Province doesn't know where extra carbon charge on gas is going
It’s a mystery to N.B. officials whether ‘adjustor’ ends up with retailers or refinery
Officials recently told the legislature's public accounts committee that it's impossible to determine who is ending up with revenue from the so-called "carbon cost adjustor," slapped on the price of gas in July.
"Where it shows up between the retailer and the wholesaler, or the wholesaler and the refinery, I don't know," said Tom McFarlane, the deputy minister of natural resources and energy development.
"I'm not aware of the internal prices that go on between them."
McFarlane was fielding questions from Fundy-The Isles-Saint John West Progressive Conservative MLA Andrea Anderson-Mason, who sounded skeptical of the PC government's message that the extra charge would help small gas stations.
"I'm finding it difficult to believe that the seven cents is going directly into the retailers' pocket," she said.
Fundy-The Isles-Saint John West PC MLA Andrea Anderson-Mason said it's hard to believe the extra money is going to retailers. (New Brunswick Legislative Assembly livestream)
Anderson-Mason peppered McFarlane with questions when he confessed to not knowing who was getting the money.
"Shouldn't we be aware of that, of where that's going?" she asked.
"Where did that seven cents go that the consumer paid over all this time? Who has the benefit of that? Somebody's getting it somewhere. Who's getting the seven cents?"
Last fall the Higgs government passed legislation giving the Energy and Utilities Board the authority to add the adjustor to the formula it uses to set maximum gasoline prices every week.
It was a response to new federal clean fuel regulations designed to help lower Canada's greenhouse gas emissions.
The regulations reward oil refineries that reduce their carbon intensity — the amount of greenhouse gases they emit in their production process.
The adjustor has fluctuated around six to seven cents for a regular unleaded litre of gas since July 1. (Robert Short/CBC)
Companies with refineries like Irving Oil can choose from different emissions-reduction strategies that earn them credits they can sell in a trading market. Those that don't reduce emissions are penalized by being forced to buy credits in that market.
But Irving, because it exports most of its product to the United States, isn't eligible for as many credits.
McFarlane told the committee that because New Brunswick regulates the final price of gasoline charged to consumers, retailers could be "squeezed" by the new rules.
"If we don't have a mechanism to show that price somewhere in the formula, it'll ultimately be the retailer who gets squeezed in the end," he said.
The refinery could pass its added costs to wholesalers, who could then pass them to retail gas stations, who would be prevented from passing it on to customers due to the maximum-price law.
Industry consulted to create formula
The EUB hired the accounting firm Grant Thornton to develop a proposed model for the adjustor. It consulted several industry players to come up with a formula, including Irving Oil, whose refinery is a major supplier of gasoline in the region.
The adjustor has fluctuated around six to seven cents for a regular unleaded litre of gas since July 1. The EUB set it at 5.96 cents last Friday.
Green Leader David Coon said the adjustor was designed to eliminate the cost of the federal regulations on Irving, taking pressure off the company to reduce its emissions.
Federal Environment Minister Steven Guilbeault said in June the initial cost impact of the regulations should be "very small, incremental," but Irving is assuming a "worst-case scenario" that may not come to pass as the new credit market sorts itself out.
"There's no regulatory reason why the price of gasoline should increase this July," he said.
At the Sept. 8 committee session, MLAs were told that contracts between the Irving refinery, wholesalers and retailers are confidential "commercial arrangements," some long-term and some short-term.
No way to repay customers if adjustor too high
"It's not something we can track. It's private information, it's private companies, so it's not publicly available," said Heather Quinn, the director of the energy division of the Department of Natural Resources and Energy Development.
Anderson-Mason pointed out that Nova Scotia's regulator hired two consultants, one who suggested an adjustor that produced a surcharge similar to New Brunswick, and a second who concluded there would be no price impact all.
The Nova Scotia regulator split the difference and established an adjustor charge in the 3.5-cent range — half that of New Brunswick's.
McFarlane pointed out the EUB plans to review the adjustor formula after six months.
If it turns out the New Brunswick adjustor was too high or not necessary, McFarlane said there is no way for customers who've been paying it to get their money back.
"There's not a mechanism to recoup it that I know of," he said.
"I'm not aware of the internal prices that go on between them."
Too Too Funny
New gasoline levy being charged in N.B. to help refiners can be traced despite baffled officials
Consumers paying more than refiners have been charging in some cases
It also shows that at least some charges that have been collected from gasoline customers to pay for increased refinery costs were not used for that.
Two weeks ago New Brunswick government energy officials told a committee of MLAs it was not clear to them what was happening with a new provincial petroleum charge that took effect in July.
But deputy natural resources and energy development minister Tom McFarlane said if consumers have been overpaying, there will be no rebates.
Fundy-The
Isles-Saint John West PC MLA Andrea Anderson-Mason questioned
provincial energy officials on who was benefiting from a new petroleum
charge on consumers that took effect in July. (Jacques Poitras/CBC)
"It's into the system. There's not a mechanism to recoup it that I know of," he told MLAs.
In July New Brunswick motorists began paying a new charge created by the province for petroleum products to help oil refiners deal with new federal "clean-fuel" regulations that are separate from carbon taxes.
The charge is calculated and set by the New Brunswick Energy and Utilities Board. The amount is adjusted weekly but has hovered above and below six cents per litre on gasoline since its creation.
Charges on diesel have also varied, moving above and below seven cents per litre.
They are significant amounts.
In New Brunswick motorists and businesses buy about one billion litres of gasoline and 400 million litres of diesel each year. Every one cent increase in price adds $15 million in annual costs to New Brunswick users.
Under questioning from Fundy-The Isles-Saint John West Progressive Conservative MLA Andrea Anderson-Mason earlier this month, energy officials acknowledged they have not been tracking if those new charges are going where they were intended — to pay for increased refinery costs caused by the new federal regulation.
"Shouldn't we be aware of that — where that's going?" asked Anderson-Mason, who was told that information is not available to government.
Earlier
this month New Brunswick government energy officials including natural
resources deputy minister Tom McFarlane, left, and the director of the
department's energy division Heather Quinn told MLAs they didn't know to
whom consumers were paying a new carbon charge. (New Brunswick Legislative Assembly)
"Where it shows up between the retailer and the wholesaler and the refinery, I don't know," said McFarlane.
"It's not something we can track. It's private information, it's private companies, so it's not publicly available," added Heather Quinn, the director of the department's energy division.
But that's not entirely the case.
Publicly available information compiled by the New Brunswick Energy and Utilities Board and the national energy information company Kalibrate does allow tracking of petroleum prices and where charges are added.
That information shows while the new cost-of-carbon charge levied on diesel in New Brunswick has been fully going to refiners as intended, charges on gasoline have been partially diverted to other uses.
Under current New Brunswick petroleum regulations consumers pay a price for gasoline and diesel that includes a base or "benchmark" amount set by large-scale trading in U.S. petroleum markets. Added to that are allowable wholesale and retail markups.
Separate from those markups, retailers can also add in the cost of having fuel delivered to their locations — but only the exact amount they have been billed.
Provincial and federal sales, excise and carbon taxes are then folded in.
By
agreement several oil refiners wholesale products to customers from
loading racks at the Irving Oil refinery. As a group their markup on
gasoline prices has increased about 3.5 cents since July, although
consumers have been getting charged six cents more. (Mike Heenan/CBC)
In June, prior to the new cost of carbon charge, wholesale and retail markups on gasoline in New Brunswick were limited to just under 15 cents per litre. Since July, with the new charge added, allowable markups have risen to about 21 cents for gasoline and 22 cents for diesel plus delivery costs.
Since the cost of carbon charge was introduced, consumers have been paying full 21- and 22-cent markups in most of the province's petroleum markets according to pricing information collected and published daily by Kalibrate.
However, while the new higher markups on diesel have all flowed to refiners as intended, that has not been the case with gasoline.
In August in Saint John according to Kalibrate's data, tankers being loaded with gasoline at the Irving Oil refinery were paying markups of about 3.5 cents per litre higher than they had in June.
That is only a portion of the extra six cents consumers are paying in new gasoline charges to help refiners. The balance has flowed to wholesalers and retailers.
McFarlane said although his department is in the dark about whether consumers are being fairly treated by the new levies, he told MLAs the Energy and Utilities Board has committed to reviewing whether amounts should be adjusted soon.
"I don't think the EUB would say we got it 100 per cent right," said McFarlane. "What they've said is they are going to review it before the end of the year."
ABOUT THE AUTHOR
"I don't think the EUB would say we got it 100 per cent right," said McFarlane. "What they've said is they are going to review it before the end of the year."
Yea Right Perhaps McFarlane will explain why NB Power is suing the EUB and why my name is at the top of the complaint
Imo, if a company accepts corporate welfare and special tax breaks, it's not a private matter. Subject to total transparency.
IMHO We get the governments we deserve when apathy and greed rule the day
No comments:
Post a Comment