Gas Bill: Understanding the Charges

A sample invoice

As you can see from my gas bill, there are various charges that are added to form your complete bill (your bill may vary slightly but will likely include the same items in some form).

1. Customer Charge - This charge is flat fee charge to you by your LDC (local distribution company). Your LDC is the gas company you send your money to. The charge does not change based on usage.

2. Delivery to you - This is also a charge that goes to your LDC. This charge is based on the amount of gas. Your LDC uses this income to maintain and expand the gas pipeline distribute network in your area. This charge also has some of the cost of gas storage built into it.

3. Transportation to your LDC - This is an expense to your LDC to transport gas to them. In my case the money goes towards transporting gas to Southern Ontario from Western Canada and the United States. This charge is also based on how much gas you use.

4. Gas Supply Charge - This is the actual cost of the gas commodity. Your LDC does not make money on this charge. This money goes to the companies that "produce" the gas and clean it. This charge is based on how much gas you use.

5. Cost Adjustment - The LDC in my area is a regulated utility and does not mark up the gas supply charge for income. The cost adjustment is a credit or cost to ensure that I pay actual costs. In my case, I am on equal monthly billing so adjustments are also made based on my actual use vs. projected use.

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