Order No. P.971202-4

IN THE MATTER of the Petroleum Products Act, R.S.P.E.I. 1988, Cap P-5.1

- and -

IN THE MATTER of an application filed under Section 32 of the Petroleum Products Act, supra, by IRVING OIL LIMITED for a non-crude related increase of 1.7 cents per litre in the price of stove oil contained in its posted consumer tank truck pricing schedule based on increased distribution costs in relation to this product.

Tuesday, the 2nd day of December, A.D., 1997

BEFORE

Wayne D. Cheverie, Q.C., Chair
Ginger Breedon, Vice-Chair
Debbie MacLellan, Commissioner

Decision and Order

On 17 November 1997, Ms. Kelli Lester, Pricing Representative for Irving Oil Limited ("Irving"), filed with the Commission an application dated 13 November 1997 under Section 32 of the Petroleum Products Act requesting approval for an increase of 1.7 cents per litre in the price of stove oil contained in its posted consumer tank truck pricing schedule, based on increased distribution costs in relation to this product.

This application was reviewed by the Commission this date with respect to the supporting documentation filed. This documentation suggests that the quality differential spread between the product furnace oil and the product stove oil is presently appropriate. Other documentation deals with the pricing differentials amongst licensed wholesalers with respect to stove oil as of 3 September 1997

Irving points out in its application that they are unable to achieve the same rate of efficiency with respect to (the distribution of) stove oil due to the lower volumes sold in comparison to its other liquid products, and that its average annual vehicle throughput of furnace oil (area not specified) is 3,800,000 litres compared to annual stove oil sales for Prince Edward Island of 1,900,000 litres.

The Commission, in its Decision and Order No. 910828, stated that unless special circumstances exist, non-crude costs would be reviewed annually, with applications to be submitted by the 15th day of March each year, with public access to the applications being available and acceptance of comments from the public by the Commission up to and including the 15th day of April. Specific information is required to be filed with respect to how the company’s refining and marketing costs in the previous calendar year changed from the costs incurred the year before (under the individual headings of Operating Costs and Investments).

In view of the above, the Commission gave consideration to this matter and determined that the reasons given are insufficient to warrant dealing with this application in isolation of a review of the overall marketing costs of this Company in Prince Edward Island.

To deal with this application independently of one filed in accordance with the above-noted guidelines would have the effect of adding a separate delivery charge in relation to this one product in isolation of the transportation and distribution cost component previously established in relation to the total basket of bulk petroleum products. In other words, to authorize such an increase in relation to a specific product would create an unnecessary imbalance in the overall recovery of distribution costs relating to all products included in Irving’s approved dealer and posted consumer pricing schedules.

The Application was therefore declined in accordance with the attached Order.

Order

IT IS HEREBY ORDERED THAT the application dated 13 November 1997 filed by Kelli Lester on behalf of Irving Oil Limited requesting a non-crude increase of 1.7 cents per litre in its posted consumer price of stove oil be declined.

DATED AT CHARLOTTETOWN this 2nd day of DECEMBER, A.D., 1997.

BY THE COMMISSION

Chair

Vice-Chair

Commissioner