Heritage Gas gets green light to slash prices for some businesses

Nova Scotia regulators have given Heritage Gas permission to slash prices for some of its commercial customers.

Company granted permission to cut base energy charge by 64% for some commercial customers

Heritage Gas says it has lost 100 commercial customers since the end of November and could lose another 150 businesses that want to convert to propane. (CBC)

Nova Scotia regulators have given Heritage Gas permission to slash prices for some of its commercial customers.

The company sought an interim order from the Nova Scotia Utility and Review Board for an immediate 64 per cent cut in its base energy charge for small and medium-sized businesses. It said the unprecedented price cut was needed to stem a growing exodus of customers to propane.

Chris Smith, the president of Heritage Gas, told the hearing the request was made under "extraordinary circumstances."

"It is our opinion, frankly, unless we do something quickly we will see future erosion of customers," Smith said as the hearings opened in Halifax.

After a half-day hearing, the Nova Scotia Utility and Review Board gave the green light for the price cut on Monday afternoon. It's effective later this week.

"The board is satisfied this will assist in retaining these customers and we are satisfied that it is in the public interest," said Peter Gurnham, the chairman of the Utility and Review Board.

Smith, meanwhile, said his company was "pleased."

"It's obviously an extraordinary measure we are taking and it will provide immediate relief," he said.

Company says it's losing customers

The company said it had lost 100 commercial customers since the end of November and 150 more customers have indicated they are preparing to go — almost all to propane.

The discount rate would be offered to all customers who consume between 500 gigajoules and 4,999 gigajoules. 

Heritage Gas said the lost revenue would accumulate in what is called a revenue deficiency account for recovery later. 

Heritage Gas president Chris Smith told the hearing the company is concerned it will lose its customers if rates don't go down. (CBC)

Gurnham noted the account would grow because of the price cut and Heritage Gas' parent company, AltaGas Ltd., will be able to earn an 11 per cent return on the losses as it is entitled to recoup the money. 

He questioned that.

"I don't see the shareholder bringing anything to the table," said Gurnham.

Consumer advocate John Merrick also questioned why the shareholder was not putting in any money.

The discount would remain in place until a full rate hearing is set for July.

Employees laid off

The company said Monday it wants the ability to adjust rates for another four to five years in order to compete with propane.

Heritage Gas laid off 20 per cent of its workforce on March 1 and the company says it will cut capital spending in 2016 from $17 million to $4 million. 

Smith also said gas purchases will offer relief. 

In 2016, it has secured cheaper natural gas from Western Canada and starting in 2017 it will have access to Marcellus Basin from Pennsylvania and bring natural gas through the new Atlantic bridge pipeline into New England. 

The company says it expects to be able to store gas at the Alton storage project in 2019.

About the Author

Paul Withers


Paul Withers is an award-winning journalist whose career started in the 1970s as a cartoonist. He has been covering Nova Scotia politics for more than 20 years.


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