AUC's role in the natural gas industry

Natural gas industry

​AUC’s role in the natural gas industry

The AUC is responsible to ensure natural gas service is safe and reliable, and that rates charged are fair and reasonable, and reflect the costs of delivering the service. There are more than one million metered sites in Alberta consuming natural gas, including most Alberta homes and businesses that use the fuel for heat and hot water.

Ensuring safe, reliable natural gas

The AUC approves the tariffs for the delivery of natural gas to Alberta homes and businesses, which include the terms and conditions of service, and ensures natural gas distribution companies meet the standards of service within strict requirements set by the AUC, contained in two AUC rules, Rule 002 and Rule 003.

The AUC also oversees the process by which default rates for natural gas service and the gas itself are set. Guided by a government regulation, each regulated gas retailer establishes their monthly cost of gas rate by forecasting both the consumption for the upcoming month and the market price using monthly and daily indices. During the course of the month, commodity costs may vary from the forecast due to changes in expected weather and/or market prices. The cost of gas is reconciled between what customers are charged for the cost of gas and the actual market costs. Any surpluses or deficits are placed in an account, this amount is included when determining the cost of gas for the next month. The AUC has an established a framework for regulated retailers to file monthly gas rates, based solely on market factors, with the small rate of return. 

Transmission and distribution development

In Alberta, construction, discontinuation, abandonment, removal, replacement of gas utility pipelines are all subject to the approval of the AUC, and their construction and operation must meet the standards set by the AUC in Rule 20.

The AUC examines and approves new high-pressure pipeline construction, issues licences for high-pressure pipeline construction, operation, abandonment and removal, reviews and approves routing, approves rates to be paid to transport gas through the pipeline system, and establishes rules and regulations for the design, construction, operation and abandonment of gas utility pipelines. For gas distribution pipelines operated at pressures less than 700 kilopascals, approval from the AUC is not required under the Pipeline Act. The AUC does not issue licences for low-pressure distribution pipelines.

The AUC has a memorandum of understanding with the Alberta Energy Regulator (AER) for the AER to perform inspections and investigations for high-pressure gas utility pipelines owned by ATCO Pipelines and AltaGas Utilities. The AER maintains records of these tasks and reports the results to the AUC. Under the memorandum of understanding, the AER investigates incidents and makes the situation safe. After the situation is safe, subsequent investigations are conducted by the AUC.

Service quality and compliance reporting

The AUC requires regulated utilities to quarterly and annually provide a detailed service quality report that provides extensive information and reporting about utility-specific energy outages and customer service standards. It also ensures that customers are treated fairly. Regulated utilities are expected to perform within strict standards set by the AUC, contained in two AUC rules, Rule 002 and Rule 003. Staff of the AUC review these reports and meet with utility officials at least once annually to discuss utility performance, including customer complaints, and investigate shortcomings if they occur. When necessary an enforcement proceeding can be initiated to deal with sub-par performance. The AUC’s performance standards for regulated utilities include standards for:

  • Interruption duration and frequency.
  • Customer satisfaction.
  • Monthly billing and meter reading.
  • Complaint response.
  • Consumer call answering performance.
  • Overdue billing.
  • Unread meters.
  • Meter errors.
  • Service guarantee.
  • Dispute resolution.
  • Worker safety.

Ensuring just and reasonable rates

The AUC determines transmission rates through an in-depth, evidence-based and fair regulatory process that involves reviewing the costs required to build, maintain and operate large-scale utility infrastructure. Alberta natural gas transmission infrastructure is owned by private businesses and operate close to 9,000 kilometres of pipelines. The AUC’s role is to ensure that companies can recover reasonable costs incurred to meet the need required to provide transmission service, and have a reasonable opportunity to earn a fair rate of return
 

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