Windsor Star

Union Gas expansion plan targets rural access

- ELLWOOD SHREVE

Union Gas is hoping a decision could come soon regarding a proposal submitted to the Ontario Energy Board to help facilitate the expansion of natural gas service to rural and remote areas.

Andrea Stass, manager of external communicat­ions and media relations for the Chatham-based utility, said many communitie­s are looking to acquire natural gas service because it’s the most affordable source of energy for both homes and businesses.

Stass said it’s approximat­ely $2,200 cheaper for a household to use natural gas rather than electricit­y or oil over 12 months, based this past winter’s conditions. For an agricultur­al operation using, for example, a grain dryer, the savings are greater, she said.

But a sparse rural population and proximity to a natural gas pipeline are factors that must be considered as the utility examines the installati­on cost of new gas infrastruc­ture and the revenue that can be generated, she said.

OEB regulation­s require that a project to expand infrastruc­ture must pass certain economic tests prior to approval. One requiremen­t is that a project should pay for itself and shouldn’t be subsidized by existing customers.

“There’s a significan­t contributi­on, financiall­y, that would be required from new customers in those (rural and remote) areas and that’s a challenge,” Stass said.

She said Union Gas has for the past three years been working with policy-makers and stakeholde­rs to make the case for a new approach. The utility has asked for flexibilit­y in the regulatory structure that will allow natural gas utilities “to serve rural customers in a way that is less of an economic burden for them.”

The proposal from Union Gas to the OEB is threefold, Stass said.

“It included a reduction in the minimum economic feasibilit­y threshold that’s needed to proceed with a project,” she said. “Today, you have to meet a certain amount of profitabil­ity. We’ve asked for that to be lowered.”

The proposal also includes a new temporary surcharge to be paid by new and future gas customers in those communitie­s.

“It’s up to 10 years and it’s a small additional charge based on the amount of gas they use,” Stass said.

There is also a temporary financial contributi­on by the municipali­ty seeking the service “that would be equal to the property tax that Union Gas would pay on the new pipeline, so that is a bit of a wash.”

Stass said in addition to receiving the applicatio­n from Union Gas, the OEB has also heard from several interested stakeholde­rs about the need to find a way to expand gas service to rural and remote communitie­s.

A new partnershi­p was recently announced at Queen’s Park between the Ontario Federation of Agricultur­e and the Eastern Ontario Wardens’ Caucus and Western Ontario Wardens’ Caucus to look at expanding natural gas to rural areas.

“Natural gas access across the province could save Ontario farmers, business owners and rural residents more than $1 billion annually in energy costs,” OFA president Don McCabe said. “This represents new, disposable income in the hands of our residents, families and rural businesses, to spend and stimulate our local economies.”

This new partnershi­p plans to work with the province and gas companies to develop a fair and equitable way to install new gas pipeline across Ontario each year for the next 20 years.

Stass said there is also a provincial government commitment of $230 million in grants and loans to expand gas service.

“That was to be rolled out in 2017,” she said, adding at this point there’s no additional informatio­n about that commitment’s status.

“Provincial funding is vital to provide the necessary energy cost relief rural Ontario so desperatel­y needs,” Chatham-Kent Mayor Randy Hope, who chairs the Western Ontario Wardens’ Caucus.

“Natural gas is the answer to reducing energy costs, developing our businesses and growing our rural communitie­s,” he added.

There are signs that change could be coming. Stass said last February, the OEB initiated what is called a “generic hearing” to talk with stakeholde­rs and utilities about what would be the best framework to get gas to new communitie­s.

“That hearing has been concluded and we’re waiting on that decision,” she said, adding Union Gas hopes a decision from the OEB will be made this year.

Provincial funding is vital to provide the necessary energy cost relief rural Ontario so desperatel­y needs.

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