Enbridge Gas has been granted a 40 per cent increase in the rates it charges customers for natural gas starting April 1 – but only on an interim basis.

The new rates will boost the gas bill of a typical household to $1,400 a year, from $1,000.

But the Ontario Energy Board, in the light of a storm of comment it received after Enbridge sought the rate hike, says it’s going to take a second look, and may temper future rate decisions.

The board notes that for most householders, gas consumption drops sharply in the summer with the end of heating season, so the impact of the rate increase will be muted in the immediate future.

That gives the board some breathing room to consider whether, for example, the rate increase should be phased in over a longer time period – called “rate mitigation” in the jargon of energy regulators.

“The board is of the view that rate mitigation may be warranted in this case to smooth the bill impact to consumer,” the board said.

“Prior to making this decision, the Board needs a better understanding of the ramifications of the proposal for delayed smoothing.”

For example, if the gas company can’t recover its expenses quickly, it may incur higher financing costs. Under the rules, it’s allowed to get those costs back from consumers, so they might not end up any better off.

Since gas rates are reviewed four times a year, customers won’t necessarily be stuck with the new, higher rates in the longer term.

The Enbridge increase raised eyebrows in part because Union Gas, which also serves customers in Ontario, had asked for a more moderate boost.

The board had granted Union a 28 per cent hike as of April 1.

Customer groups rolled their eyes at the Enbridge increase.

“Customers have had virtually no notice of the coming rate increases,” Julie Girvan of the Consumers Council of Canada had said in a submission to the board.

She noted that Union’s increase was lower, and wondered whether Enbridge “did everything it was required to do to mitigate the increase.”

She said the board should conduct a “broader generic review” of how such sudden rate increases can occur.

Gas distribution companies don’t profit from the sale of the commodity (they make their money by charging a fee for delivery.) Instead, they estimate what gas prices will be and pass the cost on to customers.

If they guess too low – and undercharge – they’re allowed to raise rates to recover their money.

Staff of the energy board suggested that in this case, Enbridge should be forced to recover the money they spent on high-priced gas over a longer than normal period, thereby moderating the immediate price jump.

Enbridge said it faces different circumstances than Union in supplying gas. Notably, Union has bigger gas storage reservoirs. That forced Enbridge to buy more spot market gas in cold winters like the one Ontario just had.

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Canadian Manufacturers and Exporters didn’t ask for any changes in the way rates get set.

But its submission did remark on the difference between Enbridge and Union’s rates, adding that “this fact gives rise to questions regarding the prudence of Enbridge’s procurement practices.”

Enbridge said late Thursday it’s studying the decision, and had no comment.

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