Natural gas could be available in Kincardine by mid-2018

EPCOR, municipalities hoping for decision in late spring

By Barb McKay

The next three months will be crucial to the success of the Southern Bruce natural gas project.

Representatives from EPCOR, along with lawyer Mark Rodger who isrepresenting the three participating municipalities on the project, were in Kincardine on Dec. 20 to meet with municipal council and talk about the next steps in the project. The delegation met with councils in Huron-Kinloss and Arran-Elderslie the same day. The municipalities, collectively, have a franchise agreement with EPCOR to distribute natural gas to the region.

“We’ve come such a long way since we started this process two years ago, but the first 90 days of 2017 will be critical,” Rodger said.

After holding a generic hearing in the spring to consider a new regulatory framework to make expansion of natural gas service to rural and northern Ontario communities affordable and achievable, the Ontario Energy Board (OEB) released a decision on Nov. 17. It decided that companies could establish standalone rates for new projects. In addition, the board ruled that costs cannot be subsidized by existing customers and cost overruns must be borne by the natural gas utility, not customers.

EPCOR estimates the cost to bring natural gas to the region is in the $100 million range, which it will front and then recoup through consumer rates over time. The municipalities will give EPCOR a 10-year hiatus from property taxes on the lines to help reduce the burden and, in turn, EPCOR will set its rates for 10 years.

“The Energy Board adopted a lot of the recommendations and submissions the Municipality of Kincardine made to it,” Rodger said.

KarimKassam, EPCOR’s vice-president of business development said following a comment period for the OEB’s decision report final guidelines for applications will be released and EPCOR will know what it needs to do to file for a leave to construct. He said that while municipalities and utilities awaited the OEB’s decision, EPCOR was working to complete its environmental impact assessment (EIA).

Public open houses will be held in all three municipalities in February for feedback on pipeline routes.  The pipelines will begin at Dornoch and extend some 245 kilometres, connecting the Bruce Energy Centre first, then Kincardine, Tiverton, Chesley, Paisley, Ripley, Lurgan Beach and Lucknow. The original route has been altered slightly to include large agricultural properties near Ripley.

Kassam said the EIA will be concluded within five to six weeks following the open houses. Then, EPCOR can make its application to the board, hopefully withapproval to construct in late spring or early summer. He said during the hearings he got the impression that the government is excited about the project because it is well ahead of any other projects it is anticipating.

At this point in time,EPCOR’s and the municipalities’ primary focus is on efforts to secure a portion of the provincial government’s natural gas access loan ($200 million) and/or natural gas grants ($30 million) – promised for new projects to extend natural gas service to rural and northern Ontario. Rodger said a meeting will be arranged with the ministries of energy and infrastructure early in the new year to underscore the need for funding, which will be used to offset conversion costs for homeowners who choose to connect to natural gas.

In a report to council, Kassam noted that typical Ontario natural gas rates are around 35 cents per metre. Currently, the lowest heating source in the region is propane which is 64 cents per metre. EPCOR is aiming to set rates that are 10 to 15 per cent below current propane rates. Rates will be firmed up in the first quarter of this year.

EPCOR provided an estimate of conversion costs, based on residential consumers’ current heating systems, along with expected energy savings and the length of time to see a payback. Propane is the least costly, with a typical conversion cost of $700, anticipated annual savings of $573 and an estimated payback period of 1.2 years. Electric forced air would, on average, require a $4,000 investment to convert, but would result in an annual savings of $2,657 and a payback period of just 1.5 years. The cost to convert to natural gas from electric baseboard heat is the highest - $11,000 for the average customer – and would take just over four years to see a payback, but would also result in an estimated annual energy cost savings of $2,657. Those on oil forced air can expect to pay approximately $4,200 to convert, see an annual cost savings of $894 and see a payback in 4.7 years.

EPCOR will be opening up offices in each municipality and will meet with individual consumers to look at their current energy bills and give them more accurate cost savings figures.

If the timeline for the project proceeds as planned, construction on the pipeline will begin in the fall of this year.

“As long as the weather co-operates, we could be putting pipes in the ground soon after the decision is made,” Kassam said.

Kincardine residents could connect to natural gas as early as the summer of 2018.