Alberta farmers counting themselves lucky to be on natural gas instead of propane this winter might have to think again.
Utility companies in that province announced last week that the colder than average winter will drive the cost of natural gas up 15 percent.
Rising propane prices, up 30 to 60 percent in some regions across Canada and in the United States, have already prompted farm groups to call for government inquiries into price gouging.
Cory Ollikka, co-ordinator of the Alberta district of the National Farmers Union, said farmers who use natural gas for grain drying or to heat their home, shop or barn are really going to feel the pinch.
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“Natural gas is quite common and most of these people have just been thankful they’re not on propane,” he said from Edmonton.
“Supply and demand has some part to play in it, but if it is plus five all next winter do you think we’ll see the price go down? I don’t think so.”
Extra costs
Northwestern Utilities Ltd. will raise its winter rate, effective Jan. 16 through to March 31, to $2.492 per gigajoule, which is $1.273 higher than the original winter rate which went into effect Nov. 1, 1996. That will mean an extra $62 for the average residential customer in 1997 compared to 1996.
Corporate communications manager Jerry Manegre said the company has 7,000 farmer customers, including 200 with grain dryers, out of a total of 378,000 customers in the Edmonton, Red Deer, Grande Prairie, Camrose and Lloydminster areas.
Colder temperatures across North America this winter led to a higher than expected demand for natural gas, and therefore higher market prices, said a company news release.
“Northwestern has paid market prices which are significantly higher than forecast when the winter gas cost rate was established last fall.”
Saskatchewan less affected
Saskatchewan residents using natural gas might see a small increase, but nothing like the hike in Alberta, according to SaskEnergy corporate affairs manager Shaf Hussain.
“Even if there is a rate adjustment it will pale in comparison to what’s happening in Alberta,” Hussain said, rejecting earlier Saskatchewan media reports that SaskEnergy rates could rise 10 percent. He predicted an increase of zero to three percent but definitely less than five percent.
An increase could be needed to cover the cost of replenishing reserves drained during the exceptionally cold months of November and December and to cover rising transportation and storage costs, Hussain said.
“We base our reserves on the coldest winter in the past 20 years but this was way colder.”
SaskEnergy has 24,000 farmers among its 300,000 customers. They use natural gas to power grain dryers, space heaters for barns and irrigation systems, Hussain said.
SaskEnergy is expected to submit a rate proposal to cabinet later this month, followed by a 45-day public review period before final consideration by cabinet.
