The New Brunswick government’s dramatic order for the province’s Energy and Utilities Board to “expeditiously” produce a report on “how to mitigate the impact on consumers of high oil prices” remains stalled at the starting line after more than a month and ultimately may not continue.
The province ignored the fact that the requested investigation required powers that the EUB does not have, according to the energy regulator.
“The board does not have jurisdiction to investigate this directive,” EUB Secretary General Kathleen Mitchell wrote in a letter to Natural Resources and Energy Development Minister Mike Holland last week.
The episode adds to the New Brunswick government’s apparently confused understanding of the EUB’s powers and how the province’s oil prices are set.
New Brunswick’s political leaders spent much of the spring fighting over what to do about rising and volatile oil prices, even though New Brunswick’s prices, excluding taxes, were consistently the lowest in the region during the period.
Premier Blaine Higgs said in June he wanted answers from the EUB about how it sets oil prices, even though the body follows rules set up by the province. (Ed Hunter/CBC)
On June 9, amid this continued volatility, Holland said he had directed his department to “put together some request to the EUB to analyze and come back with recommendations” on how the province can better address oil pricing issues. .
“This is an effort where we want to move forward and say, in a quick way, immediately, come back to us with an analysis,” Holland said.
New Brunswick has regulated the maximum amount that oil and gas companies can charge consumers for petroleum products since 2006.
The rules that govern this process are developed by the province and the Energy and Utilities Board is responsible for enforcing them.
The authority typically adjusts the cap on what consumers can be charged for various petroleum products once a week based on rising and falling commodity prices and the official pricing formula set out in legislation.
However, between January and early June this year, gasoline and diesel prices jumped 70 cents a liter in New Brunswick and required 44 separate price adjustments over 23 weeks.
This included 21 special “break” price adjustments, which are required when commodity prices rise or fall on markets by six cents a liter or more in a trading day, or five cents or more in the case of oil.
Natural Resources and Energy Development Minister Mike Holland directed the Energy and Utilities Board in June to study better ways to set prices. The board refused, citing a lack of jurisdiction given to it in the legislation. (CBC)
On June 9, the EUB raised the maximum price for regular unleaded gasoline in New Brunswick by 8.3 cents to a then-record 219.6 cents per litre. This appears to have prompted the Netherlands’ call for the EUB to investigate what the government can do to cushion price shocks.
In an official letter sent later that day, Hollande told the EUB that he wanted to “do an investigation into how to reduce the volatility of oil product prices caused by the disruptions in weekly pricing.”
He also wrote that he wants the body to make recommendations on “how to mitigate the impact on consumers of high oil prices.”
In its response to the minister sent last week, the board said it “doubted” it had the authority to look into the outage issue and was certain it did not have jurisdiction to look into mitigating high consumer prices.
“The board has jurisdiction only to act pursuant to those powers expressly or impliedly delegated by enabling legislation,” Mitchell wrote of the board.
“Actions outside this jurisdiction are of no force or effect.”
The EUB requires more than a letter from the Netherlands to delve into the requested investigations, Mitchell explained, suggesting that a formal Cabinet mandate to look into the issue is needed.
“If the Government requires the Board to make these inquiries through the Lieutenant Governor in Council, by Order in Council, the Board will be given jurisdiction and will have the duty to make such inquiries,” Mitchell’s letter reads.
Gasoline and diesel prices in New Brunswick jumped 70 cents a liter between January and June, requiring 21 special “disruption” price adjustments by the Energy and Utilities Board. (Robert Jones/CBC News)
It’s not the only misunderstanding the province has had this year over the limited power it gave the Energy and Utilities Board over oil pricing.
Also in June, New Brunswick Premier Blaine Higgs said his government was pressuring the board to explain how it sets prices under certain market conditions, apparently unaware that the body is only allowed to follow formulas given to it by the government.
“We are currently asking these questions of the EUB,” Higgs said.
Despite concerns expressed by New Brunswick government officials about pricing, records show consumers in the province fared relatively well during the spring price shocks compared to those in neighboring jurisdictions.
According to energy information company Kalibrate, the average price of a liter of unleaded gasoline in St. John was 194.6 cents a liter in May and 210.7 cents in June. That’s within a cent of Halifax prices for those two months, even though New Brunswick’s gasoline taxes are more than six cents higher than in Nova Scotia.
Diesel prices averaged 13 cents more in St. John’s than in Halifax, but diesel taxes were 15 cents higher in New Brunswick.
Asked this week if the province would accept an order in council directing the EUB to conduct the investigations requested by Holland, his department indicated in an email that it is now doing the work itself.
“We are currently reviewing the Petroleum Products Pricing Act and will make recommendations to the government on how the Act can be amended to better protect consumers and provide more security and stability for retailers and ordinary motorists,” spokesman Nick Brown wrote .
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