NEW - NL: CPA working to establish process to account for unforseen charges in set pricing

Propane providers in Newfoundland and Labrador source their propane from the North Atlantic Refinery in Come by Chance but the refinery is presently shut down because of the COVID-19 pandemic.

Coinciding with a change to the method of supply, propane providers are experiencing additional freight charges to supply customers in Newfoundland. However, these charges are not reflected in the price set every week by the Board of Commissioners of Public Utilities and intervention adjustments are not the appropriate mechanism to reflect these charges. It becomes increasingly difficult for propane providers to conduct their business while providing an essential service.

The objective right now is to develop and propose to the Board a transparent trigger process based on a set of scenarios during supply outages or constraints that would take these additional charges into account.

After discussing with Irving, Superior Propane, North Atlantic, and the CPA members affected by this situation, the CPA contacted the Board to discuss the matter. A letter was sent on April 20, 2020, stating the importance of considering these unforeseen additional freight costs due to COVID-19 when determining the price for propane in the province.

The Board acknowledged the CPA on May 6, 2020 with regards to propane as a heating fuel and the impact a change to the method of supply may have on propane suppliers operating in the province.

The Board advised anyone impacted by this change to avail of the application process provided in section 8 of the Petroleum Products Act whereby the wholesaler or retailer could demonstrate its need for an increased maximum price based on specific criteria and company-specific cost information. To date, the Board has received one application and anticipates receiving a second application in the near future.

The Board encouraged the CPA to advise its members that are propane suppliers and that have been impacted by the changes to the method of supply of propane, to participate in the application process and to contact Board staff to discuss application requirements.

In order to further address this situation, the CPA will discuss options going forward with members, which will include seeking representation at the political level with the province. The CPA feels that it is important that there is an understanding at senior levels of government that the circumstances caused by COVID-19 were truly unique and unpredictable. The increased costs could not have been anticipated in advance, unlike a planned shutdown at the Come by Chance refinery. As a result, the government should allow for adjustments to reflect the suddenly increased transportation costs.

For more information on this matter, contact Jean-Francois Duguay, Director, Government Relations, Atlantic Canada and Québec, at jeanfrancoisduguay@propane.ca.