TransCanada's Energy East project is unfair to millions of natural gas consumers

Energy costs to increase for homes and businesses  

CHATHAM, ON, Oct. 31, 2014 /CNW/ - Union Gas today expressed their concern that TransCanada's Energy East project, filed yesterday with the National Energy Board, will have significant and negative impacts on natural gas consumers in Ontario and Québec.

The TransCanada Energy East project is a proposal to develop a pipeline to ship oil from Alberta to New Brunswick by converting 3,000-kilometres of its existing natural gas Mainline between Alberta and Ottawa to oil, and building 1,600 kilometres of new oil pipeline from Ottawa to New Brunswick.

Union Gas supports the concept of the Energy East project. The conversion of under-used natural gas pipeline capacity to oil makes sense between Alberta and North Bay, Ontario. However, TransCanada's proposal to convert a critical and fully-used natural gas pipeline between North Bay and Ottawa to oil and replace it with a smaller and more expensive new gas pipeline is unacceptable. The proposed smaller replacement natural gas pipeline would reduce the existing pipeline capacity in the east by approximately 20 per cent and is the equivalent of eliminating natural gas capacity for half a million Ontario and Quebec homes and businesses.

TransCanada has consistently underestimated market demand and as a result have understated the size and cost of the new replacement gas line. Further, the proposal seeks to have eastern gas consumers bear the capital cost risk related to the construction of the new replacement line.

There is a simple solution: TransCanada should build a new oil line from North Bay east and leave the existing and fully-used gas pipeline in place to serve existing natural gas consumers as it has for many years. 

"We have expressed concerns about the structure of the Energy East project for well over a year and we continue to have serious concerns about the negative impacts to our customers of a new higher-cost line with lower capacity, and the resulting impact of increased natural gas supply costs," said Steve Baker, president of Union Gas. "While we support the concept of the Energy East project, we cannot support removing an existing, fully-used natural gas pipeline and replacing it with a new, smaller and more expensive pipeline."

"We believe there is simply no reason or logic for 3.6 million natural gas customers – which include schools, hospitals, homes and industries – to be treated unfairly," added Baker.  "We support the development of new infrastructure and there is a simple solution to ensure our support for the project: TransCanada should leave the existing and fully-used gas pipeline in place, and build and pay for a new oil pipeline from North Bay to Ottawa. That is a proposal we would immediately and unequivocally support and this would ensure western Canadian oil's safe and reliable access to global markets."

After more than a year of discussions with TransCanada to achieve a fair solution that does not negatively impact the existing gas markets in Ontario and Quebec, we are disappointed to see TransCanada file their application without resolving these concerns. 

About Union Gas
Union Gas Limited, a Spectra Energy (NYSE: SE) company, is a major Canadian natural gas storage, transmission and distribution company based in Ontario with more than 100 years of experience and service to customers, assets of over $6.4 billion and approximately 2,200 employees. The distribution business serves about 1.4 million residential, commercial and industrial customers in more than 400 communities across Ontario. Union Gas is one of Canada's Top 100 Employers for 2014. For more information, visit uniongas.com or find us on Twitter: twitter.com/uniongas, Facebook: facebook.com/uniongas and YouTube: youtube.com/user/uniongas.

SOURCE: Union Gas Limited

Andrea Stass, Manager, External Communications and Media Relations, Ph: 519-436-5490 or 1-800-571-8446 ext. 5005490, Cell: 519-365-1010, [email protected]