NB utilities board gutted natural-gas incentive program, Enbridge complains
'The program is of no value,' says Enbridge lawyer about altered residential initiative
New Brunswick homeowners struggling with high electricity or oil prices who are interested in incentives to switch to natural gas might find grants hard to come by following a ruling this week by the Energy and Utilities Board.
New Brunswick's natural gas distributor, Enbridge, claimed the EUB's restrictive rules set last winter around who can be offered up to $2,000 in incentives have all but killed the program. Enbridge's request for changes was slapped down again on Wednesday.
"The evidence provided on the Review does not raise sufficient grounds to grant the request to vary the Decision," the Board wrote in its decision.
Enbridge has been hoping to expand its customer base by attracting 140 new homeowners to natural gas over the next two years. Customers would be offered generous financial incentives that Enbridge has already been advertising.
However the EUB placed severe restrictions on the incentive plan in December. The board found it takes years too long for some of the incentives to pay for themselves. This makes the program financially dubious for existing natural-gas customers who ultimately have to pay for its cost in their own rates.
Decades to recoup money
Enbridge acknowledged hooking up a new residential customer costs it an average of $6,400 and that the expense of offering incentives on top of that can take decades to recoup.
The board heard about one homeowner who received a $1,700 incentive to switch to gas. Enbridge paid an additional $6,400 to connect the client to the network but so little gas is used that it will take 38 years for the company to recover its money.
EUB lawyer Ellen Desmond suggested Enbridge might be better off without a new customer under those terms.
"Wouldn't you agree that at least looking at it from an outside perspective, it would make more sense to have that customer contribute to the cost of construction as opposed to offering an incentive?" Desmond asked.
Enbridge consultant Russell Feingold said new customers resist paying the initial costs of switching to gas.
"One of the challenges that the natural gas industry is experiencing right now is the fact that customers are not necessarily willing to pay an upfront contribution in aid of construction to be able to switch from an alternate fuel to natural gas," said Feingold.
The EUB ultimately ruled Enbridge could only offer incentives that would pay for themselves within 15 years.
Enbridge objected, claiming only homes with very large gas consumption could meet that timeframe and that most homeowners would be completely disqualified from the program.
"It cannot work, it does not work for the residential incentive program," Enbridge lawyer David Young told the EUB in April during an attempt to have the 15-year payback period retracted.
The EUB was unmoved.
On Thursday Enbridge spokeswoman Sara Gourley said the company is abiding by the decision but declined to say how residential customer recruitment will be affected.
"Enbridge continues to comply with the 15 year payback period and continues to measure and evaluate customer growth and its marketing programs," said Gourley.
A second incentive program that pays existing Enbridge customers to add natural gas appliances was unaffected by the EUB's rulings.