Heritage Gas granted extension for program that gives discounts to some customers
Discount program applies to commercial customers, such as schools, larger businesses, offices and apartments
Heritage Gas has been given permission to renew a program that offers commercial customers in Nova Scotia a deep discount to keep them from switching from natural gas to propane.
On Monday, the Nova Scotia Utility and Review Board approved a three-year extension to a customer retention program instituted in 2016 that originally resulted in up to a 64 per cent saving on the base energy charge.
The retention program allowed Heritage Gas to levy an annual base energy charge from $3.10 to $8.68 per gigajoule of natural gas consumed.
Heritage has since increased the base energy charge to $6.60, but it has not been able to bill the full amount, meaning savings can only max out at 21 per cent.
Company president John Hawkins said the rate keeps existing customers and attracts new ones.
'Benefits all our customers,' says Heritage Gas
"The more customers that are on the Heritage gas system, the more our fixed costs are able to be spread amongst our entire customer base," he said after the decision was release. "And so, our ability to grow the business benefits all of our customers."
The commercial class — typically schools, larger businesses, offices and apartments — makes up less than 18 per cent of customers, but accounts for 37 per cent of the company's revenues.
The discount was first approved in 2016 when Heritage estimated it would lose $3 million in revenues as a flood of businesses switched to propane, which was 35 per cent cheaper than natural gas.
The Canadian Propane Association opposed the application, arguing an extension was not justified by the evidence. It said Heritage's evidence showed customers who were threatening to leave in 2016 are no longer at risk of leaving and since the program was introduced, Heritage has added 182 new large commercial customers.
What the board said
But the Nova Scotia Utility and Review Board sided with Heritage Gas. It said the circumstances that led to the approval of the program in the first place have not significantly improved on the timeline Heritage expected.
"Local sources of natural gas declined more quickly than anticipated and projects expected to improve pipeline capacity to the region have been delayed," board members Peter Gurnham, Roland Deveau and Stephen McGrath wrote in the decision.
They said the growth Heritage has acheived in recent years has been in part because of the program.
"Had that not been in place, it is quite likely that Heritage's situation would be entirely different," the board wrote.
Why Alton project delays helped Heritage's application
But the most significant problem facing Heritage is the continued delay of the Alton natural gas storage facility.
Heritage wants to buy cheaper gas in the summer and store it in underground caverns near the Shubenacadie River.
The project has been opposed by Indigenous groups in the courts and at the site.
When the company first slashed commercial rates, it was scheduled to be in service by 2019.
It's now expected to be ready by late 2023.
Hawkins said storing cheaper gas will result in savings of 20 per cent on the commodity price consumers pay for natural gas.
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