GROWING WITH GAS. Getting natural gas into rural Ontario. Fall 2013 Ontario Federation of Agriculture

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1 GROWING WITH GAS Getting natural gas into rural Ontario Fall 2013 Ontario Federation of Agriculture

2 Why natural gas? Convenient once gas is in, no tank to go empty Safe & clean only odour is for safety Low cost home heating with gas is $1,800* With oil $2,700 With propane $3,250 With hydro $5,600 ** * $1,800 includes estimated rural delivery charge ** costs derived from EdPRO propane web site calculator

3 Savings grow on farms Switch propane to gas, heat a poultry barn Save over $20,000 a year Hot water for a dairy herd, (switch hydro to gas) Save over $10,000 a year To heat a pork barn floor (with gas, not hydro) Save over $12,000 a year To heat a work shop for 200 hours Save $150 a year

4 Urban & Rural Virtually all urbanites who want gas, have gas 10% of Ontario homes use costly electric heat, the rural portion is higher In rural Ontario there are 820,000 families, including 50,000 farms Of these 650,000 families & 40,000 farms don t have gas That s a mid-size province, where 80% are without North America s most competitive fuel.

5 Competing provinces Alberta over 100,000 km. of rural gas line serving 400,000 town & rural customers: virtually complete rural service Saskatchewan investing $750 million in capital spending projects since 1992 to extend natural gas service to rural and remote communities - 92% of communities served Manitoba about 30% access & growing Ontario - under 20% Yet, Prairies are lower density than rural Ontario

6 Ontario must compete Ontario can learn & build programs that work here OFA suggests: A private/public sector partnership to enable: Provincial infrastructure help for rural gas A made in Ontario rural rate for gas Low interest loans to get gas up long lanes

7 If rural Ontario had gas Savings of $1,000 a year per household on heat $620 million a year 30,000 more farms save on energy $150 million to farm income 5,000 rural & town businesses save About $35 million a year Counties, schools, churches save $10 million a year It adds up. Total savings = $815 million a year

8 Additional benefits 50,000 homes go from electric heat to gas, saving 1.6 billion kwh of hydro a year and 300 MW 5,000 farms shift to Combined Heat & Power save 750 million kwh a year and 300 MW demand Firms that process food & need gas will be able to locate near the source of the food, rural jobs 15,000 tractors & combines will use compressed natural gas, cut fuel costs, release less Green House Gasses, save an extra $25 million

9 Where is there gas now?

10 What is needed to expand service? OFA suggests a 20 to 25 year program involving: 1. A rural rate: gas delivery rates to reflect lower density & higher costs, (like hydro rates do) 2. Public infrastructure support to pay about 35% of costs of buying & installing pipe. 3. Low interest loans to help families pay to get gas up long lanes, install gas furnaces & appliances.

11 What about gas companies? Gas companies will pay 65% to 75% of all costs for new rural lines They will recover their costs over 10 + years, with a delivery rate set by the OEB They will earn the normal regulated rate of return on their capital costs Their customer base & volume will grow As lines are amortized, rates will be reduced

12 What about existing customers? Present & future customers on existing urban & rural lines will continue to pay based on present rate schedules, as adjusted from time to time. Existing customers will not pay more because of new rural lines.

13 It s not all positive Some businesses sell alternatives to gas - propane & oil vendors, and their drivers These markets will shrink, but there is 20 years to adjust Ontario has 95 propane firms, each with 4 plus people Each year about 30 lay-offs will occur in these firms New opportunities created to sell, service & install appliances, furnaces, gas pipe and CHP units.

14 What does Ontario get? Rural Ontario saves $40 million the first year, growing to $815 million every year after 20 years The savings will be reinvested in rural Ontario Making and laying pipe = 200 jobs Making, installing new appliances = 150 jobs Ontario gets jobs, savings and new investment

15 Ontario avoids costs with rural gas Moving off electric heat & to on farm combined heat and power means Ontario will need to buy: Two less gas generators, save 700 MW $1 billion in generator costs avoided for all citizens by helping build rural gas lines And rural & farm residents save $800 million a year

16 The rural family perspective Switch from electric heat - save $3,800 a year with gas, or $1,200 if they go from propane to gas Over 20 years they are $24,000 or $76,000 ahead That is a 3% to 10% boost in after tax income for 600,000 families. For pensioners, it can improve income by 20%.

17 A farm family perspective Save over $1,200 a year in the house and $3,600 a year in the barn - $5,000 per year $150 million per year boost to net farm income

18 Three simple elements A 20 to 25 year program, laying 5,000 + km. of pipe per year, involving: 1. A new rural delivery rate 2. Public infrastructure support 3. Low interest loans to help families pay to get gas up long lanes & install gas furnaces & appliances.

19 Grow Ontario with gas Questions & enquiries to: Ted Cowan Ontario Federation of Agriculture