One Ontario town’s battle for natural gas

High electricity costs have led Latchford’s leadership to lobby for natural-gas infrastructure for years. But is it the right choice?
By Josh Sherman - Published on Mar 16, 2021
George Lefebvre is the mayor of Latchford, a town in northeastern Ontario. (Courtesy of George Lefebvre)

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George Lefebvre, 80, has a regular if unconventional winter workout routine: lugging logs from the shed to his basement, where his wood-burning furnace is. “It helps keep me tuned up,” says the mayor of Latchford, a town of about 200 people in northeastern Ontario.

Physical benefits aside, it’s a burden he’d rather not deal with at his age. “It’s a very onerous process,” he says, explaining that he orders truckloads of wood and has his son chop up lumber chords when they arrive. Yet it’s a familiar hassle for Latchford residents. The TransCanada pipeline passes through the town, but Latchford does not have access to natural gas, although it’s lobbied both Liberal and Progressive Conservative governments. So residents who can’t afford — or don’t want to pay for — surging electricity prices for heating are left to find alternatives: wood or propane, mainly.

That could soon change. The town is one of more than 200 applicants for the second phase of the provincial government’s Natural Gas Expansion Program, which, after successful bids are announced later this spring, will see upwards of 20 municipalities receive new connections to natural-gas infrastructure. While advocates for northern and remote communities say the network expansion is long overdue, some question whether it's the most efficient energy policy for the region.

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The roots of Latchford’s efforts to obtain natural gas can be traced back to the turn of the century, when the Mike Harris government deregulated the province’s energy sector. Before 2000, the town had purchased electricity in bulk from what was then Ontario Hydro through its own utility, the Latchford Hydro Electric Commission, which owned the local electrical grid.

After deregulation broke Ontario Hydro up into five separate entities, the town found itself facing higher pricing from the newly formed Hydro One. Unable to come to an agreement with surrounding municipalities to establish a co-operative, Lefebvre says, Latchford had no choice but to sell its public utility to Hydro One. “What they sold was the actual wires on the street and, more importantly … what they sold was their control over the distribution rates,” says Edgardo Sepulveda, a consulting economist who has researched energy issues. “Deregulation, and specific decisions about every single fuel, whether it was nuclear or wind or solar or hydro — this has been a sector, a file, that has been mishandled in the last 15 years, which has … resulted in relatively expensive electricity.”

Between 2005 and 2016, hydro-distribution rates in Latchford increased 480 per cent, according to a report from Niagara-on-the-Lake Hydro, a municipally owned utility that, unlike many others, was not sold to Hydro One post-deregulation. “We went from having among the cheapest rates and among the most economical rates in Ontario to paying what everybody else pays to Hydro One — and it changed the picture dramatically,” says Lefebvre, who adds that the town did not anticipate these rising costs.

man in glasses holding a small dog
George Lefebvre heats his home with a wood-burning furnace.
​​​​​​​(Courtesy of George Lefebvre)

Electrical-heating costs almost forced Latchford’s local legion branch, located in an old schoolhouse, to shutter last winter. “It got to the point where we were going to have to close the legion because we couldn’t afford to heat it,” says Lefebvre. Only the donation of a new propane furnace saved the community hub.

According to Danny Whalen, president of the Federation of Northern Ontario Municipalities, Latchford is a “perfect example” of a town that should have natural-gas access, particularly given its proximity to an existing pipeline.

And the benefits would extend beyond residents’ pocketbooks, he adds: “If a municipality the size of Latchford could attract even one small business — maybe two — because of the fact that they have natural-gas availability, that would have a significant impact on their financial bottom line and, in the end, municipal survival.”

The FNOM doesn’t want the second phase of the Natural Gas Expansion Program to be the last. “It’s overdue, and I would like to see some sort of a program when this one ends … that encourages this on a continuous basis,” says Whalen. MPP Bill Walker, the associate minister of energy and the representative for Bruce–Grey–Owen Sound, says that the program has met with an “overwhelming response” and that “there’s still a lot of demand out there — is that something that we can look at for phase three — and certainly from my perspective that is something that we’ll as a cabinet and as a government look at.”

However, Sepulveda says the expansion plan — through which the Ontario Energy Board is allowing companies, such as Enbridge, to charge an extra dollar per customer, per month, to finance construction of approved natural-gas projects — duplicates infrastructure: “My main criticism is that, if the objective of doing this is to provide an alternative source of heating, it’s not a really good use, from an economics perspective, of scarce resources when we already have an existing infrastructure there — that is to say electricity, which can provide the same set of services.”

He notes, though, that increasing electricity costs are creating more demand for natural gas at a time when there is a global trend to move away from it as a heating source: “It actually makes natural gas on an ongoing basis cheaper.”

And further reliance on natural gas, he suggests, has environmental consequences, as “there are huge implications with respect to greenhouse gases." In his view, it would be better for the government to encourage the use of newer technologies, such as electric heat pumps, which he says are popular in northern Europe and describes as working like “reverse air conditioners.” This could be done, he says, through more rebates, as well as education. (He also notes that those wishing to convert their homes to natural gas will have to shell out for a new furnace.)

But Walker suggests that natural gas is a reliable, tried-and-tested solution. “This is something that we know is there; it works in other communities,” he says. In the short term, he says, the program will support construction jobs and save consumers who switch to natural gas between $250 and $1,500 a year. “We’ve certainly found most communities that have it, love it — and most people [who don’t] are saying, ‘When can I get my natural gas?’”

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