Gas Cost Variance Account

SaskEnergy’s commodity rate (the Gas Consumption Charge on your bill) is designed to recover the cost of gas sold to customers without any mark-up. The actual cost of the natural gas and revenues from the commodity rate are intended to offset each other. In theory, this sounds simple. However, in reality natural gas prices continually change and therefore the cost of buying natural gas varies each month which means that we don’t know the total cost of gas for a particular period of time until after the fact. Consequently, regulatory practice in Canada allows natural gas distribution companies to use a Gas Cost Variance Account (GCVA) to balance the fluctuations in costs and revenues over time.

The GCVA accumulates the difference between actual commodity sales revenue and actual gas costs each month. The intent and use of the GCVA ensures that SaskEnergy does not earn a profit on the sale of natural gas nor incur a loss. It also helps us provide customers with stable rates over the short term. Over the long-term customers pay exactly the cost of acquiring the natural gas supply. To ensure independence, the GCVA is audited by the Provincial Auditor.

Where the actual cost for natural gas exceeds the amount recovered from commodity sales, customers owe the balance to SaskEnergy. Where the actual cost for natural gas is less than the amount recovered from commodity sales, SaskEnergy owes the balance to customers. That balance, positive or negative, is reflected in the next commodity rate change.

View an example of how the GCVA works.

As part of the Saskatchewan Energy Share the GCVA balance remains at $0 until March 31, 2006.

Please call 1-800-567-8899 with any questions you may have.