Energy Minister Craig Leonard introduced legislative changes on Tuesday that will force the province's largest industrial buyers of natural gas to pay higher bills starting in 2019.
Energy Minister Craig Leonard said he knows the province’s six largest industrial gas buyers, such as Irving Oil Ltd., J.D. Irving Ltd., TransCanada Corp. and Emera, will not be pleased with these changes.
"I think no company likes to pay more," Leonard said on Tuesday.
Leonard said it is time these large companies, which are known as single-end use franchises, start paying a larger share of the cost of natural gas, 15 years after they won a special deal on their gas bills.
These single-end users were given the opportunity, under the original 1999 rules, to plug directly into the Maritimes & Northeast Pipeline for a five-figure fee.
This allowed companies to bypass the distribution fee charged to smaller customers by Enbridge Gas New Brunswick.
Leonard said the original rules deprived Enbridge Gas New Brunswick of much-needed revenue.
Those single-end users consume roughly 85 per cent of the natural gas in New Brunswick and without revenue from that big volume, Enbridge has increased rates to other buyers.
“Given the fact that these six entities are utilizing basically 85 per cent of the gas going through the province, we felt there was definitely room for that movement to take place with a new fee that would cause some increases for them, but also provides that certainty past 2019,” Leonard said.
The legislative changes will force these larger companies to pay a higher volume-based fee that will kick in five years from now.
'On the surface it seems the government has responded to the suggestions that we've made for the last several years.' - Gilles Volpé, Enbridge Gas New Brunswick
Industrial users could choose to not renew their agreement with Maritimes & Northeast in 2019 but other than Enbridge there are no other companies to sell them natural gas.
Any new single-end users who bypass Enbridge will have to pay the higher fee immediately.
Some of the fee will go to Enbridge to make it affordable for the company to keep rates low for others, such as residential users.
Gilles Volpé, the general manager of Enbridge Gas Brunswick, said the provincial government has listened to some of his company’s concerns.
"On the surface it seems the government has responded to the suggestions that we've made for the last several years," Volpé said.
The response from Enbridge stands in contrast to the fight the company had over legislation introduced in 2011 by the Alward government.
Leonard brought in changes three years ago that were designed to reduce natural gas rates, particularly for residential users.
In 2012, Enbridge said the single-end use franchise agreements were a big reason why the province’s natural gas distribution system was not working properly.