Enbridge Gas is reopening its application for a 13-kilometre, C$123.7-million pipeline replacement project in Ottawa after the Ontario Energy Board (OEB) refused the project in May, 2022, even as the city moves ahead with plans to drastically reduce future demand for the natural gas the utility wants to sell.
Enbridge maintained at the time that the existing St. Laurent pipeline was a hazard and needed to be replaced, and now it’s coming back with new information to back that claim, CTV News reports. “We’ve done detailed inspections, analysis, risk assessments that show that the pipeline does need replacement, and we are submitting to the Ontario Energy Board,” said Steven Rogers, the company’s operations manager, east region. “It serves about 165,000 customers, and it’s a vital component of the energy mix for the National Capital Region.”
But the regulator didn’t buy that argument when the distribution utility first put it forward in March, 2021, The Energy Mix reported exclusively nearly two years ago, in a decision that sent minor shock waves through the province’s energy regulatory and municipal energy communities.
“Nobody expected them to lose. Zero expectation,” veteran energy lawyer Jay Shepherd of Shepherd Rubinstein told The Mix at the time.
But “having the city give evidence that everybody is cutting back on their carbon in Ottawa, the OEB was hard pressed,” he added. “If Enbridge had had any other proof that the existing pipeline was failing, they might have won. But when the city goes in and says it won’t be using as much gas anymore, you can’t just ignore it.”
The OEB’s written order [pdf] cited plans to reduce fossil gas demand across the City of Ottawa as one of the factors in the decision, along with Enbridge’s failure to show that a pipeline replacement was necessary or the most affordable option available. Major drivers of the demand reduction will include Ottawa’s community energy plan, Energy Evolution, as well as the federal government’s effort to convert its Cliff Street heating and cooling plant from steam to hot water—changes that Enbridge did not factor into its gas demand forecasts.
“The OEB finds that Enbridge Gas has not demonstrated that the risk associated with the subject pipelines warrants complete replacement at this time,” wrote OEB commissioners Anthony Zlahtic and Emad Elsayed. They found the company had only demonstrated a “very low likelihood” of serious issues with the existing pipe, based on a statistical survey of pipelines across its service territory rather than an assessment of the infrastructure at St. Laurent, and changed up its evidence in the course of the regulatory hearing as questions about the application began to accumulate.
The implications of the decision could reverberate far beyond Ottawa, said Richard Carlson, director of energy policy at the Pollution Probe Foundation.
“It’s been very uncommon for municipalities to participate as intervenors in the regulatory process,” Carlson said. But “their input can be important in the board’s decision. And for the utilities, there is the clear need to show that they’re taking community energy plans into consideration. If they go against those plans, they have to explain why. And they really need to undergo more community consultation on their future plans.”
Checkbox Consultation
Another key issue with the original St. Laurent application was Enbridge’s failure to engage in integrated resource planning (IRP), working with the city and other stakeholders to find the most effective, lowest-carbon ways of meeting local demand for energy services. The OEB mandated local IRPs in a July, 2021 decision, with an exception for gas system needs that had to be resolved within three years—by July, 2024. Enbridge tried and failed to convince the commissioners that the St. Laurent replacement was too urgent to wait.
The company also refused to consider downsizing the pipeline, citing a consultant’s conclusion that the city couldn’t reduce gas demand enough to justify a smaller pipe.
Since the May, 2022, OEB decision sent Enbridge back to engage with local officials, discussions have taken place, Carlson and regulatory consultant Michael Brophy told The Mix late last fall. “They’ve had meetings with City of Ottawa staff because the Board basically told them to,” Brophy said. “But nothing has happened. They show up, they don’t have plans, they’re not sharing any data, they’ve got money for energy efficiency and IRP, but they’re not laying out anything…. It’s all just activities without any outcome.”
The OEB’s 2021 instruction to take IRP seriously applied across the province, not just in Ottawa, and “Enbridge hasn’t done a good job on any of them,” Brophy added. “They always rule it out in favour of more capital [spending] that favours their shareholders.”
One of the major issues that arose around Enbridge’s original application was that gas distribution companies are paid based on the value of their physical infrastructure, not the product they deliver. So to increase the value of their business, or even to hold steady against the depreciation of their assets, their business model compels them to build new and expanded facilities—just as Enbridge is trying to do with its plan to rebuild the St. Laurent pipeline and expand it from 12 to 16 inches.
That doesn’t work so well for them with local governments, the International Energy Agency, and even the petro-states attending last month’s COP28 summit calling for a transition out of fossil fuels and a decline in natural gas demand and consumption.
A Political Intervention
All of those pressures came to a head at a November 21 meeting of Ottawa’s environment and climate change committee with a motion by Coun. Tim Tierney, one of four councillors whose wards are affected by the pipeline, to withdraw the city’s comments on Enbridge’s original OEB application. The motion expressed “grave concerns as Enbridge resubmits their application to the Ontario Energy Board, that previous City-provided information may result in the same decision.”
“What’s happened is based on some of the staff feedback, the Ontario Energy Board and the province rejected the application to fix this extremely… old pipeline,” Tierney told CBC at the time. “We all support trying to achieve certain targets for greenhouse gas emissions and trying to get to net zero by 2050, but unfortunately there’s some ramifications when we move too quickly.”
Tierney added that delaying the pipeline replacement could put residents at risk of a catastrophic power loss. “I’m very supportive of city staff, but in this case here I think we’ve done a disservice to the citizens of Ottawa,” he said. “Anybody on that committee has to park ideology for 10 seconds and meet with reality.”
In an interview with CBC’s Ottawa Morning show, Tierney asserted he would accept Enbridge’s warnings over the findings of OEB professional staff and claimed the St. Laurent pipeline could fail this winter, prompting host Robin Bresnahan to ask: “Are you serious?”
Tierney also said Enbridge would pay for the pipeline replacement. In reality, the cost would be borne by ratepayers over a span of decades.
CBC said Coun. Rawlson King, one of three other councillors name-checked in Tierney’s motion, rejected his colleague’s dichotomy between politics and energy safety, as well as the contention that the pipeline could catastrophically fail if it was properly maintained. “That’s rhetoric that’s being frankly utilized by many people in the energy lobby,” he said. “I think these are false arguments.”
In May, 2022, King told The Mix the OEB’s original decision pointed to an important shift in expectations.
“The message being sent by the OEB is that natural gas providers should not assume the situation is ‘business as usual’,” he said in an email. “Things are changing, and they need to see the City and Ottawa Hydro and others as partners in energy that need to collaborate in their capital works and operations planning. Approving Enbridge’s project would [have] signal[led] the antithesis of the City’s Energy Evolution goal of moving away from natural gas.”
City staff must be able to provide their expert advice “without the fear of political interference,” King added, “which is why we have these independent regulatory bodies in the first place.”
Lingering Concerns
By the time Tierney’s motion reached the full city council December 6, it had been watered down, directing staff simply to “continue collaborative activities with Enbridge Gas to find shared opportunities to achieve emissions reduction through energy transition planning, energy efficiency, and demand-side management programs, while ensuring energy security for the residents of Ottawa.”
But that didn’t allay concerns about political interference with routine city operations.
“What I find particularly disturbing is the attempt by the councillor to try to circumvent the OEB regulatory process,” Carlson said in late November. “The OEB has been regulating natural gas since 1960. They’ve been doing this for 63 years. So to claim the OEB doesn’t know what they’re doing is factually incorrect.”
Carlson acknowledged that he criticizes the OEB all the time, and would do so again if it rescinded its original decision on the St. Laurent pipeline without compelling new evidence. “But I am worried about politicians using the OEB, using the regulatory process, as a way to push their agendas in ways that may not be to the long-term benefit of consumers in Ontario.”
Angela Keller-Herzog, executive director of Community Associations for Environmental Sustainability (CAFES), a local environmental coalition, said Enbridge has every right to pay a lobbyist to represent its interests at Ottawa City Hall. “It’s then up to each councillor, obviously, whether they allow this lobby from a corporate interest to be the only voice that influences them or to what degree they put store in it.”
But she said it was “problematic” to hear Tierney tell CBC’s Bresnahan that he trusted Enbridge’s input above the Energy Board’s.
“The OEB is the place that we look to for expert adjudication of whether a pipeline does require replacement, remediation, renovation, and retrofit,” Keller-Herzog told The Mix. “In the last application, the OEB found that the pipeline should not be replaced and that a large capital project was not required. We know that Enbridge is renewing its application, but it hasn’t been filed, so we haven’t seen any new evidence. So I found it shocking that Coun. Tierney was trying to persuade his colleagues on council to take a position on this issue without seeing the new evidence or having technical staff look at that evidence to see whether it’s persuasive, before speaking on the radio about imminent pipeline failure and people freezing to death this winter by the thousands.”
Tierney did not respond to an interview request late last fall to discuss the motion.
