Cancelling the carbon tax has lowered gas bills, but the cost of the Fortis renewable natural gas program will increase by 130 percent on July 1. And more increases are in the pipeline.
Introduction
The biggest change to BC’s gas bills recently was the cancellation of the provincial government’s carbon tax. The average residential customer at FortisBC Energy Inc. (FEI), BC’s largest gas distribution utility, was due to pay $417 per year in carbon tax starting April 1, 2025. Cancelling the tax reduces the average annual bill of $1,566.63 by almost 27 percent. So much for the good news.
But now, FEI has proposed changes to its renewable natural gas (RNG) program that will have customers’ bills going in the other direction. These changes have been given interim approval by the BCUC for July 1.
Background
FEI’s RNG program has been in place since 2010, and is a key part of the utility’s strategy to reduce its greenhouse gas (GHG) emissions. RNG currently accounts for 7.6 percent of its total gas demand.
However, RNG is around 10 times more expensive than regular natural gas. Some customers voluntarily pay for a certain percentage of RNG, but not enough to cover FEI’s total purchases of RNG. The remaining cost is borne by all FEI’s gas customers, who are involuntarily supplied with a blend of RNG along with their regular natural gas. The cost appears on customers’ bills as the RNG Rate Rider.
FEI’s proposed changes
The RNG Rate Rider and RNG blend for involuntary customers were initially set on July 1, 2024, with the intention that they be set annually on January 1, starting in 2025. Changes were indeed made on January 1, 2025; the rate rider went up from $0.181 / gigajoule (GJ) to $0.301 / GJ (an increase of 66.3 percent) and the RNG blend rose from 1 to 2 percent.
Now, six months after the last changes, FEI proposes to increase the RNG blend from 2 to 3 percent, causing the RNG Rate Rider to go up from $0.301 / gigajoule (GJ) to $0.692 / GJ. This is an increase of 130 percent since January 1, and a whopping 282 percent in one year!
While increasing rates twice in 6 months is never popular, there are some good reasons to make the switch to an annual July 1 adjustment for the RNG program. The January 1 date meant that increases to the RNG Rate Rider coincided with increases to the gas delivery rate, which caused the significant combined bill increase of 17.5 percent this January. Splitting the two changes would smooth out future increases better over the year, with the RNG changes taking place in the summer when gas demand is lower.
Bill impact
FEI estimates that the proposed RNG changes equate to a bill increase of 2.9 percent on July 1. That’s certainly a lot less painful than the 17.5 percent increase in January, and customers now have the benefit of the 27 percent bill reduction thanks to the cancelled carbon tax in April.
Looking forward though, FEI is still expecting to increase its RNG blend to 10 percent by 2030. Assuming the carbon tax doesn’t make a reappearance, and holding other things constant, the average bill in 2030 is still likely to increase another 15.8 percent just to pay for the added RNG (see attachment 1).
But as I noted before, FEI’s delivery rates have risen an average of 7.6 percent annually for the last five years, which would raise bills even further. In addition, natural gas prices are coming off historic lows, driven in part by increased demand from electricity generators in the US.
Conclusion
It looks like customers’ gains from the abandoned carbon tax will be short-lived. But the biggest risk to gas bills remains the spectre of the provincial government’s proposed GHG emissions cap on utilities.
This cap, proposed in the CleanBC plan, could require FEI to increase its RNG blend to 50 per cent by 2030 rather than 10 percent. Instead of bills going up 15.8 percent, a 50 percent blend could cause the average residential customer’s bill to rise by 87 percent by 2030 (see attachment 2).
It’s possible the government will have second thoughts about its proposed emissions cap. The carbon tax was abandoned because of voters’ concerns about affordability, not because it was failing to do its job as an incentive to reduce fossil fuel use. For now, though, FEI’s customers will have to pay an ever-increasing amount for RNG that they haven’t asked for.
Attachment 1
The following calculation shows the projected bill of the annual FEI residential gas customer out to 2030:
Notes:
- The billing information is based on 2025 data provide by Fortis, and explained in my February 2025 article. All the same caveats explained there apply here too.
- I updated the RNG blend percentages to match the latest Fortis forecast.
- I removed the carbon tax from 2025 onwards.
Attachment 2
The following calculation estimates the effect of increasing the blend of RNG in Fortis gas to 50 percent in 2030:
Notes:
- The billing information is based on 2025 data provide by Fortis, and explained in my February 2025 article. All the same caveats explained there apply here too.
- I updated the cost of RNG in 2030 to match the latest Fortis forecast.
- I removed the carbon tax from the calculation.