The province overlooked the fact that the requested investigation requires powers that the EUB does not have, according to the energy regulator. “The board does not have jurisdiction to investigate this directive,” EUB chief officer Kathleen Mitchell wrote in a letter to Natural Resources and Energy Development Minister Mike Holland last week. The episode adds to a seemingly confused understanding by the New Brunswick government about the EUB’s powers and how oil prices are set in the province. New Brunswick’s political leaders spent much of the spring sketching out what to do about rising and volatile oil costs, even though prices in New Brunswick, 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 by the province. (Ed Hunter/CBC) On June 9, amid this continued instability, Holland said he asked his department to “draft a sort of request to the EUB to analyze and come back with recommendations” on how the province could best address the oil pricing issues. “This is an effort that we want to go ahead 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 governing this process were devised by the province and the Energy and Utilities Board took responsibility for implementing them. The agency normally adjusts the upper limit of the tariff that consumers can be charged for various petroleum products once a week based on the rise and fall of commodity prices and the official pricing formula set out in legislation. However, from January to early June this year gasoline and diesel prices rose by 70 cents per liter in New Brunswick and required 44 separate price adjustments in 23 weeks.
This included 21 special “switch” price arrangements, 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 furnace oil. Natural Resources and Energy Development Secretary Mike Holland ordered the Energy and Utilities Board in June to explore 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 of regular unleaded gasoline in New Brunswick by 8.3 cents to a then-record 219.6 cents per litre. This appeared to trigger a Dutch call for the EUB to investigate what the government could do to cushion price shocks. In an official letter sent later that day, Holland told the EUB that he wanted to “conduct research on how to reduce the volatility of oil product pricing caused by disruptions in weekly price fixing”.
He also wrote that he wanted 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 council said it “doubts” it has the authority to consider the holiday issue and is certain it has no jurisdiction to consider mitigating high prices for consumers. “The Board shall have jurisdiction only to act pursuant to those powers expressly or impliedly delegated through the delegated 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 investigate the requested investigations, Mitchell explained, suggesting that a formal mandate is needed to consider the matter from the Cabinet. “If the Government required the Council to conduct these inquiries through the Lieutenant Governor in Council, by Order in Council, the Council would have the jurisdiction and the duty to conduct such inquiries,” Mitchell’s letter said.
Gasoline and diesel prices in New Brunswick jumped 70 cents a liter between January and June, prompting 21 special “stop” 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 pressing the Board to explain how it sets prices in certain market conditions, apparently unaware that the agency is only allowed to follow formulas given to it by the government. “We’re asking EUB those questions right now,” Higgs said. Despite concerns expressed by New Brunswick government officials about pricing, records show consumers in the province fared fairly well through the spring shocks compared to those in neighboring jurisdictions. According to energy information company Kalibrate, the average price of a liter of unleaded gasoline in Saint John was 194.6 cents per liter in May and 210.7 cents in June. That’s within a cent of Halifax prices for those two months, even though gas taxes in New Brunswick are more than six cents higher than in Nova Scotia.
Diesel prices averaged 13 cents more in Saint John than Halifax, but diesel taxes were 15 cents higher in New Brunswick. Asked this week if the province would pass an ordinance directing the EUB to conduct the investigations requested by Holland, his department said 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 certainty and stability for retailers and everyday drivers,” he wrote. representative Nick Brown.