Public intervener voices concerns about impact of Enbridge lawsuit settlement
Heather Black expects residential customers will see rate increases
New Brunswick's public intervener is raising concerns about what the provincial government's settlement of two lawsuits with Enbridge Gas could mean for residential rates.
Heather Black expects residential natural gas customers will see a three per cent increase in 2018 and again in 2019, and possibly even bigger hikes down the road to help cover some of the debt Enbridge Gas incurred building its pipeline network in New Brunswick.
Residential customers have also lost the legislated protection that kept their natural gas rates lower than electricity rates, she said.
The "silver lining" is that the board will "have a few more tools than it has now to sort of smooth out some of those rate increases," Black said.
Those include spreading rate increases across all rate classes and using variance accounts, which can spread out any big spikes in costs over time, she said.
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Enbridge had launched two lawsuits totalling more than $820 million against the province over legislation brought in by the former Alward government, which prohibited the company from factoring $178 million in debt and interest, held in a deferral account, into rate applications.
The settlement, announced earlier this month, allows Enbridge to use rate increases to recover part of its debt principal — $144 million, but without further interest charges on that amount.
Under the deal, there's a three per cent cap on rate increases for residential natural gas customers in 2018 and again in 2019, and a rate freeze for commercial and industrial customers.
"So for that period, there's some rate stability," Black said. "Customers in all classes know what they're in for for the next couple of years."
"And that's when we really start to feel the absence of that protection mechanism for residential customers that was in the old legislation," said Black.
"The motivation behind this obviously primarily was to protect taxpayers from the potential of this $820 million and that's helpful to me as a taxpayer," she said.
"When I put my ratepayer hat on … what I want to know is, how is this going to affect my rates?"
Long-term, we may be getting some long-term stability out of this, but it's not going to feel like that for residential customers, at least in the short term.- Heather Black, public intervener
Residential customers may feel it's unfair they're facing a previously applied for 30 per cent increase, effective Jan. 1, plus a three per cent increase in each of the next two years, while rates for commercial and industrial customers are frozen.
But commercial and industrial customers have been paying more than their fair costs for the past few years because of the protection that was in place for residential customers, Black said.
She pointed to one of the other features of the deal, the re-establishment of Enbridge's "exclusivity, to some point in the province, which may hopefully foster some growth and some more investments from its shareholder, which may result in spreading those costs among new customers.
"So long-term, we may be getting some long-term stability out of this, but it's not going to feel like that for residential customers, at least in the short-term."
Just last spring, there were concerns about Enbridge pulling out of the province, said Black.
"I think the good thing for customers is now that we've got this deal at least there's some assurance there will be a utility in the future, and we may have to pay for it, but at least it will be there."
The two lawsuits filed by Enbridge were for $650 million for breach of contract and $176 million, the amount it said the PCs were blocking it from accessing in the deferral account.
Enbridge has about 12,000 customers in New Brunswick.
With files from Information Morning Fredericton