While it hasn’t grabbed nearly as much attention as the many oil pipeline proposals, shovels are going into the ground in Ontario for one major new pipeline project. Enbridge Gas Distribution is beginning construction of a major new natural gas distribution line across the Greater Toronto Area (GTA). Enbridge will build about 50 kilometres of new pipeline in two segments, at a cost of approximately $700 million.
New pipelines (that do not cross provincial boundaries) cannot be constructed in Ontario without approval from the Ontario Energy Board, usually through a formal hearing. At the hearing for the GTA pipeline, Enbridge argued that this pipeline expansion was needed to meet increased peak demand for natural gas, primarily due to the large amount of new residential development in the downtown Toronto core, and that the reliability of Enbridge’s supply to these customers was at risk. However, several environmental groups argued that parts of the new pipeline could be avoided by an increased focus on energy conservation, perhaps through geo-targeted conservation programs in the GTA, reducing the infrastructure costs for gas ratepayers. While the Board had some sympathy for this argument, it was not fully convinced that conservation was a viable alternative, and eventually approved the pipeline (.pdf).
I review the arguments for and against the pipeline in my annual energy conservation report, Planning to Conserve, released on January 13th (I also hosted a live web chat on the report on January 20). While I did not conclude that the GTA pipeline could have been avoided, I was convinced that conservation is not given a fair chance as an alternative to “hard infrastructure” in the existing regulatory approval process.
My report makes two recommendations that could improve this situation:
The ECO recommends that the Ontario Energy Board require natural gas utilities to file advance notice of any identified distribution system need that could have significant cost impact, and ensure conservation is considered as the first resource to meet some or all of this need.
The ECO recommends that the Ontario Energy Board allow utilities to increase their conservation budget if targeted conservation spending would avoid greater future infrastructure costs.
The point of the first recommendation is to require utilities to consider the potential role of conservation as early as possible in the planning process, before there is an imminent threat to reliability such that new infrastructure becomes the only option. The second recommendation would ensure that, where a utility has identified conservation as a viable alternative to an infrastructure project, it has the resources to take action and scale up its conservation efforts.
Over the holidays, the Ontario Energy Board released an updated set of demand-side management guidelines, which will govern the conservation activities of Enbridge Gas Distribution and Union Gas through 2020. A full review will need to wait until my next annual energy conservation report, but I am pleased to note that the new guidelines include provisions similar to my two recommendations, and will improve the linkages between natural gas conservation and natural gas infrastructure planning, This is an encouraging step towards achieving the Minister of Energy’s direction (.pdf) to “put conservation first” in energy infrastructure planning in Ontario.