On Thursday, Septebmer 20th, 2012, the New Brunswick Energy and Utilities Board (EUB) approved changes to Enbridge Gas New Brunwick's distribution rate structure and on September 26th approved the associated rates and tariffs for all new rate classes, effective October 1st.
Why are the rate structure and associated rates and tariffs changing?
- The recent amendments to the “Gas Distribution Act, 1999,” required Enbridge Gas New Brunswick (EGNB) to submit an application to the New Brunswick Energy and Utilities Board (EUB) on or before May 31, 2012 for the fixing of natural gas distribution rates and tariffs as outlined in the Rates and Tariffs Regulation.
How long will the new distribution rates be in place?
- The new distribution rates that will take effect October 1st, 2012 will be in place until the EUB approves the next rate application that EGNB files, which would likely be for January 2014.
Are rates for customers now going to be “cost-of-service” instead of “market-based”?
- According to the new rates and tariffs regulation for the Gas Distribution Act, EGNB is mandated to adopt a cost of service method of fixing rates or apply the market-based rate method, whichever is lower.
- The majority of residential customers, for example, will be charged market-based rates. If rates for residential customers were based solely on the cost to serve them, they would be too high. Market-based rates provide residential customers savings compared to electricity and heating oil.
How will the Customer Rate Classes change?
Based on the proposed rate structure and rates in the application, how would this impact customers?
How will the proposed rates impact Enbridge Gas New Brunswick?
- With the proposed rates (and the move to a cost of service method), EGNB will not have an opportunity to recover its full revenue requirement. This shortfall will limit the future growth of New Brunswick’s natural gas distribution system.
- However, EGNB remains committed to providing economical natural gas in a safe and reliable manner to our nearly 12,000 customers in New Brunswick.
Is natural gas still the best energy choice for New Brunswickers?
- Natural gas is still the lowest cost source of energy available in New Brunswick and is a cleaner, more reliable and safe energy choice for homes and businesses. Enbridge Gas New Brunswick has consistently brought cost savings to its customers and intends to do so for years to come.
Would this bring New Brunswick’s natural gas distribution rates in line with those of other more mature jurisdictions?
- For residential customers, no. If rates for residential customers were based solely on the cost to serve them, they would be far too high, so they will be charged rates according to the market-based method. Market-based rates provide residential customers savings compared to electricity.
- For large commercial and industrial users, the rates will decrease, but are likely to remain higher than those of mature jurisdictions because EGNB is servicing a smaller customer base over a distribution system that is now limited in expanding.
- Mature markets have established distribution systems, some of which have been around for 160 years, and serve thousands to millions of customers. Costs associated with operating and maintaining the distribution system in New Brunswick are borne by a smaller number of customers. Our delivery rates will probably always reflect the need for more pipeline to reach fewer people based on the smaller population base.