New Brunswick Energy and Utilities Board

In 1999 the Province of New Brunswick granted Enbridge Gas New Brunswick
(EGNB) the general franchise to distribute natural gas in the province. At that time it
was acknowledged that in order to attract new customers in a “greenfield” area and
develop the market, EGNB would need to charge rates for the distribution of gas
that offered sustained savings against competing energy forms in the residential,
commercial, industrial and institutional sectors. In the event that annual revenues
would not recover costs, EGNB proposed a cost deferral mechanism (the “Deferral
Account”) during the Development Period whereby costs not recovered from annual
revenues could be deferred and recovered from future revenues. At the end of the
Development Period, when the market was mature, EGNB would be allowed to
recover the amount in the deferral account.