Letter to the editor sent to New Brunswick newspapers

Thomas Adams
New Brunswick newspapers
October 26, 1998

New Brunswick’s big decision on the best methods to bring natural gas to energy users in the province provides an historic opportunity to benefit consumers and the environment. Natural gas distribution systems should be expanded in the province as rapidly as possible, consistent with maintaining the profitability of all investments.

One of the key questions facing the legislative assembly’s Select Committee on Energy, charged with making recommendations on how natural gas distribution should be developed in the province, is whether all consumers should contribute to the distribution system overhead costs, or whether some large users should be permitted to bypass any contribution and be allowed to pay only the tolls of the international pipeline crossing the province.

While it should be recognized that there is no perfect answer to this question, Energy Probe, a national environmental and consumer advocacy organization with a long interest more sustainable energy systems in New Brunswick, has a suggestion. A distribution utility with a license to serve a particular region should have as a feature of its licence the first option to serve any customer that seeks natural gas service, on the understanding that all distribution utility customers should contribute fairly to the overhead of the utility. If the prospective customer and the distribution utility cannot come to an agreement, the prospective customer should have the right to appeal to the Public Utility Board for permission to build its own connection to the main pipeline crossing the province. The Public Utility Board (PUB) should be empowered to consider whether such bypassing arrangements will be permitted and on what terms and conditions. The PUB’s review of bypass applications should be conducted in an open public forum with due process where all interested parties can examine the bypass application, ask questions of the applicant, and make submissions.

By directing prospective large users to seek service from the distribution utility before pursuing a bypass option, the opportunity for fair cost sharing is maximized. By allowing prospective large users, unhappy with the service offering of the distribution utility to make an application to the regulator for a bypass pipeline, the distribution utility is subject to some competitive pressure to keep its costs under control. By empowering the PUB to make public interest determinations in an open forum with due process, the complex tradeoffs involved in such decisions can be made outside of the political arena and with input from affected parties.

In matters of pipeline expansion and cost sharing, there is no way to define in advance exactly what constitutes the “public interest”. The political process is ill-equipped to deal with the detailed technical issues involved such as cost allocation, rate design, and usage forecasting. An independent, quasi-judicial regulatory process guided by a general consumer protection mandate is the best way to go.

Sincerely,

Thomas Adams
Executive Director, Energy Probe

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