Irving Oil drops its application for price hikes as deadline to answer questions approaches

Irving Oil has notified the New Brunswick Energy and Utilities Board it is dropping its application for an increase in petroleum wholesale margins four days before it was scheduled to answer dozens of questions about the request.

"The impact of the COVID-19 pandemic on Irving Oil's business has been significant and the situation demands that Irving Oil's management team devote its full and undivided attention to business operations," company lawyer Len Hoyt wrote in a Monday letter withdrawing the application.

"As the process has evolved, it has become apparent that the proceeding will require an inordinate level of time and effort on the part of senior management of Irving Oil, which, in current circumstances, are required in the business."

In January, Irving Oil's marketing and commercial divisions applied for a 62.8 per cent (4.09 cent per litre) increase in the allowed wholesale margin for motor fuels, including diesel and gasoline and a 54.9 per cent (3.02 cent per litre) increase in the margin for furnace oil.  

If granted the increase would be available to all New Brunswick wholesalers and raise prices to consumers by about $1 million per week.

The company had also asked that prior to a full hearing on its request in April, 85 per cent of the increase on motor fuels (3.5 cents) and 99 per cent of the increase on furnace oil (3.0 cents) be granted immediately because of intense financial pressures it says have arisen in the industry during the COVID-19 pandemic.

That request was unanimously rejected by a three-person panel of the EUB in mid-February, which found the company had presented no direct evidence to prove its claim of financial distress. 

"The board concludes that the applicants have not established that the current wholesale margin for motor fuels and furnace oil are such that security of supply would be jeopardized during the period between its application and the likely timeframe of the board's final decision in this matter," it said.

A full hearing into Irving Oil's application was scheduled to begin April 26 and as part of the process the company is obliged to answer written questions or "interrogatories" from groups registered to participate as interveners.  

Interrogatories from eight participants involving more than 150 separate questions were filed by the Feb. 19 deadline and by agreement had to be answered by the company by this Friday.  

In his letter, Hoyt said the "volume and scope" of questions being asked were a distraction to senior company managers trying to run Irving Oil's business and gave the company second thoughts about participating.  

"Many of the interrogatories are, in Irving Oil's view, beyond the scope of the hearing and are likely to result in further disagreements over the relevance of the information requested as well as its confidential nature.," wrote Hoyt.

"Accordingly, Irving Oil, after careful consideration wishes to advise the Board that they are withdrawing this application for increases in the maximum wholesale margins for motor fuel and furnace oil."

On its company website, Irving Oil criticized the regulatory process and suggested it will pursue other ways to make its case for higher prices.

"The current system does not allow for the proper consideration of what is an industry issue in our province," said the company statement.  

"We will now continue the important work of ensuring these facts are understood to support the long-term viability of the industry in this region."

Abram Lutes with the Common Front for Social Justice was involved in the hearing process in opposition to the application. He applauded the withdrawal and endorsed the EUB's handling of the matter.

"This is definitely a win for New Brunswickers," Lutes wrote in a message about the requested increase being dropped.

"We have to stay vigilant and make sure governments keep the regulatory process democratic, open and transparent."

Hafsah Mohammed with the group Grassroots NB said she is disappointed the hearing will not proceed and is concerned it may trigger an effort to dismantle petroleum regulations in New Brunswick.

"I worry about that," she said.