For anyone who follows the energy discussion in New Brunswick, you know that the distribution rate for large users of natural gas is the highest in North America – by a wide margin. The largest industrial users are paying two times the cost of the gas itself in distribution charges (on the first huge block of gas usage). I have been arguing this rate structure means it is highly unlikely that any large users of natural gas will ever invest in New Brunswick (although I hear there is the possibility of a workaround).
This was in the back of my mind when I read this article about Cavendish on PEI.
Cavendish Farms plan to cut costs and greenhouse gas emissions with a switch to natural gas. In a press conference Monday at the company’s plant in New Annan. officials said the P.E.I. potato growing giant aims to cut production costs by 30 per cent and greenhouse gas emissions by 28 per cent. It’s also eliminating the use of 29 millions litres of heavy oil per year. Robert Irving, president of Cavendish Farms, said the investment will be good for both business and the environment. “As with our investment in bio gas, we are always looking to reduce our carbon footprint while making our plant more competitive.” The company is receiving a $15-million loan, which is on a five-year term, from the Province to help build a receiving station for the natural gas, which is to be transported in large cylinders carried by truck. The gas will be extracted from the Maritimes and Northeast Pipeline in a location near Port Elgin, N.B.
You know the distribution system is messed up when a company can distribute natural gas by truck and still “cut production costs by 30 percent” while large users in New Brunswick like Flakeboard say their natural gas costs are dragging them under. Maybe that is what we should do in New Brunswick. Allow large users to back up trucks to the main pipeline and fill ‘er up.
I understand all the historical dynamics of the gas distribution system, the deferred revenue, the ROE, the SEUFs, blah blah blah. As an economic development consultant, my concern is that New Brunswick is off the table for energy-intensive industrial projects because of massive gas distribution charges.
I hope the energy commission addresses this and the broader issue of energy competitiveness head on.