Natural gas reforms risk jobs, Enbridge says

The New Brunswick government is jeopardizing the 400 jobs that have been created around the natural gas system, according to an Enbridge Gas official.

In an open letter, Guy Jarvis, the president of Enbridge Gas Distribution, criticized the provincial government’s legislative changes that were approved in December.

The Enbridge executive also said the government’s reforms, which were contained in Bill 18, could cost jobs in the province.

Jarvis said Enbridge has created 400 direct and indirect jobs since 1999 and those will be "impacted adversely."

"This is something that EGNB will fight hard to prevent, but the reality of Bill 18 is that it threatens current jobs in the province and diminishes the potential for expanded availability of natural gas to public consumers in New Brunswick," Jarvis said.

The reforms are also risking its reputation as a good place for business to invest by its unilateral attempt to reform the natural gas market, according to Enbridge Gas.

"Conversely, the Government’s apparent attempt to foster new economic development — by unilaterally changing the rules under which Enbridge has in good faith invested nearly $500 million in New Brunswick — can only be seen as a negative signal to organizations evaluating New Brunswick as a place to invest and do business," Jarvis said.

"This adverse reputational risk is a far more serious threat to economic development in the province than any concerns about natural gas distribution rates."

The Progressive Conservative government passed the Gas Distribution Act amendments in December that effectively broke its agreement with Enbridge.

The changes came after months of negotiations between the provincial government and Enbridge Gas. The reforms were introduced without the company's consent.

The amendments set out a series of reforms to the rate categories that Enbridge customers are now in. It also outlines several key dates on when the company must have its new rates approved by the Energy and Utilities Board.

Current rates are fixed until Sept. 30. Enbridge must make a new application to the EUB under the new rules by May 31. The rates for residential electricity and residential oil clients are expected to be merged on June 1, then the EUB will make an order setting rates and tariffs.

The act also contains a clause that says the provincial government cannot be sued over the changes contained in the proposed law.

The distribution system is based on a system that has 30,000 homes and businesses on it. So far, Enbridge has 11,000 customers.

Enbridge acknowledges in its letter that the market has not developed as quickly as it would have liked. However, Jarvis said in the letter the reforms introduced by the provincial government will not help improve the market.

"The right answer cannot be achieved by the government’s unilateral and specific targeting of EGNB through its passage of Bill 18," he said.

Distribution fees

Enbridge said Irving Oil, J.D. Irving Ltd., and NB Power use 80 per cent of the natural gas in the province but pay no distribution fees. 

Irving Oil's refinery uses substantial amounts of natural gas but has its own franchise for it, so it pays no distribution fees to Enbridge.

It's a big reason New Brunswick's distribution system doesn't work properly, according Enbridge New Brunswick general manager Dave Charleson.

"We're not aware of any mature jurisdictions that would have single-end use franchises. Typically the foundation for developing any distribution system is to have those large loads which then help support the build out of the system," Charleson said.

Last month, Energy Minister Craig Leonard introduced legislation to force Enbridge to lower prices, saying the company charges the most in North America to distribute natural gas to its customers, a move that got positive reviews last week at an Enbridge-sponsored luncheon by J.D. Irving president Jim Irving — a vocal Enbridge critic.

"There's a number of issues on energy the province, this current government, has done a particularly good job on, they're trying to deal with electricity and have done a good job and natural gas," Irving said.

But while J.D. Irving pays Enbridge to use gas at its wallboard plant, three other J.D. Irving mills are outside the distribution system and pay nothing — the root of the entire problem, according to Enbridge.

"If you look at the total cost that JDI pays for the distribution of natural gas, it would be the lowest in North America," Charleson said.

"So the fact that they have a campaign complaining about distribution rates in one of their facilities, while three other larger facilities pay nothing is puzzling."