Enbridge Gas pays to keep customers from switching to propane

David Salesse has spent much of the last year encouraging commercial customers in Saint John to switch their heating systems from natural gas to propane.

But he said the conversion costs are so low and the savings so high it hasn't taken a lot of arm twisting.

"It's been a no-brainer especially for the commercial accounts," said Salesse, who owns AAA Propane.

"We're doing one to two [conversions] a week. We can't do them fast enough."

Propane prices hit a record low in New Brunswick last year and have stayed down most of the winter, wholesaling for as low as 13 cents per litre at the main marketplace in Sarnia, Ont. 

That's been a problem for Enbridge Gas New Brunswick, which has had to start offering money to some commercial customers to keep them from fleeing to Salesse and other propane retailers.

"They're paying people not to switch over. They're in panic mode. They're trying to do what ever it takes to stay in business," said Salesse.

Small businesses pay higher rates

In New Brunswick, smaller commercial businesses pay the highest distribution rates for natural gas in the province — currently more than double what residential users pay.

That, plus the price of the gas itself, has made using natural gas less and less attractive for commercial customers in New Brunswick as propane prices have fallen.

One of Salesse's first conversions was a three-storey brick apartment building at the corner of Saint John's Charlotte and Horsfield streets.

Salesse promised the owner propane at 45 cents per litre for two years — 25 per cent less than natural gas — saving the building hundreds of dollars per month on its heating costs.

Enbridge said some of its commercial clients who have agreed to floating prices have gotten propane as low as 35 cents per litre delivered to their business and because many natural gas furnaces can be easily altered to burn propane, converts have been easy to find.

Paying customers to stay

In filings with the Energy and Utilities Board earlier this month, Enbridge detailed the problem it was having with commercial clients switching to propane and its plan to pay customers it still has to stay put.

"Propane costs are at historic lows in North America and more specifically in New Brunswick," Enbridge wrote.

"Existing and new [propane] competitors are taking this opportunity to attract new commercial customers."

Because of peculiarities in the way it is regulated, Enbridge is not allowed to lower rates to commercial customers.

Instead, it has agreed to pay the difference between its price and the price of propane to any business made a better offer, in writing, by a propane company.

Enbridge said as an example, a customer who currently uses 400 gigajoules of natural gas a year and is offered propane for 40 cents per litre to switch, could be paid $3,000 to stay with natural gas.

"EGNB will have to evaluate each customer on a case-by-case basis when given the opportunity to retain their business," it wrote.

"Offers will be unique to each customer."

Enbridge says it has budgeted $500,000 for its customer retention program.