March 12, 1998

Energy Board rules against gas customers, Union Gas excess profits grab okayed

(Toronto, ON) Pollution Probe today denounced a ruling by the Ontario Energy Board (OEB) sanctioning a scheme by Union Gas to force 875,000 residential customers to pay an additional $1 million a month in gas water heater rental charges.

Pollution Probe -- supported by the Association of Municipalities of Ontario (AMO), the London School Board consortium, and the City of Kitchener -- had requested the OEB reduce gas rates by the same amount that Union was raising water heater rentals. This would have avoided giving the gas distribution monopoly excess profits -- profits greater than the profit level approved by the OEB for 1998.

"Once again, Ontario gas customers have lost the Monopoly game," said Pollution Probe spokesman Jack Gibbons. "Provincial regulators have shortchanged the public interest by handing over free cash to Union Gas and sending gas consumers directly to jail," Mr. Gibbons said.

Pollution Probe and the other parties called for the gas rate reduction because the water heater rent hike would increase Union's profits above the level set by the regulatory agency. Both gas rates and water heater rentals are part of the gas company's regulated rate of profit.

The water heater rental increase reflects "arrogance and manipulation on the part of Union, a failure to pay proper attention to the needs of their customers," Pollution Probe's submission to the OEB said.

The OEB rejected Pollution Probe's remedy for reducing the excess profits Union is seeking, stating that it would have to hold public hearings before reducing gas rates. Instead, the OEB ordered Union Gas to put the $1 million a month (a 15% increase) in a special "deferral" or escrow account. The money would be ordered returned to customers if the OEB ultimately rules against the Union Gas scheme to de-regulate water heaters by selling the business to a non-regulated sister company.

The million-dollar-a-month increase is the first stage of Union Gas's plan -- filed with the OEB last year -- to sell its water heater business to non-regulated "Union Energy" and raise the rent by 44% for the same water heaters now in people's basements.

Pollution probe is concerned not only because this de-regulation proposal raises rates for gas consumers in exchange for no extra value, but also because it has negative implications for air quality.

Union Gas holds the distribution monopoly for much of Ontario, including Oakville, Burlington, Hamilton, Southwestern Ontario, Northern Ontario as far south as Orillia, and along the St. Lawrence River from Port Hope to Cornwall except the City of Kingston and Brockville.

For further information:

Jack Gibbons, Pollution Probe (416) 923 3529

Communities affected include:

North Bay 
Thunder Bay
Burlington
Oakville
London
Windsor
Hamilton
Sarnia
Orillia
Bracebridge
Sudbury Sault Ste. Marie
Timmins
Gravenhurst
Wallaceburg
Chatham
Cobourg
Belleville
Kingston Township
Cornwall
Port Hope
Trenton
Huntsville