Union Gas Limited (Union) provides an integrated natural gas utility to over 1.4 million residential, commercial and industrial customers in Ontario at a regulated rate. The rate is determined from time to time via “rebasing,” which involves a consideration and allocation of Union’s relevant income and expenses.
On May 16, 2014, Union applied to the Ontario Energy Board (the OEB or the Board) seeking regulated rate approval for a new interruptible liquefaction natural gas (LNG) service at its Hagar facility near Sudbury, Ontario. Union proposed that this new interruptible service be folded into the existing rate base – meaning that the capital costs of the new service, as well as certain profits accruing from it, would be calculated in to the regulated rate upon rebasing.
Union’s application attracted several intervenors, including Northeast Midstream L.P. (Northeast), a new entrant to the LNG market in Ontario. Northeast argued that the OEB should forbear from regulating Union’s new interruptible service on two bases: (a) that the relevant provision of the Ontario Energy Board Act, s. 29, mandated forbearance as a result of the relevant market being competitive “sufficient to protect the public interest”; and (b) that under Union’s proposal existing ratepayers would bear the risk of the new LNG service underperforming, forcing the consumer to bear the capital costs of Union’s venture.
On April 9, 2015, the OEB ruled in favour of Northeast’s motion. Rather than having ratepayers bear the risk of Union’s new LNG service, the Board ordered that Union institute a utility cross charge by which certain profits of the new non-regulated business would be treated as regulated utility earnings and eligible for sharing with ratepayers.
Northeast Midstream L.P. was represented by Goodmans LLP with a team that included David Lederman and Jesse-Ross Cohen.
Union Gas was represented by Charles Keizer of Torys LLP.
As noted, there were also several intervenors. They and their counsel were:
Canadian Manufacturers & Exporters – Peter Thompson, QC, then of Borden Ladner Gervais LLP (BLG), now of Thompson Mediation Services and a part-time OEB board member, and current BLG partner Emma Blanchard.
Building Owners and Managers Association, Greater Toronto – Thomas Brett, Fogler, Rubinoff LLP.
School Energy Coalition – Mark Rubenstein, Jay Shepherd Professional Company
Energy Probe Research Foundation – David MacIntosh (Case Manager).
Industrial Gas Users Association – Ian Mondrow, Gowling WLG.