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Ontario Natural Gas Customers to Pay $100 Million More Annually to Texas-based Owner of Union Gas

(Ottawa—16/04/08)— In a one sentence decision issued late yesterday, the Ontario Cabinet rejected an appeal by consumer groups, representing residential and industrial natural gas customers, of the May 22, 2007 Ontario Energy Board (OEB) decision confirming the deregulation of the natural gas storage industry in Ontario.

The decision means Enbridge Gas customers, after a three-year transition period, will pay about $40 million annually in additional storage costs to Union Gas’s owner, Spectra Energy of Texas. That money together with approximately $70 million annually in revenue credits that will be lost by Union’s customers will provide an estimated $100 million a year of no-strings attached revenue to Spectra Energy. Prior to the appealed OEB decision, Union Gas customers were credited most of the revenue earned by the storage built with their rates.

“All of this extra money won’t build or conserve a single cubic centimeter of additional gas storage capacity,” said Michael Janigan, General Counsel of the Public Interest Advocacy Centre. “Ontario energy customers are already anticipating steep rate hikes in the next few years. Now consumers will have to pay Union’s American owners more for a service without getting anything in return,” Janigan added.

PIAC believes the decision underlines a serious weakness in the Ontario energy legislation that allows the public interest to take second place in a deregulation application. Ontario gas customers built these facilities for private utilities like Union Gas with their rates, yet now they won’t receive a penny from their use by customers outside the Union franchise.

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