Irving Oil, public intervener spar over price hikes
An earlier compromise on wholesale margins fell apart last year
By Robert Jones, CBC News
Posted: Jan 31, 2013 6:46 AM AT
Last Updated: Jan 31, 2013 8:58 AM AT
A compromise on petroleum price increases reached between Rene Basqué and Irving Oil Ltd. late last year dissolved into deep division during Energy and Utilities Board hearings on Wednesday.
Basque, who was the public intervener in the regulatory hearing, called on the EUB to reject Irving Oil's application for increases to its petroleum margins during closing arguments in the case. Basque argued the company had not provided reliable information to back the request
"Because of a lack of information that is verifiable, they should deny it," Basque told CBC News.
But Len Hoyt, Irving Oil's lawyer, said Basque's objections "make no sense" and asked the board to grant the company everything it has been asking for.
"The reason we are here is that six years have passed with no change in the wholesale margin," Hoyt said.Irving Oil Ltd. had applied to the Energy and Utilities Board to increase the margins it can charge wholesalers for its gasoline, diesel and furnace oil. (CBC)
Irving Oil applied for increases in wholesale petroleum margins in New Brunswick late last spring, including a 22 per cent increase in gasoline and diesel margins and 25 per cent for heating oil.
The increases, which would be the first for industry since 2006, would add 1.5 cents per litre to pump prices and generate about $20 million a year for Irving Oil and various other provincial wholesalers.
Irving Oil's argument for the board to award 100 per cent of what the company applied for and Basque's call for it to get nothing is a stark contrast to positions the two took just last month
In December, the two sides agreed on a compromise that involved a smaller increase than Irving Oil applied for, after Basque openly acknowledged the company had made a compelling case to his own consultant Kurt Strunk, for at least some movement in price.
"It is, I think, public knowledge that there has been cost increases over the periods since 2006. Mr. Strunk's evidence supports some sort of increase — in the wholesale margin," Basque told the board at the time.
Hoyt praised Basque for making a deal and said Irving Oil was willing to accept less than the full amount applied for.
"We are pleased to have been able to work with the other parties to achieve the settlement," said Hoyt.
The settlement was ultimately rejected by the EUB because of a technical objection lodged against it by the Department of Energy.
But that also seemed to short circuit all goodwill between the parties with Basque retracting his acknowledgement Irving Oil deserves some increase, and the company retracting its willingness to settle for less.
The case is further complicated by the fact Irving made nearly identical applications in Prince Edward Island and Nova Scotia, both of which are already settled.
In Prince Edward Island, the Island Regulatory and Appeals Commission granted Irving everything it asked for without convening a hearing or even asking the company to file evidence to back its request.
In Nova Scotia, the province's Utilities and Review Board granted the company only half of the increase applied for in a deal Irving agreed to voluntarily.
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