N.B. legislation could lead to Enbridge gas asset writedown
Significant portion of its $460 million investment in New Brunswick will be affected, Enbridge says.
TORONTO—Enbridge Inc. says it would be forced to book a “significant” writedown on its gas assets in New Brunswick if the province goes ahead with legislation to cut prices.
The Calgary-based company says that a move to reduce natural gas distribution rates could potentially cause it to take a writedown of a “significant portion” of its $460-million investment in Enbridge Gas New Brunswick.
Shares of the company were down 20 cents to $38.41 on the Toronto Stock Exchange on Monday morning.
Enbridge has opposed the legislation, which New Brunswick Energy Minister Craig Leonard said is fair. Leonard has said market prices for natural gas have been at historic lows, but New Brunswickers are paying among the highest natural gas distribution rates in North America.
He said the existing system has not allowed people in the province to benefit from lower gas prices.
“We are extremely disappointed with the regulations as currently drafted,” Enbridge’s gas distribution president Guy Jarvis said in a release.
“Enbridge has made a substantial investment in bringing natural gas to New Brunswick businesses and residents, including reinvesting the money we have earned in the province to further develop our system, and we have adhered to our side of the franchise agreement with the government.”
The company said that “for several reasons” it is more expensive to distribute natural gas in the province than in larger markets, though it did not provide specific examples.
Gas distribution rates are based on a variety of factors, including the price of home-heating oil and electricity. They are also based on a deferral account established to recover the costs of setting up the province’s gas pipeline network.