BILL 6
An Act to Amend the Gas Distribution Act, 1999
Her Majesty, by and with the advice and consent of the Legislative Assembly of New Brunswick, enacts as follows:
1 Section 1 of the Gas Distribution Act, 1999, chapter G-2.11 of the Acts of New Brunswick, 1999, is amended
(a)  by repealing the definition “associated unit of measure”;
(b)  by repealing the definition “customer” and substituting the following:
“customer” means any person, other than a gas distributor, who uses or consumes gas in the Province for residential, institutional, commercial, industrial, manufacturing or marketing purposes or any similar purpose; (client)
(c)  in the definition “supplier of last resort” by striking out “delivers” and substituting “distributes”;
(d)  in the French version of the definition « distribuer » by striking out “faire passer” and substituting “acheminer”;
(e)  by adding the following definitions in alphabetical order:
“alternative form of regulation” means a method of establishing just and reasonable rates and charges by performance-based regulations, including earnings sharing, price caps, price indexing formulas, ranges of authorized rates of return and the reduction or suspension of regulatory requirements, without regard to methods based strictly on the cost of service, rate base and rate of return; (autre mode de réglementation)
“approval” means an approval for a customer to receive gas by delivery at an eligible facility that is owned or operated by the customer and is located in the distribution area; (approbation)
“approved customer” means a customer who holds an approval; (client approuvé)
“deliver” means to transmit, transport, move or conduct gas by any means other than by a gas distribution system and “delivery” has a corresponding meaning; (livrer)
“distribution area” means the area of the Province for which the Board has granted the general franchise holder a permit to construct a pipeline under the Pipeline Act, 2005; (zone de distribution)
“eligible facility” means a facility that is used for institutional, commercial, industrial or manufacturing purposes or any similar purpose; (installation admissible)
“general franchise holder” means a gas distributor who has been granted a general franchise and includes its successors and assigns; (titulaire de la concession générale)
“generally accepted public utility practice” means any of the practices, methods or acts engaged in or adopted by the public utility industry in Canada or any of the practices, methods or acts which, in the exercise of reasonable judgment, and in light of the facts known at the time a decision is made, would be expected to accomplish the desired result in a manner which is consistent with the laws of Canada, New Brunswick and the other provinces and territories of Canada; (pratique généralement reconnue au sein des services publics)
“licence” means a licence to deliver gas to a customer at an eligible facility owned or operated by the customer; (licence)
2 Subsection 6.1(1) of the Act is amended
(a)  in paragraph (b) by striking out “delivered” and substituting “distributed”;
(b)  in paragraph (c) by striking out “delivered” and substituting “distributed”;
(c)  in paragraph (d) in the portion preceding subparagraph (i) by striking out “delivered” and substituting “distributed”;
(d)  in paragraph (e) in the portion preceding subparagraph (i) by striking out “delivered” and substituting “distributed”;
(e)  in paragraph (f) by striking out “delivered” and substituting “distributed”.
3 Section 10 of the Act is amended
(a)  by repealing subsection (1.1) and substituting the following:
10( 1.1) Despite subsection (1), an amendment to the general franchise agreement, including a restatement of the general franchise agreement or a renewal or extension of the general franchise agreement by the Minister under section 11.1, is not subject to the approval of the Board.
(b)  in subsection (2) by striking out “section 7” and substituting “section 7, other than a general franchise agreement,”.
4 Section 11.1 of the Act is amended
(a)  in subsection (1) by striking out “The Minister” and substituting “Subject to subsection (1.1), the Minister”;
(b)  by adding after subsection (1) the following:
11.1( 1.1) If the general franchise agreement provides the general franchise holder with a right to renew the general franchise agreement or to extend its term and the general franchise holder exercises the right to renew or extend, the Minister shall renew the general franchise agreement or extend its term, as the case may be, for the term specified in the general franchise agreement.
(c)  by repealing subsection (2);
(d)  in subsection (3) by adding “for a renewal under subsection (1)” after “fee”;
(e)  by repealing subsection (4).
5 Subsection 13(1.1) of the Act is amended
(a)  in paragraph (a) by striking out “the holder of the general franchise” and substituting “the general franchise holder”;
(b)  in paragraph (b) of the English version by striking out “the holder of the general franchise” and substituting “the general franchise holder”.
6 Subsection 13.2(2) of the English version of the Act is amended by striking out “the holder of the general franchise” and substituting “the general franchise holder”.
7 The heading “Part 2 – PIPELINE CONSTRUCTION AND OPERATION PERMITS AND LICENCES” before section 27 of the Act is repealed and the following is substituted:
PART 2
PIPELINE OWNERSHIP AND OPERATION
8 Section 51 of the Act is amended
(a)  in subsection (2) by striking out “A gas distributor who has been granted a general franchise” and substituting “The general franchise holder”;
(b)  in subsection (3)
( i) by striking out the portion preceding paragraph (a) and substituting the following:
51( 3) If the general franchise holder sells or offers to sell gas to a customer, the general franchise holder
( ii) in paragraph (b) by striking out “notwithstanding section 58,”.
9 Section 52 of the Act is amended
(a)  by adding after subsection (2) the following:
52( 2.1) The Board may, in accordance with generally accepted public utility practice, make an order permitting the general franchise holder to create or establish a regulatory variance account in respect of the occurrence of an event for the purpose of minimizing the rate impact of the costs arising from the event.
(b)  in subsection (3) by striking out “to the classes of customers prescribed by regulation” and substituting “its customers”;
(c)  by repealing subsection (5) and substituting the following:
52( 5) In approving or fixing just and reasonable rates and tariffs, the Board
(a)  may adopt any method or technique it considers appropriate, including an alternative form of regulation,
(b)  may recognize or consider a regulatory variance account as part of the regulated assets of the general franchise holder, and may determine whether and how amounts recorded in the account shall be included in the revenue requirement of the general franchise holder,
(c)  shall recognize or consider the regulatory deferral account as part of the regulated assets of the general franchise holder to be included in the revenue requirement of the general franchise holder in accordance with this Act,
(d)  shall not permit the general franchise holder to add to or earn a return on the regulatory deferral account and shall not recognize or consider these amounts as part of the regulated assets of the general franchise holder, and
(e)  shall not recognize or consider any financing or carrying costs incurred by the general franchise holder in relation to the balance in the regulatory deferral account as part of the regulated assets of the general franchise holder.
10 The Act is amended by adding after section 52 the following:
Balance in regulatory deferral account
52.01 On the commencement of this section, the balance in the regulatory deferral account shall be $144.5 million.
Regulatory deferral account – 2017 to 2019
52.02 For the period commencing on January 1, 2017, and ending on December 31, 2019, no portion of the regulatory deferral account shall be included in the revenue requirement of the general franchise holder.
Return on equity – 2017 to 2019
52.03( 1) For the period commencing on January 1, 2017, and ending on December 31, 2019, no amounts shall be credited towards the balance in the regulatory deferral account except as provided for in this section.
52.03( 2) If, between January 1, 2017, and December 31, 2019, both dates inclusive, the general franchise holder recovers in any year an amount from rates and tariffs or from any other source that results in an actual return on equity in excess of 10.9 per cent, the amount that exceeds 10.9 per cent shall be allocated as follows:
(a)  if the difference between 10.9 per cent and the amount that exceeds 10.9 per cent does not exceed 200 basis points, an amount equal to the difference shall be credited towards the balance in the regulatory deferral account; and
(b)  if the difference between 10.9 per cent and the amount that exceeds 10.9 per cent exceeds 200 basis points,
( i) with respect to the portion of the difference that does not exceed 200 basis points, the portion shall be credited towards the balance in the regulatory deferral account; and
( ii) with respect to the portion of the difference that exceeds 200 basis points,
( A) an amount equal to half of the portion shall be credited towards the balance in the regulatory deferral account, and
( B) the remaining amount shall be applied to reduce the revenue requirement of the general franchise holder for the following year and this reduction shall be applied to decrease rates and tariffs for one or more classes of customers other than the Small General Service class of customers for that year.
Recovery of balance
52.04( 1) For the period commencing on January 1, 2020, and ending on the date the balance of the regulatory deferral account is recovered, the balance remaining in the regulatory deferral account after the amounts, if any, have been credited in accordance with section 52.03, shall be recovered by including in the revenue requirement of the general franchise holder those amounts authorized by the Board in accordance with this section.
52.04( 2) On application by the general franchise holder for an order approving or fixing rates and tariffs in accordance with section 52, the Board shall authorize the recovery of the balance in the regulatory deferral account in any manner it considers appropriate, including determining the period during which the balance is to be recovered and the amounts to be included in the revenue requirement of the general franchise holder in any year.
52.04( 3) Despite subsection (2), the Board shall authorize the recovery of $100 million of the balance in the regulatory deferral account on a fixed straight line amortization basis for the period commencing on January 1, 2020, and ending on December 31, 2045, unless the balance of the regulatory deferral account has been fully recovered before that date.
Return on equity
52.05 For the purposes of the approval or fixing of rates and tariffs under sections 52.06 and 52.07, the Board shall permit a return on equity of 10.9 per cent.
Order re rates and tariffs – Small General Service class of customers
52.06( 1) The general franchise holder shall file with the Board an application for an order approving or fixing rates and tariffs in accordance with section 52 for those customers who, on the commencement of this section, belong to the Small General Service class of customers.
52.06( 2) The order shall take effect on January 1, 2018, and remain in effect until December 31, 2019, both dates inclusive.
52.06( 3) Subject to subsection 52(2.1) and subsection (4), the Board shall approve or fix an increase in the variable portion of the rates and tariffs approved or fixed by the Board with respect to the general franchise holder’s application dated July 25, 2016, as follows:
(a)  3 per cent, effective January 1, 2018; and
(b)  3 per cent, effective January 1, 2019.
52.06( 4) If, at any time between January 1, 2018, and December 31, 2019, both dates inclusive, the Board approves or fixes an average increase of more than 3 per cent to rates under the Electricity Act that is to be applied to the residential rate classes, the Board shall make an order approving or fixing a similar increase in rates and tariffs for those customers who, on the commencement of this section, belong to the Small General Service class of customers and a corresponding reduction in the revenue requirement of the general franchise holder shall be applied to decrease rates and tariffs for one or more other classes of customers as proposed by the general franchise holder.
Rates and tariffs freeze – 2017 to 2019
52.07 Subject to subsection 52(2.1), clause 52.03(2)(b)(ii)(B), subsection 52.06(4) and section 52.08, the rates and tariffs approved or fixed by the Board with respect to the general franchise holder’s application dated July 25, 2016, for the following classes of customers shall, in aggregate, be subject to a rates and tariffs freeze and shall remain in effect until December 31, 2019:
(a)  Mid-General Service Class;
(b)  Large General Service Class;
(c)  Contract General Service Class;
(d)  Industrial Contract General Service Class; and
(e)  Off-Peak Service Class.
Order re new classes of customers
52.08 If the Board combines any of the classes of customers referred to in section 52.07 into a new class or classes of customers, the revenue requirement that was used to determine the rates and tariffs approved or fixed by the Board with respect to the general franchise holder’s application dated July 25, 2016, shall apply to the new class or classes of customers and the rates and tariffs for the new class or classes of customers shall, subject to subsection 52(2.1), clause 52.03(2)(b)(ii)(B) and subsection 52.06(4), remain in effect until December 31, 2019.
11 Section 52.1 of the Act is repealed.
12 Section 52.2 of the Act is repealed.
13 Section 52.3 of the Act is repealed.
14 Section 52.4 of the Act is repealed.
15 Section 57 of the Act is amended
(a)  in subsection (1) by striking out “gas delivery service” and substituting “gas distribution service”;
(b)  in subsection (2) by striking out “delivering” and substituting “distributing”.
16 Subsection 58(1.1) of the Act is amended
(a)  in paragraph (a) by striking out “by any means other than by a pipeline or gas distribution system”;
(b)  in paragraph (b) by striking out “by any means other than by a pipeline or gas distribution system; and” and substituting a semi-colon;
(c)  in paragraph (c) by striking out “by any means other than by a pipeline or gas distribution system.” and substituting a semi-colon;
(d)  by adding after paragraph (c) the following:
(d)  the general franchise holder; and
(e)  an owner or operator of a gas fuelling station that provides fuelling services for vehicles that operate on gas.
17 Subsection 60(2) of the Act is repealed.
18 The Act is amended by adding after section 65 the following:
PART 5.1
LICENSEES AND APPROVED CUSTOMERS
Prohibition against delivery of gas without a licence
65.1 No person shall deliver gas to customers unless the person holds a licence.
Prohibition against delivery of gas in distribution area
65.11 During the period from the date of commencement of this section to August 31, 2039, inclusive, no licensee shall deliver gas to a customer at an eligible facility that is owned or operated by the customer and is located in the distribution area unless the customer holds an approval for the eligible facility.
Exemption – gas fuelling stations
65.12 For greater certainty, an owner or operator of a gas fuelling station that provides fuelling services for vehicles that operate on gas is exempt from the requirement to obtain a licence.
Application for licence
65.2( 1) An application for a licence shall be made to the Board in the form provided by the Board and shall contain the information required by the Board.
65.2( 2) The Board may assess a processing fee and require the applicant to pay the fee.
Issuance of licence
65.21 On application in accordance with section 65.2, the Board may issue a licence.
Terms and conditions
65.22 The Board may impose any terms and conditions that the Board considers appropriate on a licence.
Requirement to provide information to Board
65.3 A licensee shall provide the following information to the Board on an annual basis:
(a)  the names and addresses of its customers;
(b)  the quantity of gas the licensee delivered in each of the previous 12 months; and
(c)  any other information requested by the Board.
Licence not transferable
65.31 A licence is not transferable.
Notice of amalgamation
65.32 If a licensee is a corporation and the licensee enters into an amalgamation agreement or amalgamates with any other corporation, the licensee shall immediately advise the Board in writing and the Board may amend the licence accordingly.
Notice of change of name
65.4 If a licensee changes its name, the licensee shall immediately advise the Board in writing and the Board may amend the licence accordingly.
Cancellation of licence
65.41( 1) The Board may cancel a licence if the licensee
(a)  violates or fails to comply with a provision of this Act or the regulations,
(b)  violates or fails to comply with any term or condition of the licence, or
(c)  violates or fails to comply with an order of the Board.
65.41( 2) A person whose licence has been cancelled may apply to the Board for a new licence.
65.41( 3) The Board may issue a new licence if it is satisfied that the person has fully remedied the circumstances that gave rise to the cancellation and may impose any terms and conditions on the licence that it considers appropriate.
Prohibition against receiving gas by delivery in distribution area
65.42 No person who owns or operates an eligible facility that is located in the distribution area, other than a gas fuelling station that provides fuelling services for vehicles that operate on gas, shall receive gas by delivery at the eligible facility during the period from the date of commencement of this section to August 31, 2039, inclusive, unless the person holds an approval for the eligible facility.
Application for approval
65.5( 1) Subject to section 65.8, any person, other than an individual, who owns or operates an eligible facility that is located in the distribution area and who wishes to receive gas by delivery at the eligible facility may apply for an approval for the eligible facility.
65.5( 2) An application for an approval shall be made to the Board in the form provided by the Board and shall contain the information required by the Board.
65.5( 3) The Board may assess a processing fee and require the applicant to pay the fee.
Copy of application to general franchise holder
65.51 On receipt of an application for an approval, the Board shall provide the general franchise holder with a copy of the application.
Objection to application
65.52( 1) Within 30 days after receiving a copy of an application for an approval, the general franchise holder may file with the Board a notice of objection to the application on the form provided by the Board setting out the reasons for and any grounds and arguments in relation to the objection.
65.52( 2) On receipt of a notice of objection, the Board shall provide the applicant with a copy of the notice of objection.
65.52( 3) If a notice of objection is filed with the Board, the Board shall hold a hearing to consider the matter.
Issuance of approval
65.6 The Board may issue an approval if
(a)  no notice of objection has been filed with the Board,
(b)  all objections have been withdrawn, or
(c)  after holding a hearing, the Board determines that it is in the public interest to issue the approval.
Terms and conditions
65.61 The Board may impose any terms and conditions that the Board considers appropriate on an approval.
Transfer or assignment of approval
65.62 An approved customer shall not transfer or assign an approval without the prior written approval of the Board.
Notice of amalgamation
65.7 If an approved customer is a corporation and the approved customer enters into an amalgamation agreement or amalgamates with any other corporation, the approved customer shall immediately advise the Board in writing and the Board may amend the approval accordingly.
Notice of change of name
65.71 If an approved customer changes its name, the approved customer shall immediately advise the Board in writing and the Board may amend the approval accordingly.
Cancellation of approval
65.72( 1) The Board may cancel an approval for an eligible facility if the approved customer
(a)  violates or fails to comply with a provision of this Act or the regulations,
(b)  violates or fails to comply with a term or condition of the approval,
(c)  uses the facility for any purpose other than institutional, commercial, industrial or manufacturing purposes or any similar purpose, or
(d)  does not receive gas by delivery at the eligible facility for a period exceeding six consecutive months.
65.72( 2) A person whose approval has been cancelled may apply to the Board for a new approval.
65.72( 3) The Board may issue a new approval if it is satisfied that the person has fully remedied the circumstances that gave rise to the cancellation and may impose any terms and conditions on the approval that it considers appropriate.
Exemption – gas fuelling stations
65.8 An owner or operator of a gas fuelling station that provides fuelling services for vehicles that operate on gas and that is located in the distribution area is exempt from the requirement to obtain an approval.
Exemption from application for approval – delivery prior to commencement of this section
65.81 If, immediately before the date of the commencement of this section, a customer received gas by delivery at an eligible facility that is owned or operated by the customer and is located in the distribution area, the Board shall issue an approval to the customer for the eligible facility if, within six months after the date of the commencement of this section, the customer provides the Board with the following information:
(a)  proof that is satisfactory to the Board that the customer received gas by delivery at the eligible facility before the date of the commencement of this section and continued to receive gas after that date; and
(b)  any other information the Board considers relevant.
Exemption from application for approval – delivery prior to area becoming part of distribution area
65.9 If an area of the Province becomes part of the distribution area and, immediately before the date on which the area became part of the distribution area a customer received gas by delivery at an eligible facility that is owned or operated by the customer and is located in the area, the Board shall issue an approval to the customer for the eligible facility if, within six months after the date on which the area becomes part of the distribution area, the customer provides the Board with the following information:
(a)  proof that is satisfactory to the Board that the customer received gas by delivery at the eligible facility before the date on which the area became part of the distribution area and continued to receive gas after that date; and
(b)  any other information the Board considers relevant.
19 Subsection 69(1) of the Act is amended
(a)  in paragraph (c) by striking out “delivery” and substituting “distribution”;
(b)  in paragraph (l) by striking out “delivery” and substituting “distribution”;
(c)  in subparagraph (n)(ii) by striking out “deliveries” and substituting “distribution”.
20 Section 71 of the Act is amended by adding after subsection (5) the following:
71( 6) When the Board inquires into, hears and determines any matter or thing that under this Act it may inquire into, hear and determine relating to the general franchise holder, the Board shall inquire into, hear and determine the matter or thing in a manner that is consistent with the general franchise agreement.
21 The Act is amended by adding after section 71 the following:
Determination re reasonable economic alternative
71.1 On or before August 31, 2039, the Board shall make a determination as to whether the delivery of gas to all customers in the distribution area is a reasonable economic alternative to the distribution of gas to all customers in the distribution area by the general franchise holder.
22 Subsection 95(1) of the Act is amended
(a)  by repealing paragraph (m.1);
(b)  by repealing paragraph (m.2);
(c)  by repealing paragraph (m.3);
(d)  by repealing paragraph (m.4);
(e)  by repealing paragraph (m.5);
(f)  by repealing paragraph (m.6);
(g)  in paragraph (n.1) by striking out “a gas distributor” and substituting “the general franchise holder”.
23 Paragraph 96(1)(e) of the Act is amended by striking out “certificates” and substituting “certificates, licences, approvals”.
24 Schedule A of the Act is repealed and the attached Schedule A is substituted.
CONSEQUENTIAL AMENDMENTS
Energy and Utilities Board Act
25( 1) Subsection 27.1(1) of the Energy and Utilities Board Act, chapter E-9.18 of the Acts of New Brunswick, 2006, is amended
(a)  by adding after paragraph (g) the following:
(g.1)  the grant of a licence or an approval under the Gas Distribution Act, 1999;
(g.2)  the amendment or cancellation of a licence under the Gas Distribution Act, 1999 or the amendment, cancellation, transfer or assignment of an approval under that Act;
(b)  by repealing paragraph (h) and substituting the following:
(h)  the determination as to whether an applicant for a licence, permit, approval or certificate that is authorized to be granted, issued or renewed by the Board has complied with any terms or conditions of an order or decision of the Board with respect to that licence, permit, approval or certificate;
25( 2) Paragraph 50(2)(b) of the Act is repealed and the following is substituted:
(b)  gas distributors, gas marketers and licensees under the Gas Distribution Act, 1999;
25( 3) The heading “Autre mode de régulation” preceding section 67 of the French version of the Act is amended by striking out “régulation” and substituting “réglementation”.
25( 4) Section 67 of the Act is amended
(a)  by repealing subsection (1) of the French version and substituting the following:
67( 1) Dans le présent article, « autre mode de réglementation » s’entend du mode de fixation de taux et de tarifs justes et raisonnables au moyen d’une réglementation axée sur les performances, y compris le partage des recettes, les plafonds de prix, les formules d’indexation des prix, les fourchettes de taux de rendement autorisés et l’assouplissement ou la suspension des exigences réglementaires, sans égard aux modes fondés strictement sur le coût du service, la base tarifaire et le taux de rendement.
(b)  in subsection (2) of the French version by striking out “autre mode de régulation” and substituting “autre mode de réglementation”;
(c)  in subsection (3) by striking out “the Board shall adopt the methods or techniques prescribed in the relevant regulation made under the Gas Distribution Act, 1999” and substituting “the Board may adopt any method or technique that it considers appropriate, including an alternative form of regulation”.
Regulations under the Gas Distribution Act, 1999
26( 1) Section 4 of New Brunswick Regulation 2003-19 under the Gas Distribution Act, 1999 is repealed and the following is substituted:
4( 1) A gas distributor that sells gas shall make available a standard offering having a term of one year and shall calculate the price of gas in the manner and for the period determined by the Board, which price shall be based on the cost estimated by the gas distributor for purchasing gas and selling gas to customers.
4( 2) For the purposes of subsection (1), the difference between the estimated cost of purchasing and selling gas and the actual cost of purchasing and selling gas for a period determined by the Board shall be included in the forecasted price of gas for a period determined by the Board.
26( 2) New Brunswick Regulation 2012-49 under the Gas Distribution Act, 1999 is repealed.
Pipeline Act, 2005
27 Section 1 of the Pipeline Act, 2005, chapter P-8.5 of the Acts of New Brunswick, 2005, is amended by repealing the definition “customer” and substituting the following:
“customer” means a customer as defined in the Gas Distribution Act, 1999. (client)
SCHEDULE A
Column I
Section
 
Column II
Category of Offence
 
 
 
    
 
  3...............
H
 
 
  4...............
H
 
 
14(2) ...............
H
 
 
15(1) ...............
H
 
 
47...............
H
 
 
51(1) ...............
H
 
 
52(1) ...............
H
 
 
55(1) ...............
G
 
 
55(2) ...............
G
 
 
58(1)(a) ...............
H
 
 
58(1)(b) ...............
H
 
 
58(1)(c) ...............
H
 
 
58(1)(d) ...............
H
 
 
58(2)(a) ...............
G
 
 
58(2)(b) ...............
G
 
 
58(2)(c) ...............
G
 
 
58(2)(d) ...............
G
 
 
65.1...............
H
 
 
65.11...............
H
 
 
65.42...............
H
 
 
69(1)(a) ...............
G
 
 
69(1)(b) ...............
G
 
 
69(1)(c) ...............
G
 
 
69(1)(d) ...............
G
 
 
69(1)(e) ...............
G
 
 
69(1)(f) ...............
G
 
 
69(1)(g) ...............
G
 
 
69(1)(h) ...............
G
 
 
69(1)(i) ...............
G
 
 
69(1)(j) ...............
G
 
 
69(1)(k) ...............
G
 
 
69(1)(l) ...............
G
 
 
69(1)(m) ...............
G
 
 
69(1)(n) ...............
G
 
 
69(1)(o) ...............
G
 
 
69(1)(p) ...............
G
 
 
69(1)(q) ...............
G
 
 
69(1)(r) ...............
G