New Brunswick consumers may face double carbon charges on July 1

New Brunswick drivers appear likely to face two new carbon-related charges this time next month that could add as much as 12.4 cents per litre to the price of gasoline and 14.2 cents to diesel, factoring in all changes, including the effect of the HST.

In a province that consumes 1.4 billion litres of the two fuels each year, it's a potential cost to consumers in excess of $175 million, less than one-third of which will be subject to rebates.

Final amounts will depend on an upcoming decision of New Brunswick's Energy and Utilities Board, but a double increase on each fuel on July 1 appears inevitable according to the province's new public intervener Alain Chiasson.

"Unfortunately, that sounds about right," said Chiasson.

On gasoline, the two charges include a 3.26-cent-per-litre annual increase in regular carbon taxes applied at the pump. 

Diesel, which contains more carbon than gasoline, is facing a 3.97-cent-per-litre increase.

Those increases, added to existing carbon taxes imposed in earlier years, will all be recoverable by consumers when carbon tax rebates in New Brunswick begin in October.

The second and more controversial July 1 charge, estimated to be as high as 7.5 cents per litre on gasoline, is to be imposed to compensate oil companies for extra costs caused by new federal "clean fuel" regulations.

A similar charge on diesel could be as high as 8.4 cents and unlike carbon taxes, neither of those will be subject to rebates.

There is a dispute between the federal and New Brunswick governments over whether oil companies or consumers should deal with the costs of the clean fuel program, but it's New Brunswick's decision. In December, the province changed legislation clearing the way for consumers to pay.

New Brunswick Natural Resources and Energy Development Minister Mike Holland told the legislature that costs of the clean fuel regulations to "manufacturers and importers" of petroleum products would be "significant."

"These cost will be passed on to wholesalers and retailers, so it will be critical to have these costs reflected in the weekly price calculation," said Holland.

Through its legislation, the province authorized a new "carbon cost adjuster" to be added to regulated fuel prices to  mitigate costs to oil companies of the new clean fuel rules and then left it to the Energy and Utilities Board to decide on an amount.

The board hired the consulting company Grant Thornton to advise it on how to proceed and the company developed a formula that estimated amounts that would have to be charged to consumers to pay for new federal levies facing industry.