Enbridge Gas warns loss of customers to cheap propane hurts system

Enbridge Gas New Brunswick says its loss of hundreds of commercial customers to lower priced propane is a threat to the entire natural gas distribution system that all gas users should help pay to fix.

Enbridge has budgeted to spend up to $500,000 this year to pay commercial customers who are enticed to switch to propane to stay with natural gas instead and has asked the Energy and Utilities Board to let it recover the money from all 12,000 of its customers. 

"These kinds of programs are typically funded by the ratepayers because it benefits the whole system to have customers remain on the system," said Gilles Volpé, the company's general manager.  

• Enbridge Gas pays to keep customers from switching to propane

Enbridge has applied to the EUB for a number of changes to its rates effective May 1, which includes the funding of the program to fend off stiff competition from propane retailers.

Enbridge acknowledges it lost more than 200 commercial customers to lower cost propane last year and failed to sign up another 300 commercial accounts it had been budgeting to add to the provincial distribution system. 

That made 2015 the first year Enbridge's overall customer base shrunk in New Brunswick since it began delivering gas in the province in 2001.

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 central marketplace in Sarnia, Ont.  

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 - and have been easy targets for propane retailers.

For example, this February an Enbridge commercial customer using 100 gigajoules of gas will be billed $2,360 plus HST in gas, distribution and service charges, about $500 more than propane retailers are charging for the same amount of energy.

Enbridge seeking lower distribution rates

Enbridge has applied to lower distribution rates for small commercial customers on May 1, although Volpé said he's convinced low propane prices is a short term problem that will fix itself as a North American-wide surplus of propane is used up over the next several months.

"We believe this is a temporary situation because the price of propane will — and analysts concur — will go back to its normal level sometime at the end of this year [or] early in 2017," said Volpe, who predicts those customers who leave gas for propane will be sorry.

"When prices go back up to historical levels which are higher than natural gas these folks might be stuck in a contract they don't like," he said.

Still Volpé says New Brunswick's struggling natural gas distribution system cannot afford to lose customers for a short or long period, even if that means paying for them to stay.