LETTER NO. L-62-06
SIXTH FLOOR, 900 HOWE STREET, BOX 250
ROBERT J. PELLATT
VANCOUVER, B.C. CANADA V6Z 2N3
COMMISSION SECRETARY
TELEPHONE: (604) 660-4700
Commission.Secretary@bcuc.com
BC TOLL FREE: 1-800-663-1385
web site: http://www.bcuc.com
FACSIMILE: (604) 660-1102
Log No. 15837
VIA E-MAIL
Stargas@shaw.ca
October 5, 2006
moebee@shaw.ca
Mr. Moe A. Blumes
Treasurer
Stargas Utilities Ltd.
2287 Selkirk Drive
Kelowna, B.C. V1V 2N6
Dear Mr. Blumes:
Re: Stargas Utilities Ltd. (“Stargas”)
F2007 Application to Alter Rates
Locking in Gas Commodity Prices
This is in response to your September 29, 2006 e-mail in which you express an intention to lock in gas
commodity prices for 80 percent of purchase volumes for three to five years, and request guidance from the
Commission with respect to these plans.
The Commission has reviewed Stargas’ Information Request responses dated August 27, 2006, which state that
the gas supply contract with Direct Energy will remain in effect until one party gives written notice of
termination. The Commission has not identified any issues at this time with respect to the gas supply contract.
With regard to locking in commodity prices for up to 80 percent of purchase volumes for three to five years, the
Commission considers this to be a relatively aggressive hedging strategy but accepts the strategy in the current
market conditions, providing Stargas surveys the opportunities to fix prices that are available to it and confirms
that the fixed price it obtains is market competitive.
To the extent Stargas locks in gas prices, Stargas is required to file any amendments to its energy supply contract
with Direct Energy and is requested to file a report on the locked-in price and quantity, in a timely fashion. Also,
if the locked-in gas price is materially different from its forecast of gas prices, Stargas is requested to recalculate
and file updated gas commodity charges for Commission review in the F2007 Application to Alter Rates.
Yours truly,
Original signed by
Robert J. Pellatt
JBW/dlf
Stargas/Cor/L 62-06 AlterGasCommodityPrices
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.