HomeMy WebLinkAboutINS-19-001 - Natural Gas Storage & Transportation Contract with Enbridge Gas Inc.REPORT TO:Committee of the Whole
DATE OF MEETING:January 28, 2019
SUBMITTED BY:Greg St. Louis, Director of Utilities
519-741-2600 ext. 4538
PREPARED BY:Greg St. Louis, Director of Utilities
WARD (S) INVOLVED:All
DATE OF REPORT:January 21, 2019
REPORT NO.:INS-19-001
SUBJECT:Natural Gas Storage & Transportation Contract with Enbridge Gas Inc.
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RECOMMENDATION:
Thatthe Mayor and Clerk be authorized to execute an agreement with Enbridge Gas Inc.
pertaining to natural gas storage and transportation ("T3 Contract") effective April 1,
2019, for a three year term ending on March 31, 2022; and the said agreement is to be
satisfactory to the City Solicitor, as outlined in INS Report INS-19-001.
BACKGROUND:
On October 15, 2018, Enbridge Gas Distribution Inc. and Union Gas Limited amalgamated into
one single utility and effective January 1, 2019 the name of the newly amalgamated utility is
Kitchener Utilities manages all of th
a single T3 contract with Enbridge. The T3 contract with Enbridge provides Kitchener Utilities
with firm access to Enbridge underground gas storage facilities near Sarnia (Dawn) Ontario and
its gastransmission facilities between Dawn and Milton (Trafalgar) Ontario.
Most of the gas used annually by Kitchener Utilities customers is during the winter heating
season. The storage facilities under the T3 contract with Enbridge allows Kitchener Utilities to
inject excess gas supplies into storage during the summer when demand and cost is low and to
withdraw gas from storage during the winter to supplement flowing gas supplies when demand
and cost is high. The storage space and related firm injection and withdrawal rights are the most
customers.
REPORT:
The T3 contract with Enbridge is up for renewal on April 1, 2019 and there are no proposed
changes from the previous T3 contract executed in March of 2017. The T3 Contract is essential
to the gas operations of Kitchener Utilities. The contract provides operating parameters for both
storage and distribution but does not specify rates. The parameters include firm daily contract
quantity, maximum injection/withdrawal from storage, minimum delivery pressure, etc.
***This information is available in accessible formats upon request. ***
Please call 519-741-2345 or TTY 1-866-969-9994for assistance.
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The rates charged by Enbridge under the T3 contract are reviewed and approved by the Ontario
Energy Board (OEB). The OEB will review the rates and allow the public to provide input and
comment on the proposed rates prior to being approved. Accordingly, Kitchener Utilities staff
remains vigilant and participates actively in Enbridge rate hearings before the OEB to ensure its
interests and those of its customers are fairly considered.
There are no alternatives to Enbridge for comparably economic physical connection to gas
gas service to its utility customers.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
through the delivery of core service.
FINANCIAL IMPLICATIONS:
As indicated, the T3 contract provides operating parameters for the storage and distribution of
natural gas however, the rates are reviewed and approved by the OEB. The total estimated cost
associated with this three-year contract is approximately $5.9 million per year based on the
current rate submission to the OEB and an estimated quantity of natural gas. This cost can
change as rates are approved on a quarterly basis with the OEB and vary depending on several
factors including, quantity of gas used and stored and capital improvements to the Enbridge
distribution system.
COMMUNITY ENGAGEMENT:
INFORM
council / committee meeting.
ACKNOWLEDGED BY: Denise McGoldrick, General Manager, Infrastructure Services
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