Inuvik Gas will be allowed to increase its rates for the time being – by a smaller amount than requested – while a regulator studies complaints about prices the firm wants to charge.
In July, the company said rates would go up by 28 percent for residents and 44 percent for the Town of Inuvik.
Inuvik Gas, calling this the first rate increase since 2012, said the old prices were “no longer sustainable given the increased cost of providing safe and reliable energy service,” while costs associated with new storage facilities – after supplies nearly ran out last winter – needed to be recovered.
The town complained to regulator the Public Utilities Board, saying the rate hike required an “in-depth review,” some expenses described by the company had not been scrutinized, and the increase amounted to a “rate shock” of the kind the PUB has rejected in the past.
In a decision on Thursday, first reported by the CBC, the PUB said Inuvik Gas had “demonstrated that circumstances have materially changed” since rates last changed in 2012.
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But the board said it was not satisfied that the evidence supported the full increase, “even on an interim basis” while a broader review is carried out.
The original Inuvik Gas price hike amounted to $10 per gigajoule. The PUB said prices can go up by $6 per gigajoule for now, but that’s only a temporary adjustment and the board will have the final say later.
To make a final decision, the PUB is now planning to examine the operating costs of Inuvik Gas, the justification for its spending on new propane storage, the timing and planning behind the firm’s key decisions, its “competitive circumstances” and how its rates are designed.
Last week, Inuvik Gas had defended its proposed rate hike in a fresh letter to the regulator.
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“While the percentage increase appears significant when measured against current rates,” the company wrote, “the adjustment reflects current supply impacts, increased operating costs, enhanced reliability requirements, and recent substantial investments made to secure short and long-term energy supply for the community.”
The PUB expects to hear more evidence from the town and company until the end of October before reaching its decision.
