N.B. 'riskier' for investors than Colombia, says Enbridge GM

Enbridge Gas New Brunswick’s general manager says a new fee for large industrial users of natural gas is a move in the right direction, but it doesn’t fix the problems created by the provincial government in 2011.

The provincial government introduced legislative changes this week that will allow Enbridge Gas to receive higher payments from six of the province’s largest buyers of natural gas starting in 2019.

However, Gilles Volpé, the general manager of Enbridge Gas New Brunswick, said the natural gas company is still feeling the pain from controversial reforms imposed by the Alward government in 2011.

“[Company investors] look at New Brunswick and say, ‘Wow, we've invested a bunch of money. We followed the contract. Now there's $200 million that we can't recover. I think I'd rather put my money in Colombia,” Volpé said.

So they see, as an example, they see New Brunswick as a riskier place to do business than Colombia.- Gilles Volpé, Enbridge Gas New Brunswick

“So they see, as an example, they see New Brunswick as a riskier place to do business than Colombia.”

Enbridge was given a 20-year monopoly in 1999 to build and operate a natural gas distribution system in New Brunswick, but the cost of the expansion greatly outstripped customer demand for service.

Enbridge was allowed to put much of the expenditures it incurred building its network into a deferral account to be recovered later. But a lack of customers meant the deferral account kept growing with distribution rates kept high to cover the costs.

Energy Minister Craig Leonard introduced the reforms in 2011 that were intended to lower the cost of natural gas for consumers.

The changes, which were imposed without the company’s consent, barred Enbridge from charging customers anything for the cost of the deferral account, which the company claimed had grown to $176 million by the beginning of 2012.

The legislative changes announced this week have been recommended by Enbridge for 15 years.

The changes will mean the six largest natural gas users, which are known as single-end use franchises, will be paying a larger share of the cost of natural gas in 2019.

That will mean other natural gas customers will see a benefit in their rates, according to Enbridge’s Volpé.

“Ratepayers should see a reduction if these funds materialize. The size of the reductions in five or six years from now will depend on how much [large industrial customers] contribute,” Volpé said.

Volpé said it is difficult to determine how much of a savings will be passed onto other customers five years from now.