Heritage Gas price outrage fuels commercial customer exodus

A Halifax landlord says soaring prices and shabby treatment by Heritage Gas is driving him to switch from natural gas to propane.

"Close to a 400 per cent increase, which is nothing we have ever experienced before with any other commodity," said Peter Giannoulis Jr. of Cosmos Properties.

Cosmos is one of dozens of commercial customers that have moved to propane. 

One of the region's largest landlords, Killam Properties, told CBC News it has converted two of its apartment buildings to propane.

Giannoulis Jr. says his company has already switched some of its properties over and is evaluating whether to do so at the rest.

"We did not want to go to this step, but we have to think of our own financial situation," he said.

The Halifax family business owns a restaurant, hotel and several apartment buildings.

Extraordinary measures

To stop the exodus of companies like Cosmos, the Nova Scotia Utility and Review Board gave Heritage Gas approval this week to slash prices for about 1,100 commercial customers.

The regulator allowed the AltaGas Ltd. subsidiary to reduce its base energy charge by 65 per cent from $8.68 per gigajoule to $3.10 per gigagoule. The approval is temporary. A full hearing will be held in July.

"It's important for us to send a message to them. This is one part of our overall strategy to provide them with pricing relief," Heritage Gas president Chris Smith told reporters Monday after winning approval for a "customer retention program."

The company says about 100 commercial customers have left since last fall, another 150 have told the company they intend to leave, and Heritage Gas feared the loss of another 500 in 2016 unless it immediately cut prices.

Heritage Gas considers each gas meter a customer, which magnifies the impact when a landlord with multiple buildings switches.

"We obviously don't want to lose any customers, so I am absolutely empathetic with the plight of customers who are facing challenges in energy prices," said Smith.

"We would love to have the customers who have left come back, but for customers who are contemplating a move, we are taking steps."

The company says it locked into a supply of abnormally high priced gas last year. Heritage Gas says it has secured cheaper gas from Western Canada for 2016 and will have access to natural gas from Marcellus Basin when the Atlantic Bridge pipeline to New England comes on stream in 2017.

"We won't see prices that we've seen this winter, next winter,"  said Smith.

Too little, too late 

That isn't good enough for Giannoulis Sr.

"The last time I was upset with them, I went to their office and I told them if you give it to me for free, I'm not going back to you because of the treatment we got from them," he said.

Heritage Gas has lost the respect of the family patriarch who says the company threatened to cut natural gas off to his buildings after he struggled to pay huge monthly gas bills. He and his son, Peter Giannoulis Jr., say they wanted to extend payments beyond 30 days.

"I don't care if they go under. OK. Because the way they treated everybody, I think they deserve it," said Giannoulis Sr.

CBC has asked Heritage Gas for a response to Giannoulis's situation.

Quadrupling of price

The landlords say they invested $350,000 converting their buildings to natural gas three years ago.

When they first started using natural gas the price was around $4 per gigajoule, but jumped to about $20 per gigajoule within a year.

"When the price to heat buildings goes up three to four times, it's not something can sustain," said Peter Giannoulis Jr.

Earlier this week, Smith said the immediate price cut — expected to go into effect later this week — and improved gas supply will provide the price relief commercial customers are demanding.