Nova Scotia natural gas a policy failure9/4/2012
Remember natural gas? It was going to take us to the Promised Land. For 30 years after its discovery near Sable Island, a half-dozen premiers drooled at the thought of cutting the ribbon when the pipeline made landfall. A law for the "orderly development" of a gas system was passed in 1997 and grand speeches were made.
By the time it came in 2000, it was so tarnished by our muddled politics that then-premier John Hamm never even showed up for the ribbon-cutting.
It got worse. Heritage Gas, a subsidiary of the Alberta company AltaGas, has been allowed to cherry-pick the profitable projects -- Dal, Nova Scotia Power, hospitals and other big institutions -- while starving out the good stuff from a public policy point of view: the HRM domestic market. As a regulated monopoly, HG has an even sweeter deal than Nova Scotia Power, which we complain about incessantly -- 11 per cent return (13 per cent for most of the last 10 years) and a usurious 7.25 per cent allowed on borrowing costs, when rates are almost nothing. All of this on the stretched premise that HG needs a "risk premium." Under these terms, hooking up HRM is simply not profitable enough.
The upshot is that we're the most backward jurisdiction in North America for delivering to the domestic market.
Sez who? Let me introduce a couple of Dalhousie University experts who have trouble keeping their professorial cool these days. Their starting question is: Why can't I and others get our houses hooked up with natural gas 100 metres from the Dal main line? Their blood pressure rose when the province lately announced a program of trucking compressed natural gas far and wide. If you can truck it all over, they ask, why not 100 metres away?
One is Peter Allen, professor of mechanical engineering, specializing in energy supply, utilization, conversion and conservation, plus solar energy. He has also worked for several big energy companies. "I travel the world and investigate the energy situation wherever I travel," he says. "Nova Scotia is the only jurisdiction on the planet where we have gas transmission lines and negligible delivery of gas within a stone's throw of the lines."
HG has a paltry 3,700 homes hooked up in HRM, out of a potential of over 100,000. HG's website is cheery about inviting people to hook up. But the zone of access has only 10,000 homes and even within that, you can't just hook up. You have to convince enough of your neighbours to do the same on the hope that you can meet HG's profitability criteria -- not company-wide, but as applies to your specific neigbourhood.
Michael Poulton is a retired prof of urban economics. He's had a response from Energy Minister Charlie Parker, who points out that most people with access to natural gas "choose not to convert" and that the investment to widen the system won't generate the revenue to fund it.
How in blazes, then, does New England manage to be hooking up like crazy, with our gas to boot? (One in 31 homes there hooked up since Sable gas came ashore; here, one in 250.) How is New Brunswick way ahead, again with our gas? How did penetration in available markets reach 70 per cent in the four Western provinces and Ontario?
Maybe it just hasn't been explained. According to the profs, a home that costs $2,100 to heat would cost $800 with gas at present prices. With North America awash in the stuff -- including Deep Panuke ready to come on -- and oil prices rising, this is a deal. And gas can be used to heat domestic hot water, cook and dry clothes at a fraction of the cost of electricity.
What's absent in this policy void, says Allen, is awareness of the large benefits, both private and public: no more oil tank replacements, for example; fewer costly oil spills; huge conservation of electricity, oil and coal; and very significantly, a large reduction of CO2 (gas generates 60 per cent of the CO2 that oil does).
While others prepared for our gas, he adds, we prepared nothing. We've built hundreds of kilometres of streets and roads without a plan when laying down pipe would have been cheap; replaced possibly tens of thousands of boilers, furnaces, etc., that could have been converted.
The Utility and Review Board decides on all this. It had this dumped in its lap and was not prepared, says Poulton, as we continue to use the regulator as a political dumping ground. It did the usual thing, he says -- got some consultants who, naturally, endorsed the status quo.
What we have is a huge policy failure going back two decades -- one that's as much the fault of HRM as the province. The NDP just picked it up and did nothing with it. Driving this forward, as everybody else has done, would be huge.
Ralph Surette is a veteran journalist living in Yarmouth County. This article was first published in The Chronicle Herald.