Enbridge will have to cut natural gas distribution rates for large businesses in the province by up to 50 per cent beginning next month, New Brunswick's Energy and Utilities Board has ruled.

But the regulatory body approved increasing the distribution rates for residential customers by 11.1 per cent in its decision, released Thursday.

Enbridge had been ordered by the provincial government to apply for substantial rate cuts last winter after negotiations between the government and the company broke down.

Energy Minister Craig Leonard alleged the company was hampering economic development in the province by charging businesses the highest natural gas distribution rates in North America.

But the rates had been earlier approved by the EUB as "just and reasonable," so Leonard introduced legislation to force new rates and ordered Enbridge to apply for them.

Enbridge complied, but asked that the rates be rejected by the EUB.

In its decision Thursday, the EUB said it agreed with the company that the rate cuts do not comply with normal regulatory practice.

But it said it had no choice but to impose the government-ordered rate cuts on Enbridge even though they will force the company to lose money — a circumstance it would not normally endorse.

"The regulatory objective of providing shareholders with the opportunity to earn a reasonable return while ensuring that rates are fair to customers is well recognized in the case law," the board stated in its 29-page decision.

But the board said it would not be applying that principle because government actions "have limited the board's previous broad discretion to determine what constitute just and reasonable rates."

Enbridge will now have to cut natural gas rates for business customers by 50 per cent or more by Oct. 1st, even though the company says that will cause it to lose $6 million this year.