage Plan lets residential customers pay Alberta's wholesale energy price. Instead of a markup on every GJ consumed, a flat daily fee gives you access to the same wholesale prices a retailer pays.

The Wholesale Market Rate option is suited to customers that are willing to experience occasional, seasonal spikes, in exchange for typically lower rates over time.

Understanding distribution and transmission charges

As you know, other charges appear on your bill besides energy costs (the amount and rate of the natural gas that your property consumes).

Distribution and transmission charges are the main ones. These are costs associated with processing the energy and delivering it across Alberta, including maintenance and upgrades of equipment and the distribution system from time to time.

Distribution costs vary with location and consumption. The transmission charge is based on how much gas you use each month.

Following is a summary of the items that make up the delivery charges on your bill: 

• Fixed delivery charge: this covers the cost of building, operating, and maintaining our distribution system.
• Variable charge: this is calculated based on the amount of natural gas you use and also helps cover the cost of maintaining the system.
• Rate rider: this is an adjustment approved by the AUC, to recover costs or refund money for a temporary situation or one caused by factors beyond our control. You can read more about rate riders here.
• Municipal franchise fee: this is collected on behalf of the municipality. It covers the exclusive right to provide gas distribution service to residents and businesses in the region and the right to use the municipality’s property for the construction, operation and extension of the gas distribution system.
• Federal Carbon Tax: this was implemented in January 2020 and you can read more about it below.

Understanding the carbon tax and its impact on natural gas prices

There is still some confusion among Alberta residents about the federal carbon tax regulations and how they affect monthly energy bills.

Since January 1, 2020, a federal carbon tax has been included as a line item under gas distribution charges on your energy bill.  The tax is part of the Canadian government's comprehensive climate action plan to help lower carbon emissions.

Despite what some homeowners may think, GST is charged on the carbon tax and the carbon tax appears on your bill under the delivery charges above the GST line item.

Under the regulations, natural gas distributors are responsible for calculating the tax based on monthly natural gas consumption. Energy retailers then pass the tax amount on to customers through the monthly billing process. The more natural gas you use, the higher the amount of carbon tax you will pay.

Distributors also report, collect and remit this to the federal government each month in a similar way to how GST is collected and remitted.

Following are the present and projected rates for the carbon tax in Alberta:

• April 2024, carbon tax costs per GJ: $4.0950825/GJ

• April 2025, carbon tax costs per GJ: $4.78 (estimated)

• April 2026, carbon tax costs per GJ: $5.53 (estimated)

• April 2027, carbon tax costs per GJ: $6.29 (estimated)

• April 2028, carbon tax costs per GJ: $7.04 (estimated)

What are your options with ATCOenergy?

As one of the main natural gas providers in Alberta, ATCOenergy provides guaranteed rate and market rate plans for natural gas customers.

The guaranteed rate is provided via plans that range from one to three years in length. You may be rewarded with a lower rate for signing up for the longer plans. 

A guaranteed rate helps you predict your bills over the next 12, 24, or 36 months due to the stable rate offered. With ATCOenergy, your rate is guaranteed for the length of your agreement, but you’re free to change or cancel your plan at any time without penalty.  

The ATCO Advantage rate is the market rate plan that provides more flexibility from month to month.

This option allows you pay a daily fee to tap into wholesale pricing with no retail markups or administration fees. There may be spikes over time but, with this option, when rates are low, your bill will be lower. 

Bear in mind that whether you opt for a longer guaranteed term or the ATCO Advantage Rate, you're never locked into your plan. It’s flexible and you are not bound by long-term commitments so you can switch anytime.

We often say that our rates and term lengths are our guarantees to you but you're free to change your plan anytime.