- Enbridge Gas New Brunswick owns and operates the 750 km distribution system that distributes natural gas to customers and is regulated by the New Brunswick Energy and Utilities Board (EUB), with rates only changing with the approval of the EUB.
- Because of the large upfront capital investment, it means that Enbridge Gas New Brunswick cannot charge customers the real cost of providing service.
- The current business model was developed to ensure the total cost of natural gas in New Brunswick remains:
Low enough to provide consumers with a reason to switch to and continue using natural gas, meaning the total cost to use natural gas is less than the cost of their previous energy source.
High enough to recover as much of the costs of owning and operating the distribution system as the market will allow.
There are three charges that make up the total cost of natural gas for a customer:
- Customer Charge: the cost to cover services like meter readings and customer support.
- Delivery Charge: the cost for the delivery of natural gas through the distribution system.
- Commodity Charge: the cost of the natural gas product itself. (Enbridge Gas New Brunswick does not profit from the sale of the commodity.)
- The Customer and Delivery Charges are regulated by the EUB and are the source of revenue for Enbridge Gas New Brunswick.
- Enbridge Gas New Brunswick sets the delivery charge according to market-based rates, which provide target annual savings based on estimates of what they would otherwise spend using an alternative fuel. The rates depend on estimates of the future cost of oil, electricity and natural gas.
- With market-based rates, customers are grouped into rate classes depending on previous energy supply, consumption and use of natural gas.
- “Target annual savings” means that when looking at the total expected costs of using natural gas over the next 12 months, a typical customer will realize "X" savings (varies by rate class, see below) compared to their previous fuel source. This is built into the formula.
- Once a year, based on changes in the market, Enbridge Gas New Brunswick may apply to the EUB to increase the maximum allowable delivery charge for any rate class.
- When the maximum delivery charge is set, Enbridge Gas New Brunswick may apply to the EUB to raise or lower the delivery charge within a rate class when there have been changes in the market, but at no time is able to charge more than the maximum.