Enbridge mulls writedown at New Brunswick gas unit
CALGARY, Alberta (Reuters) - Enbridge Inc (ENB.TO: Quote) warned on Monday that it may write off all or part of its C$460 million ($463 million) investment in a New Brunswick natural gas distribution business as the Canadian province's government readies new rules that will lower the price of the fuel for consumers.
Enbridge, Canada's No. 2 pipeline company and its largest gas distributor, said the province's Progressive Conservative government is ready to implement new rules limiting the rates Enbridge can charge customers.
The company said it has reviewed draft regulations for a bill altering its 1999 agreement with New Brunswick to establish gas distribution in the province and believes the new limits will damage the profitability of its operations.
"As drafted, they impose explicit limits on the rates that (Enbridge Gas New Brunswick) can charge to individual classes of customers," said Jennifer Varey, a spokeswoman for the company.
The new rates are "substantially below current rates and below the level required to recover Enbridge's investment," she said.
The New Brunswick government said the province's consumers are now paying among the highest natural gas rates in North America and have not benefited from decade-low prices for the fuel because prices are tied to alternative fuels like heating oil.
"As natural gas commodity prices have been decreasing, rates in New Brunswick have been increasing," said Craig Leonard, New Brunswick's energy minister.
Leonard said the regulated utility's need for revenue has climbed while the high rates it charges have made it difficult for it to lure new customers.
"This is a move that government had to make," he said. "It was a model that was flawed and broken, and the government has the responsibility to step in and try to correct a situation that was clearly off the rails." Continued...