I don’t know if you have been following the natural gas issue in New Brunswick but it is approaching the level of bizarro world. The CEO of Flakeboard writes and op/ed stating he pays 10 times the gas distribution costs as his competitors pay in other markets in North America. In an article in the TJ, a US natural gas expert is quoted as saying the system is rapidly going under. Now Enbridge is fighting back. Here are some of the comments in an Enbridge letter to the editor with my comments below:
Enbridge Gas New Brunswick offers reliable, clean and economic natural gas to its customers and is committed to continuing to provide energy that is less expensive than what typical customers would otherwise pay for oil and electricity in New Brunswick.
That’s false. Enbridge does offer gas at rates below oil and electricity but only because it has been able to bank $132 million in cumulative losses (to be made up after the development period). The true statement is that Enbridge has provided energy that is more expensive but at some fuzzy time in the future, that will be rectified.
It is questionable whether this is ‘economic development’ in any definition of the term. The average New Brunswick household pays something in the realm of $2,500/year to heat their home. Shifting from one source of energy – at least on paper – doesn’t do much for economic development. It is just moving from one energy source to another. It is true that Enbridge has invested $380 million but that just means less investment from other energy suppliers. Enbridge coming to NB did nothing to increase the overall economic activity in the province. In economic development modelling there is some benefit from efficiencies. For example, if the average household pays 10% less for energy, they can spend that money elsewhere in the local economy. However, with Enbridge building up a $132 million loss to be taken back from consumers in the future, this too is a doubtful claim.
Bringing natural gas to New Brunswick has been a positive development for our province’s economy. Today, New Brunswickers who choose to use natural gas pay less for energy than they would if they were using electricity or oil. Enbridge Gas New Brunswick is committed to delivering clean and economic natural gas to its customers and to delivering a model that works in the best long-term interests of the province.
Again, they pay slightly less because it will be made up by customers in the future. If NB Power was allowed to charge 20% less and then bank those losses to be made up in the future, I would bet they would take the deal.
I think, looking back now, that you could have easily made the case that natural gas should have been piped into a few industrial parks and rolled out to residences as it became economically viable. If the government wanted to incentivize people to get off baseboard electrical heating, they could have used a variety of other incentive tools that would have been cheaper and more effective (wood pellets, energy efficiency, solar, etc.). The $137 million deficit racked up by Enbridge represents $17,000 per customer. For that cost, the government could have paid for the entire solar power system for each household.
As for the best long term interests of the province – that’s why I am so frustrated. Read my column here to see why.