Enbridge says higher natural gas use isn't good for consumers
Natural gas consumption has jumped 201% between 2005 and 2013, but most has bypassed the public system
Enbridge Gas New Brunswick says a new report showing significant increases in the consumption of natural gas in the province is not particularly good news for consumers since most of the fuel has bypassed the public distribution system.
"In the end, customers are paying higher rates because of that."
On Monday, the Atlantica Centre for Energy released a report showing natural gas has deeply penetrated New Brunswick's economy, with consumption increasing 201 per cent between 2005 and 2013.
There are currently about 12,000 consumers and small businesses on the public distribution system.
Use of natural gas in New Brunswick is more than triple the usage in neighbouring Nova Scotia, but those large volumes have not significantly helped distribution rates for consumers and smaller businesses because of unique arrangements in the province with large industry.
Irving Oil Ltd., J.D. Irving Ltd. and the natural gas generating plant in Saint John operated by Emera consume more than two-thirds of the natural gas used in New Brunswick.
But those companies have agreements that allow them to buy gas outside of the public distribution system and pay no fees toward its cost.
Because the costs are born by fewer number of customers, the rates in New Brunswick are higher because of that.- Gilles Volpe, Enbridge Gas New Brunswick
That has led to lower costs for those companies, but Volpé says it has burdened everyone else.
New Brunswick currently has some of the highest natural gas distribution charges in North America, especially for small- and medium-sized businesses.
"Because the costs are born by fewer number of customers, the rates in New Brunswick are higher because of that," said Volpé.
"It costs $48 million a year to run this utility. It would probably cost $48 million if they were on the system also, but they would be paying a fair chunk of the cost to operate the utility so everyone else's rates would be going down."
The provincial government granted the independent franchises to industry in 1999, arguing it would speed up the construction of pipelines throughout the province.
Those original franchises expire in 2019 and the province says companies will be made to contribute to the public distribution system after that, even if they remain outside of it.