Heritage Gas granted permission to base prices on market conditions
'Viability of the utility itself' threatened by departing customers, finds utility board
A large natural gas company in Nova Scotia will be dropping fuel prices in an effort to keep disgruntled customers.
Heritage Gas can now reduce fuel bills on a sliding scale based on market conditions, instead of having a fixed rate, Nova Scotia Utility and Review Board decided Thursday.
For commercial customers who use between 500 gigajoules and 4,999 gigajoules per year, that could be a reduction of up to a 64 per cent.
For smaller businesses and residential customers, the possible reduction is just under six per cent, a cut of about 50 cents a gigajoule.
The decision comes after more than 100 commercial companies, mostly property rental owners, left Heritage Gas in favour of propane, a heating fuel offered for about 35 per cent lower than natural gas, the board said.
'Serious negative rate impacts'
Heritage Gas laid off 20 per cent of its staff in March and cut capital spending by almost 70 per cent.
Around that time, the utility board gave the company permission to temporarily cut rates for some small- and medium-size commercial customers. Thursday's decision covers the majority of the next two to four years, depending on the rate class.
"[T]he departure of customers from the system could potentially have serious negative rate impacts on the remaining customers of the utility, and indeed, perhaps even on the viability of the utility itself," Thursday's decision said.
Heritage Gas stood to lose more than $3 million in annual revenue from the 250 customers who left or were planning to leave over natural gas prices, according to the utility's decision.
The company was not available to comment Thursday afternoon.
'Significant increases' in prices
The region's largest apartment rental company, Killam Properties, presented at the hearings. The company was one of several watching gas prices closely, considering about half its residential buildings use the fuel for heating.
It noted in its first quarter report the company absorbed "significant increases in natural gas prices," and so hoped for future savings.
'Positive impact' on greenhouse gas emissions
The utility board also approved the rate decrease in the spirit of "maintaining a viable alternative energy option" due to the "demonstrable positive impact the use of natural gas has on greenhouse gas emissions," the board said in its decision.
Despite that positive impact, Heritage Gas's parent company, AltaGas, has been subject to a series of protests and court actions over environmental concerns.
AltaGas has plans to store natural gas in underground salt caverns near Stewiacke, N.S. The local First Nation and others have worries over the potential impact to the watershed and Shubenacadie River system.
Propane group denied sanction request
The Canadian Propane Association also was involved with the hearing this summer. It asked the board to sanction Heritage Gas between $100,000 and $200,000.
The industry lobby group alleged Heritage Gas withheld negative information from a previous hearing.
The utility board found against the association and said the group was acting for private interests over public.
"However, if similar circumstances were to arise in the future, the board would seriously consider imposing an award of costs against Heritage to account for the waste of time, money, and effort by counsel and the board in dealing with such an issue," the board said.
With files from CBC's Paul Withers