10/04/2011 03:44 EDT | Updated 12/04/2011 05:12 EST

Nova Scotia resists change on gas prices after review of New Brunswick system

HALIFAX - The independent body that regulates gas prices in Nova Scotia says it has no intention of changing the way it does business, essentially shrugging off a suggestion from Premier Darrell Dexter that it take a closer look at New Brunswick's system.

The Nova Scotia Utility and Review Board issued its decision Tuesday, almost four months after Dexter asked for a review amid a series of dramatic price swings that made it appear as if New Brunswick's gas prices were falling faster than Nova Scotia's.

In both provinces, gas prices are set weekly. But prices in New Brunswick can change more frequently because adjustments are automatic when commodity spot prices change more than six cents per litre in one day.

In Nova Scotia, the board only considers making a mid-week change when the market price fluctuates by at least six cents per litre for at least two days.

The Nova Scotia board concluded that its discretionary approach works better because automatic interruptions can lead to frequent changes and unreasonable prices — results that are at odds with the board's mandate to keep prices stable.

"The board observes that this type of automatic interruption could cause an unreasonable benchmark price contrary to the prevailing market situation," the report said.

"The N.B. interrupter method also has the potential to interrupt multiple times in the same week."

While the board agreed that a mandatory process would be more transparent, "it would be inferior to a discretionary process that permits the board to balance the objectives of the mandate. ... Having discretion is more apt to meet the objective of price stability."

As well, the board rejected Dexter's suggestion that it invoke an automatic adjustment only when prices are moving down.

"In the interest of fairness, the board recommends that the mechanism must be applied equally in either direction," the report said.

Prince Edward Island and Newfoundland and Labrador also use the discretionary model.

Gas price regulation was introduced in New Brunswick and Nova Scotia in June 2006. The other two provinces introduced it earlier.

The Nova Scotia board has used its discretion to make mid-week changes only twice — both times in May 2011.

The board concluded its review by suggesting a mandatory trigger would transform the board into an administrative body.

"Part of the rationale for having an independent regulator adjust petroleum pricing is so that the regulator can bring its judgment to bear in the setting of prices."