Petroleum investigation ordered by province killed by EUB

A dramatic order by the New Brunswick government for the province's Energy and Utilities Board to produce "in rapid fashion" a report on "how to mitigate the impact on consumers of high petroleum prices," remains stalled at the starting line after more than a month and may not proceed after all.

The province overlooked the fact the requested investigation requires powers the EUB does not possess, according to the energy regulator.

"The Board does not have jurisdiction to investigate this directive," the EUB's chief clerk Kathleen Mitchell wrote in a letter to Natural Resources and Energy Development Minister Mike Holland last week.

The episode adds to an apparently confused understanding by the New Brunswick government about the EUB's powers and the manner in which petroleum prices are set in the province.

New Brunswick political leaders spent much of the spring jousting over what should be done about the rising and volatile cost of petroleum, even though prices in New Brunswick, outside of taxes, were consistently the lowest in the region through the period.

On June 9, in the midst of that ongoing volatility, Holland said he had directed his department "to put together some sort of a request to the EUB to analyze and come back with recommendations," about how the province could better deal with petroleum pricing issues.

"This is an effort in which we want to go forward and say, in a rapid fashion, in immediate terms, come back to us with an analysis," said Holland.

New Brunswick has regulated the maximum amount oil and gas companies can charge consumers for petroleum products since 2006.  

Rules that govern that process were devised by the province and the Energy and Utilities Board was given responsibility for applying them. 

Normally the body adjusts the upper limit of what consumers can be charged for various petroleum products once per week based on rising and falling commodity prices and the official pricing formula spelled out in legislation.

However, between January and early June this year gasoline and diesel prices jumped 70 cents per litre in New Brunswick and required 44 separate price settings in 23 weeks.  

That included 21 special "interrupter" price settings, which are required when commodity prices rise or fall on markets by six cents per litre or more in a single trading day or five cents or more in the case of  furnace oil. 

On June 9, the EUB lifted the maximum price for regular unleaded gasoline in New Brunswick 8.3 cents to a then record 219.6 cents per litre.  That appeared to trigger Holland's call for the EUB to investigate what government could do to soften the price shocks.

In an official letter sent later that day, Holland told the EUB he wanted it to "make an investigation on how to reduce the volatility of petroleum product pricing caused by the interruptions in the weekly price setting."  

He also wrote he wanted the body to make recommendations on "how to mitigate the impact on consumers of high petroleum prices."

In its response to the Minister sent last week the board said it "doubts" it has the authority to look at the interruptions issue and is certain it has no jurisdiction to look at mitigating high prices for consumers.

"The Board only has jurisdiction to act upon those powers expressly or implicitly delegated through enabling legislation," wrote Mitchell for the board.

"Actions outside this jurisdiction are of no force or effect."  

The EUB requires more than a letter from Holland to dig into the requested investigations, Mitchell explained, suggesting an official assignment to look at the issue from Cabinet is required. 

"If the Government were to require the Board to carry out these investigations through the Lieutenant Governor in Council, by Order in Council, the Board would be seized with jurisdiction, and have the obligation to carry out such investigations," read Mitchell's letter.  

It's not the only misunderstanding this year the province has had over the limited authority it has given the Energy and Utilities Board over petroleum pricing.  

Also in June, New Brunswick Premier Blaine Higgs said his government was pressing the Board to explain how it sets prices in certain market conditions, apparently unaware the body is only permitted to follow formulas given to it by government.

"We are asking those questions of the EUB right now," said Higgs.

Despite concerns expressed by New Brunswick government officials over pricing, records show consumers in the province fared reasonably well through spring price shocks compared those in neighbouring jurisdictions.

According to the energy information company Kalibrate, the average price of a litre of unleaded gasoline in Saint John was 194.6 cents per litre in May and 210.7 cents in June.  That's within one cent of prices in Halifax for those two months even though taxes on gasoline in New Brunswick are more than six cents higher than in Nova Scotia.  

Diesel prices averaged 13 cents more in Saint John than Halifax but taxes on diesel were 15 cents higher in New Brunswick.

Asked this week whether the province will pass an order-in-council directing the EUB to conduct the investigations requested by Holland, his department indicated in an email it is now doing the work on its own.

"We are currently reviewing the Petroleum Products Pricing Act and will bring forward recommendations to government on how the Act can be amended to better protect consumers, and to provide more certainty and stability for retailers and everyday drivers," wrote spokesperson Nick Brown.