February 4, 2014
Mr. Gaétan Caron
Chair and Chief Executive Officer
National Energy Board
444 Seventh Avenue Southwest
Calgary, Alberta T2P 0X8
Mr. John Pecman
Commissioner of Competition
50 Victoria Street
Gatineau, Quebec K1A 0C9
Dear Mr. Caron and Mr. Pecman:
We are writing concerning recent reports of propane scarcity and higher than normal prices in some regions of Canada. Canadians are concerned about shortages and price jumps that could put a large financial strain on their families.
Since mid-December 2013, there have been reports of propane supply shortfalls in Canada and certain jurisdictions in the United States, which have impacted normal deliveries of propane to customers. These reports have identified a number of potential factors that have contributed to the situation, including increased demand due to early and sustained colder- than-normal winter temperatures, record demand for propane in the U.S. for agricultural purposes, and logistical issues. As a result, consumers have seen prices for propane to heat their homes move from approximately $0.60 per litre in November 2013 to as much as $1.00 per litre in January 2014. This sharp increase over a short time frame is puzzling and worrisome for Canadian families.
We are writing to request that the National Energy Board (NEB) and the Competition Bureau work together to review propane market issues, including price increases, scarcity and the volume of exports to the U.S. A collaborative effort between your two organizations is desirable, given the potential impact of the issue. Moreover, as Canada’s energy regulator, the NEB monitors the Canadian supply and demand scenario for all energy commodities, including oil, natural gas, natural gas liquids and electricity. The Competition Bureau ensures that Canadian businesses and consumers can operate and benefit from a competitive marketplace. Together, the two organizations are well situated to jointly review the current propane market situation and report publicly on your findings.
In particular, we would ask that your two organizations examine:
- the propane supply and demand situation in Canada, including production, inventories, exports/imports and end-use;
- the propane distribution network;
- wholesale and retail propane pricing;
- composition of the wholesale and retail market;
- the factors that have contributed to the recent shortages and price spikes;
- whether there have been any anti-competitive activities that may have exacerbated the impact on consumers; and
- any potential factors that could exacerbate the current market challenges or contribute to future propane shortages and related price increases.
We are requesting and would be grateful to receive a preliminary report on the availability of current supplies and your initial perspectives on the factors that have led to the propane shortages in Canada by February 28, 2014, with a more detailed final report on the overall propane market situation published publicly before April 30, 2014.
Thank you for your assistance in reviewing this important matter that is impacting many Canadians.
The Honourable Joe Oliver, P.C., M.P.
Minister Natural Resouces
The Honourable James Moore, P.C., M.P.
Minister of Industry