FREDERICTON – Enbridge Gas New Brunswick is asking the courts to overturn new regulations under the Gas Distribution Act that it says will stifle growth of the province’s pipeline network and force the company to downsize.
According to documents filed late Wednesday with the Court of Queen’s Bench, the company says changes to the way natural gas rates are set will result in reduced revenues.
In an affidavit, company general manager Dave Charleson says if the company can’t recover reasonable costs, including the cost of building the pipeline, then services will have to be cut and some employees laid off.
“We’re looking at a reduction of about 50 per cent of our employees, or about 50 to 60 people,” Charleson said in an interview.
“There may be other models where we don’t have to go quite that far, but you’re still looking at job losses, and little to no investment in the province by Enbridge.”
Legislation in 1999 gave Enbridge sole distribution rights for natural gas in New Brunswick for 20 years and set out how rates would be set.
But in December, the provincial government passed amendments allowing other companies to distribute gas in northern New Brunswick.
The amendments also change the way the Energy and Utilities Board can set rates.
“The effect of that regulation means that the full cost of our operations can’t be recovered through the rates that the regulation will allow us to set,” Charleson said.
He said if Enbridge maintains current operations under the new regulations, the company would lose more than $9.7 million a year.
“If we really scaled back and cut costs as much as we can, but still ensure that we keep a safe and reliable system, you’re still looking at a loss of over $6 million a year,” he said.
Enbridge is also seeking an injunction that would no longer require it to make a new rate application by the end of this month.
He said the company can’t make a rate application when they believe the regulation is invalid.
Charleson said he hopes the court will set a hearing date very soon.
The court action comes after Enbridge Gas New Brunswick filed a lawsuit against the province last week.
Enbridge is seeking at least $650 million in that case, alleging the province has breached conditions of an agreement and in so doing, has harmed the company’s bottom line.
The company alleges the government is not abiding by the terms of a general franchise agreement signed in 1999.
An Energy Department spokesman said Thursday the government won’t comment while both matters are before the courts.