Regulator reviews N.B. gas-pricing formula

The New Brunswick Energy and Utilities Board is reviewing the way the regulator sets its weekly maximum fuel prices.

The provincial government adopted a regulated gas system in 2006, where maximum prices were set every two weeks, and the system switched to a weekly price-setting formula in 2007.

Dave Young, an advisor for the regulatory board, said public hearings are being planned to see if price margins that are paid to wholesalers and retailers should be altered.

The energy regulator calculates the average price for each regulated fuel based on the previous week's trading at the New York Mercantile Exchange. The board then adds margins for wholesalers and retailers.

The final component to the maximum gas price is an optional transportation charge that can be attached to the price.

This week, the benchmark price for regular gasoline is 61.15 cents per litre, the maximum wholesale margin is six cents, the maximum retail margin is five cents, and once taxes are included that sets a price for self-service regular gasoline of 104.92 cents per litre.

There is a maximum transportation cost of 2.5 cents per litre, which means the maximum price for regular self-serve gasoline that can be sold in New Brunswick is 107.8 cents per litre.

The board has hired a consultant to review the process of setting a maximum price for fuel each week.

Young said recommendations will be made on how that setting might be changed.

"The actual calculations will be the same. It's just how much you add in above the New York price for wholesalers' margins and for retailers' margins and then what the possible allowance for extra delivery charges will be," Young said.

Public intervener hired

Young said a public hearing will be held next month to allow wholesalers and retailers in the fuel industry to respond to the recommendations.

He said the provincial government has appointed a public intervener to represent New Brunswick consumers at the upcoming hearing.

The board sets maximum prices for gasoline, diesel, heating oil and propane.

The regulator only sets maximum prices but it does not enforce a minimum price.

Young said the review is part of the ongoing process of regulating petroleum prices that was set up in 2006.

"The board did this in 2008 and is now reviewing them again to see if they're appropriate," Young said.

"The board's hired a consultant to collect information from the industry and will present a report making some sort of recommendation."