National Energy Board rejects $176M Irving pipeline discount

The decision is seen by some as a win for natural gas customers in Nova Scotia.

Decision seen by some as win for natural gas customers in Nova Scotia

The National Energy Board has rejected an application by ​Maritimes and Northeast Pipeline for a $176-million pipeline discount for Irving Oil. Irving Oil's refinery in Saint John is pictured above. (Devaan Ingraham/Reuters)

The National Energy Board decision this week to reject a $176-million pipeline discount for Irving Oil is being applauded in Nova Scotia as a win for the province's beleaguered natural gas consumers.

"We're happy with the outcome today," Nova Scotia Energy Minister Geoff MacLellan said. "When you look at what customers pay for natural gas, which is among the highest in the country, this was a good decision and it was a fair one."

​Maritimes and Northeast Pipeline applied to the regulator to slash the tolls it charges Irving to deliver natural gas to Saint John.

The 13-year "load retention rate" was an inducement to keep Irving from jumping to a rival pipeline in New Brunswick owned by the Halifax-based energy conglomerate Emera.

Maritimes and Northeast Pipeline argued its system is better off with Irving than without. 

Nova Scotia rates would rise

But others — including Emera subsidiary Nova Scotia Power — objected, saying customers in Nova Scotia would be forced to pay much higher tolls to make up for the revenue lost because of the Irving discount.

Nova Scotia Power warned the National Energy Board tolls it pays could rise by 30 per cent, costing the company an additional $6 million a year, enough to consider abandoning natural gas as a fuel source to generate electricity.

"We're pleased that the National Energy Board recognized the broader customer and industry impacts of M&NP's proposal, as it would have resulted in higher natural gas costs for Nova Scotia Power and its customers," spokesperson Tiffany Chase said in an emailed response to CBC News.

The Nova Scotia government also filed objections with the National Energy Board.

"Having these tolls reduced would mean other customers would pay higher prices," MacLellan said.

Nova Scotia Energy Minister Geoff MacLellan said he was happy with the decision to reject the discount. (CBC)

The decision issued late Monday by the National Energy Board said it denied Maritimes and Northeast Pipeline its load retention rate because it was "a premature response that gives rise to significant concerns among affected parties."

But it made no finding on whether the proposed rate was "just and reasonable."

The ruling contradicted Maritimes and Northeast Pipeline's assertion that its rival, the Emera Brunswick Pipeline, would receive fast-tracked regulatory approval to reverse and repurpose its pipeline to accommodate Irving's daily demand for approximately 65,000 million British thermal units.

Emera will have to file its own National Energy Board application if it wants to supply Irving, the board said.

Uncertainty after 2019 rates and demand

The decision does not end uncertainty over the future supply of gas in the Maritime market, given the rapid winding down of the two offshore projects that anchored the Maritimes and Northeast Pipeline.

The pipeline was built in the late 1990s to deliver natural gas from the ExxonMobil Sable project and then later Encana's Deep Panuke field. Both projects will be decommissioned over the next two or three years.

The board decision refers repeatedly to the uncertainty in the region's market.

"M&NP stated that it does not know with any certainty what post-2019 tolls will look like for any of its customers," the National Energy Board noted. "M&NP submitted that post-2019 there are too many unknown variables to accurately forecast demand."

Heritage Gas gets a win

Heritage Gas holds the monopoly franchise to distribute natural gas in Nova Scotia.

It, too, objected strenuously to the Irving discount due to "the very real potential of increasing rates to our customers significantly," said Heritage Gas president John Hawkins.

"We're pleased with the decision because the board in stating its reasons for the ultimate decision seems to recognize and share those concerns. With this ruling there is greater certainty over our toll pricing in the future."

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About the Author

Paul Withers

Reporter

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.