Market Overview

Alberta is the largest producer of natural gas in Canada, providing almost 80% of total production. In terms of gas consumption, Alberta demand amounted to 20.6 10⁹m³(728 Bcf) in 2001, placing it second to Ontario. The large majority of gas consumption in Alberta is within the industrial sector. This sector comprises end-users such as petrochemical and fertilizer manufacturers, oil sands operators and electricity generators. Industrial demand accounts for about 70% of total gas consumption; the remainder is consumed by the residential and commercial sectors, primarily for heating.

Investor-owned utilities serve about 88% of the Alberta market with the balance of service provided by 69 rural gas co-operatives and 24 municipally-owned utilities, such as the City of Medicine Hat. ATCO Gas and AltaGas Utilities Inc. are the largest utilities in Alberta. ATCO Gas serves approximately 825,000 customers, or about 80% of the Alberta market.

This includes ATCO Gas North, which operates in Edmonton, and northern Alberta and ATCO Gas South, which operates in Calgary, and southern Alberta. (Direct Energy has acquired a large portion of the ATCO customer portfolio in a transaction that was still under regulatory review in early 2004). AltaGas Utilities Inc. distributes gas to approximately 56,000 customers. The LDCs are regulated by the Alberta Energy and Utilities Board (AEUB).

Albertans that purchase gas from either ATCO Gas or Altagas Utilities Inc. have the option to purchase gas from a direct marketer. Municipally-owned utilities may allow customers to buy directly from a marketer but they are not required to do so; customers of rural gas co-operatives do not have the option of buying direct from a marketer. There are eight licensed direct marketers for commercial customers but only two of these marketers are active in the residential market, namely, ENMAX Energy Corporation and EPCOR Energy Services Inc. At this stage in the market's development, very few residential and commercial customers buy their gas directly; thus, marketers serve only a small portion of the retail market.