Wednesday 13 July 2022

Petroleum investigation ordered by province killed by EUB

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MP John Williamson discusses historic inflation rates, the August 2022 closure of Grand Manan's only bank, the effects of ArriveCAN on Campobello Island tourism, the impending reduction of hours at the Vanceboro/St. Croix international border and more on CHCO-TV. Original Broadcast Date: July 2022

 

 

https://www.cbc.ca/news/canada/new-brunswick/petroleum-investigation-killed-eub-1.6518610 

 

Petroleum investigation ordered by province killed by EUB

Regulator rejects Ministerial order citing lack of jurisdiction

The province overlooked the fact the requested investigation requires powers the EUB does not possess, according to the energy regulator.

"The Board does not have jurisdiction to investigate this directive," the EUB's chief clerk Kathleen Mitchell wrote in a letter to Natural Resources and Energy Development Minister Mike Holland last week.

The episode adds to an apparently confused understanding by the New Brunswick government about the EUB's powers and the manner in which petroleum prices are set in the province.

New Brunswick political leaders spent much of the spring jousting over what should be done about the rising and volatile cost of petroleum, even though prices in New Brunswick, outside of taxes, were consistently the lowest in the region through the period.

Premier Blaine Higgs said in June he wanted answers from the EUB about how it sets petroleum prices even though the body follows rules made by the province. (Ed Hunter/CBC)

On June 9, in the midst of that ongoing volatility, Holland said he had directed his department "to put together some sort of a request to the EUB to analyze and come back with recommendations," about how the province could better deal with petroleum pricing issues.

"This is an effort in which we want to go forward and say, in a rapid fashion, in immediate terms, come back to us with an analysis," said Holland.

New Brunswick has regulated the maximum amount oil and gas companies can charge consumers for petroleum products since 2006. 

Rules that govern that process were devised by the province and the Energy and Utilities Board was given responsibility for applying them. 

Normally the body adjusts the upper limit of what consumers can be charged for various petroleum products once per week based on rising and falling commodity prices and the official pricing formula spelled out in legislation.

However, between January and early June this year gasoline and diesel prices jumped 70 cents per litre in New Brunswick and required 44 separate price settings in 23 weeks. 

That included 21 special "interrupter" price settings, which are required when commodity prices rise or fall on markets by six cents per litre or more in a single trading day or five cents or more in the case of  furnace oil. 

Natural Resources and Energy Development Minister Mike Holland ordered the Energy and Utilties Board in June to investigate better ways to set prices. The board declined, citing a lack of jurisdiction given to it in legislation. (CBC)

On June 9, the EUB lifted the maximum price for regular unleaded gasoline in New Brunswick 8.3 cents to a then record 219.6 cents per litre.  That appeared to trigger Holland's call for the EUB to investigate what government could do to soften the price shocks.

In an official letter sent later that day, Holland told the EUB he wanted it to "make an investigation on how to reduce the volatility of petroleum product pricing caused by the interruptions in the weekly price setting." 

He also wrote he wanted the body to make recommendations on "how to mitigate the impact on consumers of high petroleum prices."

In its response to the Minister sent last week the board said it "doubts" it has the authority to look at the interruptions issue and is certain it has no jurisdiction to look at mitigating high prices for consumers.

"The Board only has jurisdiction to act upon those powers expressly or implicitly delegated through enabling legislation," wrote Mitchell for the board.

"Actions outside this jurisdiction are of no force or effect." 

The EUB requires more than a letter from Holland to dig into the requested investigations, Mitchell explained, suggesting an official assignment to look at the issue from Cabinet is required. 

"If the Government were to require the Board to carry out these investigations through the Lieutenant Governor in Council, by Order in Council, the Board would be seized with jurisdiction, and have the obligation to carry out such investigations," read Mitchell's letter.  

Gasoline and diesel prices in New Brunswick jumped 70 cents per litre between January and June requiring 21 special 'interruption' price settings by the Energy and Utilities Board. (Robert Jones/CBC News)

It's not the only misunderstanding this year the province has had over the limited authority it has given the Energy and Utilities Board over petroleum 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 the body is only permitted to follow formulas given to it by government.

"We are asking those questions of the EUB right now," said Higgs.

Despite concerns expressed by New Brunswick government officials over pricing, records show consumers in the province fared reasonably well through spring price shocks compared those in neighbouring jurisdictions.

According to the energy information company Kalibrate, the average price of a litre of unleaded gasoline in Saint John was 194.6 cents per litre in May and 210.7 cents in June.  That's within one cent of prices in Halifax for those two months even though taxes on gasoline 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 taxes on diesel were 15 cents higher in New Brunswick.

Asked this week whether the province will pass an order-in-council directing the EUB to conduct the investigations requested by Holland, his department indicated in an email it is now doing the work on its own.

"We are currently reviewing the Petroleum Products Pricing Act and will bring forward recommendations to government on how the Act can be amended to better protect consumers, and to provide more certainty and stability for retailers and everyday drivers," wrote spokesperson Nick Brown.

ABOUT THE AUTHOR

Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

19 Comments

 
 
John D Bond
Another consequence of not being fully aware of how the world works. First poorly written emergency health orders that fail to pass the legal test when people are charged that are being thrown out of court for being to vague. Then creating a rental cap increase that would prevent people from losing their homes that has more holes than a brick of swiss cheese. Now not understanding how world markets work, the drivers for volatility in global markets for petroleum products and the asking the EUB to do something the legislation that created it does not provide tools for.
Rather substandard performance from the government. What the heck are the opposition parties doing in NB, they should be all over this and organizing like crazy. With a track record like this, they don't deserve to get re elected, but what to do when there are no viable options present.

 
David Sampson
How silly the government must be to think they could change the pricing of gas at the pumps without approval from the Irvings!
 
 
 
 
Johnny Jakobs
Keep drinking the kool aid and nothing will change.
 
 
 
Fred Brewer
This would be funny if it were not so sad. Mr. Holland asks the EUB to fix a problem that was created by the Dept of Energy back in 2006. The gasoline pricing formula was entirely devised by government, so government via the Dept of Energy should be able to adjust the formula without any outside help.

Why involve the EUB unless you are looking for someone else to blame?
 
Billy Joe Mcallister
Reply to @Fred Brewer: Holland is an empty suit 
 
 
 
 
 
 
Alex Butt 
I can not believe that people, especially new brunswickers fall for this smoke & mirrors. Every one knows that higgs is rolling is excess tax cash and loving every moment and is doing everything in his power to protect this and his buddies like the irvings bottom line, all the while the rest of us are are being financially decimated!
 
Les Cooper
Reply to @Alex Butt: you have proof?
 
 
Billy Joe Mcallister
Reply to @Les Cooper: Whether anyone has proof or not is moot. All that is required is a brain and a set of eyes
 
 
 
 
 
Carl Douglas
I think it would surprise most people to know the Crown still owns Canada. If you don't pay your taxes your land reverts to the crown, you sign a contract with a province you sign a contract with the Crown through the crowns representative. Ever wonder why the Queens representative has a massive mansion in Fredericton and yet the premier lives in a modest split level home? Perhaps we could ask the Queen for a break on fuel taxes. FYI "The land of Canada is solely owned by Queen Elizabeth II who .
 
Fred Brewer
Reply to @Carl Douglas: I will have to call BS on your statement that if you don't pay your taxes your land "reverts" to the crown. The land can be sold to recover the taxes, but that's about it. The crown cannot for instance take your land and build a shopping mall on it. They can sell it to recover the taxes but anything more than the taxes owed that gets recovered goes to the land owner or the holder of the mortgage.

Johnny Jakobs
Reply to @Fred Brewer: can the crown take your land if they want to build a highway through it? Yes. And yes, the crown can take your land.
 
Les Cooper
Reply to @Carl Douglas: the crown owns the crown land. Hence the name.
 
Carl Douglas
Reply to @Fred Brewer: If the land is sold you don't own it. What's the BS part? I'd expect most people would know that. I'm only pointing to the fact that the land is owned by the Crown (minus the 9.7%). That's fact not BS. 
 
 
 
 
 
Michael Collins
Turns out the EUB is just another paper tiger. That board or the government will not get the Irving Empire to reveal it's margins and profits, in particular the crack spread.
 
Donald Gallant
Reply to @Michael Collins:
Same for any other oil company.
 
Billy Joe Mcallister
Reply to @Michael Collins: Most boards come to be as fronts that follow and deliver directives from on high. They exist at the pleasure of their funders. They make the day to day decisions pertaining to daily operations while all the major changes are always political and/ or corporate
 
Rusty Shackleford
Reply to @Michael Collins: Its funny how everyone likes to blame the high gas pricing on Irving....funny, I don't see the price cheaper anywhere else. As a matter of fact, I hear gas is a little expensive in other provinces and countries too...man oh man those Irvings must have a further reach than I figured. Glad you guys have it all figured out. We should drive them out immediately. But wait...don't they employ 1 in 12 people here in NB? What do we tell them? What do you think it would do to our tax base if they were gone? Perhaps we should get rid of the McCain's as well while were at it? Its easy to blame all the problems on the big targets...Irving, McCain's, Trudeau, Higgs. Things are a bit more complex than that, and we have evolved critical thinking skills to work these things out. A shame we don't use them anymore.
 
 
Brian mcknight
That's convenient

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