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Commercial gas rate rises by 138 per cent Norman Wells business owners say they were blindsided by increased cost after town council's plan for cheaper alternative energy plan fails
Chris Puglia
Northern News Services
Published Monday, September 30, 2013
LLI GOLINE/NORMAN WELLS
Tempers flared during a special meeting of council in Norman Wells, called to vote on a proposed 138-per-cent increase to natural gas rates for commercial users.
Mayor Gregor Harold McGregor, listens to members of the public during a meeting at the community hall in Norman Wells. About 30 people attended the meeting to discuss the impending shut off of natural gas services in the community. - Chris Puglia/NNSL photo |
On Sept. 23, 18 business people crowded the town's council chambers to oppose the increase to $47.63 per thousand cubic feet (MCF) from $20/MCF for gas which, despite impassioned and angry pleas from many in attendance, passed unanimously. Imperial Oil would not release the gigajoule rate.
Norman Wells is facing a gas crisis because Imperial stated in 2009 that its oil field is running dry. Natural gas for the community - used for electricity, to heat homes and run appliances - is produced as a byproduct of oil production at the Imperial's oil field and sold to the town. As a result of the expected shutdown of oil production, Imperial set a timeline to ween the community off natural gas.
Under that directive, commercial customers had until this year to convert their systems to oil or an alternative energy source. Residential customers have until next year to do the same. However, earlier this year, Imperial Oil told the town it would be able to provide additional units of natural gas to help commercial customers who have yet to convert off the gas system. The new pricing is being charged at the equivalent price of home diesel fuel, according to the Pius Rolheiser, spokesperson with Imperial Oil.
Rolheiser said the cost was decided upon to create parity with commercial users who have already switched to diesel and to provide an incentive for more commercial users to convert away from the natural gas system.
Much of the anger during the meeting came from business owners who said they felt blindsided by the increased cost. Although the community has known for four years it will need to switch away from natural gas, some said the town had asked them to hold off converting their systems pending a report from Dalkia, a European company specializing in energy solutions. Earlier this year, Mayor Gregor Harold McGregor was hopeful Dalkia would be able to find an energy solution cheaper than diesel.
Dalkia's report came a week later than expected, at the end of August, and the company was unable to provide a viable solution because a low customer base resulted in a proposed rate of $65 per gigajoule.
"You told all the commercial users to not convert by June 13, 2013," said Lorraine Tremblay from Global Technical Systems Ltd. "You told them to stay on gas so they could be part of the Dalkia solution,"
Norman Wells council was informed of the increase in gas rates on Aug. 8, according to McGregor, but didn't sign the agreement until Sept. 19 because the mayor said council attempted, with no success, to negotiate better terms.
Tremblay and other business owners were not comforted by the information.
"Why didn't councillors tell people, that's what we elect you for ... You're here to protect us and you didn't tell anyone," said Tremblay, who added knowing earlier would have allowed businesses to order equipment before the barge deadline, which has now passed.
Anne Marie Tout, director of the Norman Wells Chamber of Commerce, complained about the lack of notice given for the special meeting held to approve third reading of the gas bylaw. She also said the fact the first and second reading were held on Sept. 20, the Friday before the Monday special meeting, demonstrated council was trying to push the bylaw through.
McGregor and Coun. Nathan Watson both took exception to the accusation of secrecy.
"Nobody likes this," said Watson. "How many years has the bell been ringing quietly in the distance? Well the bell is ringing quite loud now."
The fear now is the bell ringing in the distance will come from a low pressure alarm the town has installed on its part of the natural gas line. The alarm will warn of a pressure drop similar to what occurred last winter that nearly forced a community-wide evacuation.
"There is barely enough (gas) to heat the homes ... It could freeze up everyone on gas this winter," said Watson, who also responded to questions regarding the increase being applied to commercial customers. Watson said commercial customers have the recourse to recuperate the additional cost which residential customers cannot do.
However, Tremblay argued some commercial customers who have switched to diesel have used systems which have resulted in a less than two-per-cent increase in cost.
"With high-efficiency equipment you get better than what you are providing with the natural gas that you are more than doubling," she said. "It could have been better for a lot of people if we had gone to oil."
Frustration was also expressed toward Imperial Oil who many believed should have kept the price the same. Some suggested the company provide the gas for free as good corporate citizenship.
"$1.9 million, that's a drop in the bucket for Imperial Oil," said the Heritage Hotel's Jim Ulch, responding to the amount the town paid for natural gas last year. "Raising this rate is no less than extortion."
Despite charging a price equivalent to diesel for natural gas, Rolheiser said Imperial is seeing no net benefit in its deal with the town. Jennifer Watson, with Imperial in Norman Wells, told a second public meeting in the community on Sept. 25, that extra revenue collected will be far less than what Imperial Oil is supplying to the town for its rebate package.
McGregor said Imperial Oil has committed to providing "substantial" money to help pay for customers to convert to diesel. McGregor said he couldn't disclose the exact amount of the deal but said it could amount to between $5,000 and $10,000 per account. How the money will be distributed was also not clear.
"It may be keep-your-receipts type of help instead of, 'here's the money,'" said Watson.
However, McGregor said it would be possible for the town to work with community members to provide the funds to residents who are not able to afford to pay for the conversion upfront.
Watson said council has sought financial help from both the territorial and federal governments. Although some help is expected from the territorial level, pleas to Ottawa have been ignored.
"There are less than 100 private homes on natural gas. Do you all really believe that some politician in some high level of government is going to sign off on giving money to businesses? If that were true, and even feasible, where is it? Certainly they've been asked," said Watson.
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