138% gas rate increase deemed fair
Utilities board raises concerns about Norman Wells increase, but rules in favour
Chris Puglia
Northern News Services
Published Monday, December 23, 2013
LLI GOLINE/NORMAN WELLS
A substantial rate increase to commercial customers in Norman Wells was fair considering the community's dire gas situation, according to a letter from the Public Utilities Board (PUB) dated Dec. 16.
However, the letter does express concerns with the way the rate has been applied.
"The pass through to the commercial customers, of additional gas costs forecast to be incurred by the town in the winter months with respect to any excess gas purchased by the town and priced on the basis of fuel oil, does not appear to be unreasonable on its face," the letter states, basing the rationale on the fact commercial customers were supposed to be off the gas system by July 1, 2013.
The board began an investigation into the rate increase after Lorraine Tremblay, of Global Technical Systems, filed a complaint on Oct. 1, which was later supported by a letter from North Wright Airways Ltd., on Nov. 21.
Increasing the gas rate has been a contentious issue among businesses yet to convert their heating systems away from natural gas. Tempers flared when the rate was passed during a special meeting of council on Sept. 23 and then again at a community-wide meeting on Sept. 25.
The new price, which came into effect on Nov. 1, is $47.6 per 1,000 cubic feet of natural gas. The old price was $20.9.
The pricing, according to the town and Imperial Oil, was purposed to cover the cost of excess gas and provide an incentive for commercial customers to switch to an alternative heating solution.
North Wright's letter re-asserted the contention that some commercial customers delayed their conversion efforts after the town requested they remain on the system to help ensure a commercial base for a proposed district heating system that eventually proved to be too costly.
"With the increase in the natural gas rate targeted to the commercial users who were in the process of converting, it has crippled those users who were so considerate of the town's efforts to hold off on their converting efforts," North Wright's letter stated.
However, at the request of the town, Imperial Oil was able to extend the gas supply to commercial customers to July 1, 2014, which is the deadline for all customers - residential included - to be off the system.
Another factor in Tremblay's complaint is the town is charging the higher rate year-round, despite the fact the town continues to pay the lower rate until the community exceeds its original allotment of natural gas per month. Tremblay argued there is no guarantee the town will exceed that original usage, a statement she based on historical consumption and the fact many people are already using alternate heating sources. She also took issue with the surplus structure, which effectively means commercial Natural Gas users will be picking up the tab for decommissioning the natural gas system.
The PUB agreed. "The Board finds pricing all gas sold to commercial customers in the Nov. 1, 2013 to Nov. 1, 2014 period, to reflect the fuel oil-based pricing of excess gas, irrespective of whether the town was forecasting to incur the cost or not, would be discriminatory pricing." the letter reads.
"Furthermore, the Town's decision to increase only its commercial customer rates in order to accumulate a surplus from the funds generated to pay for system decommissioning costs is discriminatory, since costs related to decommissioning of the system are applicable to all customer classes."
However, despite its findings, the PUB was not prepared to force a resolution and has requested the Town of Norman Wells and the complainants meet to resolve the issue themselves. It has imposed a deadline of Jan. 31, 2014 for a negotiated settlement to be reached.
"If no settlement is reached by this date the parties should advise the Board accordingly with suggested process steps," the letter reads.
Tremblay said she is pleased with the PUB's decision for the most part.
"Saying that commercial users should pay the full furnace oil price, I'm not happy with that," she said. "There might be a dispute on that."
Mayor Gregor Harold McGregor, said on Dec. 18 that the town is prepared to move ahead with the recommendations of the board.
"If we can make accommodations with the complainant, we will," he said, adding he hopes a settlement can be reached without further involving the PUB.
McGregor wasn't prepared to discuss what the options might be until the town has the chance to meet with Tremblay and other stakeholders.
Tremblay is hopeful that negotiations can be completed on time but worries the Christmas holidays will delay proceedings. She added she thinks a settlement will be reached.
"It wouldn't be good for the town not to reach a solution," she said.
