2015 is the year for the natural gas project, consultant tells Huron-Kinloss
By: Liz Dadson
December 16, 2014
Next year will be the year to determine whether the proposed natural gas project for the Kincardine, Huron-Kinloss and Arran-Elderslie area, will fly.
That's the word from Mark Rodger of Borden Ladner Gervais LLP, consultant on the project, now referred to as the Bruce Gas Initiative.
Rodger met with Kincardine council Monday afternoon, along with the mayor and deputy mayor of Arran-Elderslie. And Monday night, he gave his presentation to Huron-Kinloss council at its regular meeting.
He noted that in September of this year, Ontario premier Kathleen Wynne announced a $200-million natural gas access loan which is good to September, 2016, and a $30-million natural gas economic development grant.
The Bruce Gas business plan was released to the public in October and Rodger has met with senior officials with the Ontario energy ministry and infrastructure ministry. He also had a preliminary meeting with senior staff at the Ontario Energy Board (OEB) in November.
He said that as a result of the Bruce Gas business plan, the OEB is now dealing with regulatory issues for greenfield natural gas projects.
"The benefits of natural gas are substantial," said Rodger, "however, project economics under a conventional rate-setting model are challenging. We need new creative options to enable the Bruce Gas initiative to proceed."
He said the major problem is that the province has announced the program of loans and grants, with no rules or guidelines.
"Our immediate challenge is to pressure the ministries to put guidelines in place to help all three municipalities," said Rodger, adding that the $80-million capital contribution for a natural gas pipeline is a fundamental barrier to the project's success.
Plus, there are no definitive numbers on the cost to sign up which makes it difficult to market the idea, added Rodger. "We have to be creative on rate design, and be creative on the cost of capital."
Rodger said the next steps for 2015 include: working with the province to establish funding guidelines and requirements; participating in OEB's policy forum; proving that the best/lowest-cost option has been selected; developing a draft Request for Proposal to assist the province, the OEB and development partners; having the mayors meet with the OEB chairman in January, 2015, and meet with other key provincial/federal officials; and continuing to communicate with the public.
In response to questions from township council, Rodger said the plan is to conduct a professional marketing campaign in the spring and summer of 2015, with the results compiled by the fall.
"We have to do what's best to get natural gas here, fast," said councillor Don Murray.
"It has to happen this year," said Rodger, "once the province has the funding guidelines in place. The rules have to be workable to make the business viable."
He said his work is shifting now from analysis to lobbying. "We must have hard numbers to present to the public; otherwise, people will not sign up."
"Well, I can see we have the right person heading up this project," said mayor Mitch Twolan. "Thanks, Mark, for taking the lead; we appreciate your hard work."
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