The construction of a gas distribution system in the province involves the investment in a pipeline system that must be built with the future in mind so that it will meet the current and future demands of New Brunswickers.
In the early years, because of this large upfront capital investment it means that we cannot charge our customers the real cost of providing the service. Instead, we developed what is referred to as “market based” rates.
With market based rates, rate classes are developed for each group of customers who on average are paying the similar price for their current energy supply.
For example in the residential market, customers are grouped into two rate classes; those who previously used heating oil and those who previously used electricity. Rates are then developed that will on average provide both groups with the same incentive to switch to natural gas, while recovering as much of the costs of providing the service as possible. In this case, the rates in both groups are set to provide typical customers with a 20% target annual savings. With market-based rates, both of these groups are being treated equally because they both enjoy the same relative savings.
"Target annual savings" means that when looking at the expected costs over the next 12 months, a typical customer will realize "X" savings (varies by rate class) compared to their previous fuel source. This is built into our rate formula.
Target Annual Savings by Rate Class:
Once a year, Enbridge Gas New Brunswick may apply to the EUB to increase the maximum delivery charge for any rate class. When the maximum delivery charge is set, we may apply to the EUB to raise or lower the delivery charge within a rate class, but are not able to go over the maximum rate. These adjustments are called Rate Riders and Rate Re-Instatements and may be applied for at any time to maintain an acceptable level of savings over the alternative energy cost, without exceeding the maximum allowable rate. At no time are we allowed to charge more than the maximum approved distribution rate for a class.