Terrace city council has joined other local northwestern B.C. governments in protesting a proposed 53 per cent hike in Pacific Northern Gas (PNG) rates over the next three years.
In a letter sent to Premier David Eby, Terrace mayor Sean Bujtas said an the ever-increasing hike PNG wants places an "increasingly unsustainable" financial burden on people, particularly during the coldest months.
"PNG's pattern of increases feel disproportionately targeted at northern communities, amounting to what many perceive as a 'northern tax'," he told Eby.
For its part PNG has said it needs the money because it has fewer large industrial customers than ever before to help foot the bill to maintain its northwestern B.C. pipeline. It means primarily residents are shouldering a majority of current shipping costs.
Only 20 per cent of the pipeline's capacity is being used now that large customers such as Methanex and Eurocan in Kitimat have shut down. Sawmill and pellet plant closures have added to the cost burden being placed on northwestern residents.
The utility also has a plan for a $200 million pipeline project but Bujtas, echoing the Village of Telkwa and the North Coast Regional District. said the project lacks transparency.
The matter "raises serious questions about fiscal responsibility and the expectation that ratepayers should absorb the cost of questionable operational decisions," Bujtas added in his letter to Eby.
PNG officials defended their rate increases in a face-to-face meeting with Kitimat council the end of May, saying that while it used $20 million in cancelled contracts last year to avoid the pain of a rate increase, the company must now spend money to meet increased safety regulations brought in following a 2018 explosion on an Enbridge pipeline north of Prince George.
PNG official David Weir also told Kitimat council a Ridley Island LNG export facility under development in Prince Rupert might offer cost relief by becoming a customer.
PNG buys gas from suppliers but cannot add to the cost when selling to its customers. That means its income and profit comes from its delivery rates.
Speaking about his letter to Eby, Bujtas acknowledged that finding a solution is tough but that the province has to put some thought to how it treats northern residents.
"We're providing money for the province but somehow we're paying the tax bill all the time," he said. "It just feels these extra costs are are just really forced upon northerners unjustly and unfairly."
"The one solution they tell us is to get a major industry and that will share the transportation, which is what it used to be. But it's not my job to find them," Bujtas continued.
He also felt it ironic that LNG Canada has just started shipping natural gas to overseas markets through a massive pipeline at a time when PNG has asked for higher domestic rates.
Many northwesterners have no option but to remain PNG customers given the cost of other heating methods such as heat pumps, Bujtas continued.
"Even with rebates, these are programs for the privileged. Those are the people that can go out and take advantage of these things but there are folks just making ends meet," he said of the cost heat pump systems.
Eby has not replied directly to Terrace council's letter and his office has instead referred it to energy and climate solutions minister Adrian Dix. His minister oversees the B.C. Utilities Commission.
Once a stand alone company, PNG was sold to Calgary-based AltaGas in 2011.
During PNG's meeting with Kitimat council, Kitimat councillor Mario Feldhoff questioned why customers must absorb higher costs while shareholder returns remain protected. He was told that shareholder returns are fixed by the utilities commission.
鈥淭he shareholder needs to feel pain, because the consumers certainly are,鈥� Feldhoff said in response.
An interim 19.9 per cent rate increase took effect May 1, but the utilities commission has not yet issued its final decision. The commission will continue reviewing public submissions and financial data. If the final approved rates differ, PNG may be directed to make retroactive adjustments to customer bills.
With files from Quinn Bender
