Enbridge Gas pays to keep customers from switching to propane

David Salesse has spent much of the last year encouraging commercialcustomers in Saint John to switch their heating systems from naturalgas to propane.

But he saidthe conversion costs are so low and thesavings so high it hasn't taken a lot of arm twisting.

"It's been a no-brainer especially for the commercial accounts," saidSalesse, who owns AAA Propane.

"We're doing one to two [conversions]a week.We can't do them fast enough."

Propane prices hit a record low in New Brunswick last year and havestayed down most of the winter, wholesaling for as low as 13 cents perlitre at the main marketplace in Sarnia, Ont.

That's been a problemfor Enbridge Gas New Brunswick, which has had to start offeringmoney to somecommercial customers to keep them from fleeing toSalesse and other propane retailers.

"They're paying people not to switch over. They're in panicmode. They're trying to do what ever it takes to stay in business,"said Salesse.

Small businesses pay higher rates

In New Brunswick, smaller commercial businesses pay the highestdistribution rates for natural gas in the province currently morethan double what residential users pay.

That, plus the price of the gas itself, has made using natural gasless and less attractive for commercial customers in New Brunswick aspropane prices have fallen.

One of Salesse's first conversions was a three-storey brick apartmentbuilding at the corner of Saint John's Charlotte and Horsfieldstreets.

Salesse promised the owner propane at 45 cents per litre for twoyears 25 per centless than natural gas saving the building hundreds ofdollars per month on its heating costs.

Enbridge saidsome of its commercial clients who have agreed tofloating prices have gotten propane as low as 35 cents per litredelivered to their business and because many natural gas furnaces canbe easily altered to burn propane, converts have been easy to find.

Paying customers to stay

In filings with the Energy and Utilities Board earlier this month,Enbridge detailed the problem it was having with commercial clientsswitching to propane and its plan to pay customers it still has to stayput.

"Propane costs are at historic lows in North America and morespecifically in New Brunswick," Enbridge wrote.

"Existing and new[propane] competitors are taking this opportunity to attract newcommercial customers."

Because of peculiarities in the way it is regulated, Enbridge is notallowed to lower rates to commercial customers.

Instead, it hasagreed to pay the difference between its price and the price ofpropane to any business made a better offer, in writing, by a propanecompany.

Enbridge said as an example, a customer who currently uses 400gigajoules of natural gas a year and is offered propane for 40 centsper litre to switch, could be paid $3,000 to stay with natural gas.

"EGNB will have to evaluate each customer on a case-by-case basis whengiven the opportunity to retain their business," it wrote.

"Offerswill be unique to each customer."

Enbridge says it has budgeted $500,000 for its customer retention program.