Natural gas pipeline for Perth East, but Union Gas says similar project not yet feasible for Wellesley

NEW GROUND WAS BROKEN in Perth East last week with the start of a $5-million pipeline project that promises to bring affordable natural gas to that neighbouring township.

The Union Gas pipeline project will give the residents and business owners of Milverton, Rostock and Watburg access to natural gas in the next year or two. Customers will have the option to switch to natural gas, which the company says can save them up to $1,500 a year on average on their heating bills compared to using electricity, oil or propane.

“The availability of affordable natural gas presents an opportunity to significantly reduce energy costs for local citizens and businesses and drive economic development and job creation,” Perth East Mayor Bob McMillan said in a statement announcing the project.

Successful approval of Perth East’s pipeline project may have future implications for the Township of Wellesley, which has similarly been pining for a natural gas supply for some time.

According to Andrea Stass, a spokesperson for Union Gas, the pipeline in Perth East was made possible thanks to revisions to provincial regulations.

“What we know is the cost of expanding gas service to some rural and indigenous communities – if they’re located a long way from an existing pipeline, that cost can be more than customers, in our experience, would be willing to bear, under the old regulatory framework. So essentially it costs more to build the pipeline than you can recover from customer,” explained Stass.

Under the new regulations, Union Gas was able to levy an additional charge on customers’ gas bills in Perth East to pay for the pipeline. The going rate for natural gas in southern Ontario is 19 cents per cubic metre; but with these new regulations, Union Gas will charge Perth East customers an additional 23 cents per cubic metre over the next 15 years to recover the costs of the pipeline project. Even with this extra charge, Union Gas says consumers can expect a reduction in their heating bills.

Besides that, under the new regulations, Perth East Township will also be contributing some of the property taxes paid by Union Gas itself back into the project itself. The end result is that the company is able to recover their expenses on the new pipeline.

There is still no plan for a similar project in Wellesley, however.

Individuals and groups of property owners in the township have successfully petitioned for their own gas supplies, but there is nothing on a larger scale in the works.

The township, for its part, is very supportive of individuals interested in negotiating their own natural gas supplies with Union Gas, said Kevin Beggs, director of public works, and is willing to approve those

projects. Residents and businesses in Wellesley have to contact Union Gas, however, and fund these projects on an individual basis.

A small population spread over a large area is one of the factors potentially barring Wellesley from an affordable, large-scale pipeline project, said Stass. The costs of paying for the pipeline infrastructure that would ultimately be passed on to the consumer would still outweigh any savings township residents would hope to see.

Moreover, the opportunity to apply to the province’s $100-million natural gas grant program, which the township hoped could help fund a Wellesley pipeline, has lapsed.

The Perth East Township pipeline will take a few years yet to be completed, and even longer to begin entering people’s homes and places of business. By the 10th year of the project, Union Gas estimates the pipeline will be attached to 625 residential buildings, 41 multi-family residential, 66 medium and small commercial, and six large commercial buildings.