Inuvik (Mar 21/03) - Inuvik natural gas consumers will be hoping for an early summer if a looming price increase is approved here.

Inuvik Gas Ltd. has applied for a 45 per cent increase in natural gas prices that could come into effect May 1.

Lyle Neis, general manager of Inuvik Gas, says the company has applied to the Public Utilities Board for price increase of 45 per cent for natural gas. - NNSL photo The Inuvik Gas Project was completed in 1999. The pipeline and transmission network cost about $44 million. Two customers: Inuvik Gas and the Northwest Territories Power Corporation. Two companies, upstream and downstream are both owned by a joint venture between Alta Gas, Inuvialuit Petroleum Corporation and Enbridge Inc. Upstream regulated by the National Energy Board, downstream regulated by the Public Utilities Board. 621 customers in Inuvik have converted to gas.

On Feb. 28, Inuvik Gas filed an application with the NWT Public Utilities Board (PUB) to raise the price of gas from $12.10 to $17.50 per gigajoule.

The price increase comes to keep the price of gas here on par with the rising cost of home heating fuel, since the price of gas in Inuvik is based on market price, rather than actual cost of service.

Lyle Neis, general manager of Inuvik Gas Ltd., said that the price of gas is tied directly to the price of a heating equivalent diesel fuel.

"(The transmission and distribution system) was approved on the basis that natural gas would be 15 per cent less than fuel oil," Neis said.

For a change in price the utility must first give 60 days notice to the PUB and the Town of Inuvik. If there are no objections, the price will automatically be approved.

Inuvik Gas is owned by the joint venture between Alta Gas, Inuvialuit Petroleum Corporation and Enbridge Inc.

The gas is wholesaled to Inuvik Gas and the Northwest Territories Power Corporation from a different company, but is also owned by the same joint venture.

The wholesale gas is purchased on a one-year contract price that is set every Aug. 1.

The price of wholesale gas is $8.15.2 per gigajoule. That price will not be changed until Aug. 1.

While the wholesale price has not increased, the price of diesel has.

"Our costs have not increased, but our costs don't factor into what the price of gas is; in that it's a market-based rate," Neis said, adding that even with the increase, customers will still be paying 25 per cent less than the equivalent cost of the alternative.

Any profits made are used to pay down the $44 million cost of constructing the line and transmission system and provide a financial return to the shareholders.

Gerry Malin, vice president of regulatory and Northern development for Alta Gas Marketing, a division of Alta Gas Services, said the net profit for 2002 for the upstream company was $1.7 million but Inuvik Gas didn't quite break even.

"We didn't make any money at all," Malin said.

"We came out just a little bit less than even."

Most industry forecasts say that crude oil prices will stay high or even rise over the coming months.