EUB confirms 2 carbon-related price increases hitting N.B. pumps in July

New Brunswick's Energy and Utilities Board has confirmed retail gasoline and diesel prices will have an estimated eight cents per litre added to them after July 1 to pay for new federal clean-fuel regulations that take effect on Canada Day.

In a 10-page ruling released Tuesday, the utilities board wrote that the increase related to the clean-fuel regulations will be calculated weekly and cannot be precisely quantified yet, but eight cents is a reasonable estimate.

"While this amount is only a sample at a particular moment, and there will be some variables on each weekly calculation, it is indicative," wrote the board.

Although the new regulations take effect Saturday, July 1, the board said it will wait until prices reset as usual on Friday, July 7, before it introduces the new charge.

The amounts are in addition to carbon-tax increases of 3.26 cents per litre on gasoline, and 3.97 cents on diesel, that are also taking effect the same week in New Brunswick. Sales taxes on the combined increases would mean at least 13 cents in higher fuel prices for New Brunswick consumers by the end of the first week in July, if all costs are passed through.

In its ruling, the board made mention of a letter it received in May from federal Environment Minister Steven Guilbeault urging it to deny any increase in prices to consumers for clean-fuel costs, but said the letter was not treated as evidence in the matter.

"The board receives these documents as letters of comment only," it wrote.

The letter was sent a month after the board's April hearing into the matter had concluded, and the board said when it conducts a planned review of the new charges "in no more than six months," Guilbeault's department is welcome to participate and present any evidence it wants.

In its decision the board made it clear it had no real option but to allow for increased prices.  

It noted it was "mandated" by the New Brunswick government, through legislation passed in December, to set what is called the carbon-cost adjuster so that new compliance costs under the clean-fuel regulations "flow through to the end-user."

Clean-fuel regulations are meant to cut the "carbon intensity" of automotive fuels sold in Canada. 

The plan is to push oil companies that refine or import fuel to lower the emissions intensity of that process by setting limits.

Refiners can comply with the new rules in various ways, including putting more ethanol in gasoline, selling biodiesel, or finding ways to reduce their own refining emissions.

Companies that come in below the federal government's emissions intensity ceiling will earn extra credits they can sell. Other producers can buy those credits if their fuels fall short.

It's also possible to earn credits through investments in things unrelated to refining, such as electric-vehicle charging stations.

Critics have complained passing costs of penalties onto consumers will lower incentives for industry to make changes.

The board expressed some concern the public is largely unaware of the distinction between the coming carbon-cost adjuster increase caused by the clean-fuel regulations, and the separate increase caused by the more familiar carbon tax, and urged all petroleum players to begin explaining what will soon happen at the pumps.

 "The amount of the adjuster will be significant," read the decision.  

"The Board will do what it can to describe its mandate and the background of the new cost of carbon adjuster component. However, all industry stakeholders are urged to work to enhance public understanding."