Many of the city’s current financial woes could be eased by charging Enbridge gas the same fees some other Canadian municipalities do, believes at least one city councillor.
With a 20-year agreement between Enbridge and the City of Guelph allowing the use of municipal easements set to expire next spring, Leanne Caron believes it is time to shift the financial responsibility away from Guelph taxpayers and onto Enbridge.
“That will go a long way in offsetting all the pressures that we're feeling in affordability and service cuts that are facing us in this budget year,” she said, referring to the Enbridge agreement as a public subsidy of a for-profit business.
“It's our fiduciary responsibility in our job description (as members of city council) to advocate for and advance policy that's in the best interests of our residents. And I think signing a 20-year agreement where all the risk and all the cost is borne by the municipality, we'd be abdicating our responsibility to the public if we did not challenge this.”
City council is set to consider what is essentially an extension of the current contract, modelled after an Ontario Energy Board (OEB) template, during its committee of the whole meeting on Tuesday.
Caron intends to put forward a motion calling for changes that could eventually see the municipality receive an additional $8 million annually, based on what Enbridge pays in other jurisdictions.
Terry Gayman, the city’s general manager of engineering and transportation services, confirmed the proposed contract includes no new fees from the municipality, though it does include some other adjustments.
“The city’s concerns mainly relate to improving efficiency in process, which improves our ability to manage standard projects’ risks,” he explained via email. “The model franchise agreement is intended to be a standard set of terms applicable to all municipalities and gas distributors, however there are local-level relationships and practices.
“We are able to manage the local-level risks through close, collaborative relationships with utilities.”
The draft 2025 city budget update, as it currently stands, comes with a property tax increase of 2.59 per cent for the average property owner in the city (excluding the cost of local boards and committees), as well as $3.58 million in service reductions and $1.1 billion in capital project deferrals through the 10-year forecast and beyond.
Guelphites won’t know how much their property taxes will rise in 2025 until late January, when the boards and committees present their budgets to council. The city-controlled portion is expected to be finalized before the end of this year.
Before any additional dollars could flow from Enbridge to the City of Guelph, the provincial government would need to amend the Municipal Act in order to allow it. Requesting such a change is part of Caron’s motion.
“I'm not hopeful that this provincial government will amend the act,” she said, noting the government overturned an OEB decision last year that, if it was allowed to stand, would have prevented the cost of new home connections to Enbridge’s system from being amortized over 40 years, with the up-front costs covered by existing customers.
“Momentum is gathering around the province for this,” Caron continued, “so perhaps a future government will be more receptive. The important thing for me is that we don't enter into a 20-year agreement that we can't amend when it happens.”
If the City of Guelph received fees in line with what Enbridge pays in several Canadian municipalities outside Ontario, city coffers would see about $8 million more annually, Caron said.
Last year, Enbridge paid the city about $1 million for property taxes as well as municipal permit and inspection fees related to the installation of new pipes and maintenance of existing ones, company vice-president and chief customer officer Heidi Bredenholler-Prasad stated in a Letter to the Editor sent to GuelphToday earlier this year.
The OEB has approval authority over municipal contracts with Enbridge.
“Where the municipality and gas distributor have not reached an agreement, section 10 of the (Municipal Franchises Act) allows either the municipality or the gas distributor to apply to the OEB for an order for renewal of the franchise agreement,” explains a city staff report heading to council.
“If the city and Enbridge do not enter into a new franchise agreement prior to expiry of the current agreement, the terms of the current agreement will continue in effect.”
For Caron, it’s not all about finances.
“Fossil gas is a dying energy source. It's on its death spiral,” she said, pointing to the OEB decision which references government efforts at all levels to reduce reliance on fossil fuels such as gas in an effort to mitigate climate change.
“As more and more homes disconnect from fossil gas, the infrastructure is abandoned in our right of way and we're responsible for it. And that's not right,” said Caron.
Her motion also calls for Enbridge to pay for the full cost of any pipeline relocations needed because of conflicts with municipal infrastructure.
It also directs city staff to reach an agreement with Enbridge that would keep any future charges from the municipality from being passed on to Guelph customers.
Even Ferrari, executive director of eMERGE Sustainable Guelph, stands behind Caron’s motion.
“At the end of the day, it's not only a Guelph issue. There is another 339 municipalities across the province (in contracts with Enbridge),” he said. “It's about $850 million across the province.
“Once one municipality is successful, then with every new renegotiation or renewal of the franchise agreement, this would continue to happen.”
