04/22/2014 05:22 EDT | Updated 06/22/2014 05:59 EDT

Changes in New Brunswick would see big industry pay more for natural gas

FREDERICTON - New Brunswick's biggest industrial users of natural gas, including the Irving Oil refinery and pulp and paper mills, would pay more to access natural gas under changes introduced Tuesday to the province's Gas Distribution Act.

Energy Minister Craig Leonard said under the 1999 law, the province's six largest users of natural gas have paid an annual fee to New Brunswick's Energy and Utilities Board to bypass the province's natural gas distributor, Enbridge Gas New Brunswick (TSX:ENB).

That fee, which isn't based on natural gas consumption, was $50,000 in 1999 but has risen to $65,000 because of indexing. The money was used to cover the board's costs of regulating natural gas distribution.

Leonard said the changes would eliminate the fee as of 2019 but require those companies to pay $0.10 per gigajoule of natural gas they use to the board.

"The $50,000 figure was a rather arbitrary number," Leonard said outside the legislature. "What we have tried to do is provide a fee that is based on the volume that the companies are actually utilizing."

Leonard said the six large companies currently use about 85 per cent of the natural gas that flows in the province.

Any new, large industrial companies that use more than five million gigajoules of natural gas per year would also be able to bypass Enbridge Gas New Brunswick to access natural gas. But they would have to begin paying the new rate immediately, not in 2019.

Enbridge Gas New Brunswick general manager Gilles Volpe said he supports the changes, which he says could see those industrial users pay about $3 million to $4 million a year to the board.

Leonard said the amount of money paid to the board that is in excess of its costs to regulate the natural gas market would be transferred to Enbridge Gas New Brunswick to help reduce the company's costs.

Volpe said that would help stabilize natural gas distribution rates for all customers.