Direct Energy Regulated Services

Direct Energy Regulated Services

December 22, 2008 07:00 ET

Direct Energy Regulated Services Files January Rates

CALGARY, ALBERTA--(Marketwire - Dec. 22, 2008) - Direct Energy Regulated Services (DERS), a business unit of Direct Energy Marketing Limited, has filed with the Alberta Utilities Commission proposed regulated natural gas rates for January 2009. Upon approval, these rates will apply to customers who have not chosen a competitive supplier within the ATCO Gas North and South service territories.

North Service Territory

The North territory includes customers living in and north of the City of Red Deer.

- For customers in the ATCO Gas North service territory, the proposed January regulated natural gas rate is decreasing from the December rate of $7.210 per GJ to $6.092 per GJ.

- This rate reflects a market price for January supplies of approximately $6.17 per GJ as reported by the NGX, and incorporates an adjustment of ($0.08) per GJ for December and prior months.

- The typical residential gas bill for January based on an average 20 GJ of consumption would be approximately $167 in the North.

South Service Territory

The South territory includes customers living south of the City of Red Deer.

- For customers in the ATCO Gas South service territory, the proposed January regulated natural gas rate is decreasing from the December rate of $7.224 per GJ to $5.584 per GJ.

- This rate reflects a market price for January supplies of approximately $6.17 per GJ as reported by the NGX, and incorporates an adjustment of ($0.59) per GJ for December and prior months.

- The typical residential gas bill for January based on an average 20 GJ of consumption would be approximately $152 in the South.

According to the Natural Gas Price Protection Regulation, government rebates are triggered during the months of October through March when approved rates for two of the three major regulated gas providers in Alberta exceed $5.50 per GJ. Direct Energy Regulated Services has applied for rates that exceed this threshold, therefore a Natural Gas Rebate of $1.50/GJ may be implemented for January.

Further information on regulated gas supply and a complete list of competitive retailers can be found on the Alberta government's customer choice website at: www.ucahelps.gov.ab.ca.

Backgrounder

In the North Service Territory, how will a typical bill this month compare to previous months based on 20 GJs (including rebates, where applicable)?

- January 2009, a typical residential bill will be $167

- January 2008, a typical residential bill was $177

- December 2008 (based on 19 GJ), a typical residential bill was $178

In the South Service Territory, how will a typical bill this month compare to previous months based on 20 GJs (including rebates where applicable)?

- January 2009, a typical residential bill will be $152

- January 2008, a typical residential bill was $171

- December 2008 (based on 19 GJ), a typical residential bill was $178

How does this month's rate compare to previous months?

The graph below shows regulated natural gas rates each month for the past year.

To view the Regulated Gas Rates graph, please visit the following link: http://media3.marketwire.com/docs/direct1222.pdf

How much natural gas does a typical residential customer use?



Natural gas consumption for a typical residential customer - GJ
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
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20 17 15 9 6 4 3 3 5 10 15 19 126
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How does this month's market price compare to last month?

The regulated rate is based in part on the current market view of natural gas prices for the month, as reported by NGX:

- As of the time the rate application was filed, the market price for January is $6.17 per GJ.

- The market price last month at the time of filing was $6.92 per GJ.

- Last month's actual market price was approximately $6.54 per GJ.

Why are there adjustments this month?

The formula used to calculate the regulated rate accounts for any over- or under-recoveries of actual gas costs arising from differences in:

- normal and actual weather, which affects the volume of natural gas consumed; and

- forecast and actual market prices occurring in December and prior months.

When are natural gas rebates triggered?

According to Alberta's Natural Gas Price Protection Regulation, rebates are triggered during the months of October through March when the approved cost of procuring natural gas for two of the three regulated gas providers exceeds $5.50 per GJ. The cost of procuring natural gas makes up the most significant portion of the regulated rate. No provincial rebate will be applied from April to September.

Why do natural gas prices fluctuate?

Natural gas prices are set in an open and competitive market, and are influenced by many variables throughout North America and the world. These variables include supply and demand, production and exploration levels, storage injections and withdrawals, continental weather patterns, pricing and availability of competing energy sources, and market analysts' views of future trends in any of these or other variables. Natural gas prices in Alberta are not typically a function of localized weather.

Why are North and South regulated natural gas rates different?

DERS is required by the Alberta Utilities Commission to purchase natural gas for ATCO Gas' North and South systems separately. Each system has slightly different load, weather, and supply characteristics that result in a different mix of Monthly and Daily Index purchases.

For more information, please view the January 2009 regulated natural gas rate applications on DERS' website at www.directenergyregulatedservices.com.

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