frequently asked questions
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Which communities and rural areas will have access to natural gas?
The Municipalities of Norfolk Treherne, Glenboro South Cypress, Lorne, Louise, and RM’s of Thompson and Victoria are represented on the Growth and Prosperity Stakeholders Group. The communities of Treherne, Rathwell, Holland, Cypress River, Glenboro, Notre Dame, Somerset, Swan Lake, Mariapolis, St. Leon, Pilot Mound, Crystal City, and Miami are currently included in the feasibility study and natural gas would be available to any land parcel within these communities (see “Maps” for proposed routing. Rural property owners who submitted an expression of interest and bid at a rate of $0.1/btu prior to the January 15, 2017 intake deadline were also included in the feasibility study. Rural homeowners who are directly located on route of a distribution line will also be offered access.
I have heard that some municipalities have backed out of the project. Why is that?
The original scope included servicing 10 municipalities, at the current time there are 6 that are still pursuing the opportunity. Municipal councils have declined participation in the project due to other financial obligations.
Who can connect to natural gas?
The proposed route supplies natural gas to any business, public facility, or resident within the communities, as well as Hutterite colonies and rural properties who have put in a successful bid at the current connection fee schedule rates. (see website www.southcentralnaturalgas.com for details).
What is the capacity of the pipeline?
The system was designed to be optimized for the customers who expressed interest as well as estimations for 70% (1,308) existing town residential customer connections. The in-town commercial was designed for commercial customers who signed up. However, because residential build up in the feasibility was set at 45% after 10 years, it left additional capacity for existing in town commercial which was allocated as a 25% increase in in-town commercial customers by year 10. No "future growth" factors (i.e. potential "new" customers) were included. This is consistent with the requirement of MB PUB that current customers cannot pay for new customers.However, due to standardized pipe design sizes, grain dryer seasonality, and diversity of consumption patterns that will show up once the system is in use there will be some extra capacity. It’s hard to put a number on it until a few years of operation data is available, and it will vary by location. Future capacity issues will be dealt with as it arises and addressed in accordance with Public Utilities Board direction.
What is the Customer Count based off the expression of interest forms collected and estimated residential sign ups?
Residential (Est 45% Signup) = 844 customers
Commercial (Signups + 25% Additional Potential) = 196 customers
Rural = 67 customers
Hutterrite Colonies = 11
What is the timeline for project completion?
Funding needs to be confirmed before moving forward. Once confirmed an Environmental Assessment and review from the Public Utilities Board will be conducted. They will take at minimum a year to complete and construction will take 2 years.
How are the Project costs or “contribution in aid of construction” calculated?
The cost of the project includes materials and labour, as well as technical expertise of Manitoba Hydro including engineering, environmental assessment, marketing, and logistics.
To determine the required contribution in aid of construction the Public Utility board requires that all expansion projects must pass a feasibility test. The revenue generated by new customers is used in this feasibility test and determines how much Manitoba Hydro can invest in the expansion, the shortfall must be covered through additional sources. In the case of this project, the contribution in aid of construction is $49.5 million, revenue over a 30-year period will cover the cost of maintaining the pipeline as well as about $2.7 million revenue credit issued by Manitoba Hydro.
How is the Project being funded?
At this time the funding proposal is asking for 40% of project costs from the Federal Government ($19.8 million), 33.3% from the Provincial government ($16.5 million) and the remaining 26.7% coming from local contributions including the MB Hydro revenue credit (2.7 million), customer connection fees ($5.5 million), and municipal contributions ($5 million).
What does my “connection fee” pay for?
The connection fee would pay for a distribution line to your property line, with the capacity allocation requested. It is the responsibility of the property owner to extend the line into the property where it will be used and convert equipment. Gas lines and equipment require a permit and must be installed by a certified technician at the cost of the property owner, inspections are completed by MB Hydro.
In addition to a connection fee, will my taxes increase for the municipal debenture?
The GPSG has proposed a funding breakdown that takes into account a combination of municipal economic development and user pay. The current proposed funding breakdown has municipalities contributing 1/10th of project costs as they see a net benefit to the region by having access to natural gas. To pay for this, most municipalities will have to take out a debenture and recover the cost through increased taxes. Municipalities are proposing a 20-year plan involving 75% of the debenture coming from a special levy applicable only to all land parcels if they are directly within the communities proposed to receive natural gas, this will equate to approximately $90/year. The remaining 25% of the debenture costs would come from an at large mill rate increase, which works out to $2.40 for every $100,000 of farm land and $4.15 for every $100,000 residential property assessment. These are dependent on total Project costs and funding breakdown, therefore may be subject to decrease or increase. Municipalities may also propose an alternative. Municipalities will also receive $114,000 annually in new tax revenue from the pipeline this may be put towards their debenture and would eliminate the mill rate increases (with a surplus of $7,000), the urban parcel levy would have to be maintained because rate payers would be given the option to pay upfront. In addition, savings from converting municipally owner/operated buildings have been estimated at $120,000 annually. These savings will be applied to lower municipal budgets or reallocated to provide other services or upgrade services.
Will there be any ongoing maintenance costs for the pipeline?
The contribution in aid of construction would be a one-time investment that would be maintained by MB Hydro in the future without ongoing costs.
Have the municipalities committed their contribution towards the Project?
The municipalities will be hosting public hearings where you can voice your support or concern. Dates or times have not yet been set, visit the website events calendar or contact your local municipality.
What is the status on applying for government grant funding?
The GPSG will apply for funding through the Investing in Canada Plan. The expression of interest intake period is August 10, 2018, with more information to come. The GPSG has conducted an Economic Impact Analysis that will be useful in quantifying the economic benefits of this Project for the area and for Manitoba and Canada. The GPSG keeps local MLA’s and MP’s updated on progress. Your support through letters to us or to elected officials is encouraged.
What if the GPSG cannot secure Federal and Provincial funding?
If funding is not secured the project scope will be revisited.
The estimated customer connection fees amount does not add up to the number of customers in the Project, why and when will this be updated?
The contribution from customer connection fees is estimated based off the information received during the call for expression of interest. The amount is subject to change, especially with variability in the amount collected from rural and colony customers. The GPSG took a conservative approach by directing MB Hydro to include customers who expressed interest in the Project scope, but if they did not submit a postdated cheque with their application, the customer fee was not considered “confirmed”.
MB Hydro has indicated they are not willing to allocate additional resources to contact potential customers and re-ask for a post-dated cheque or do additional re-scoping until other sources of funding (Federal, Provincial, and Municipal) are in place. At that point MB Hydro will be responsible for contacting interested customers and collect the appropriate customer connection fee.
Why is the contribution from municipalities not split based solely on usage?
The GPSG considered a number of factors to calculate municipalities contribution including what they will receive in new tax revenue from the pipeline, the number of urban parcels in the communities that will receive gas and the at large assessment value. It was recommended to choose factors that could be referenced (eg 2017 number of parcels and assessment value), estimated customer usage can be variable.
Can municipalities decide to borrow or apply tax rate increases as they see fit?
Yes, the feedback GPSG got from the public information session was that they wanted to pay a similar rate if they owned land in any one of the municipalities. The GPSG has put forth their recommendation for the $90 levy on urban parcels within communities that will receive access to natural gas and 0.092 at large mill rate increase with consideration from municipal members and has drafted by-laws for each of the municipalities.
Potential Customer Inquiries
I submitted an Expression of Interest form with a post-dated cheque, will there be costs in addition to my Expression of Interest Bid?
Prior to January 15, 2017 potential customers in the Project area were invited to submit an Expression of Interest Bid. This provided customers in rural areas a realistic cost estimate of natural gas service while allowing the GPSG to identify interest and optimize proposed route selection. All rural properties who bid at the $0.01/btu rate were included in the feasibility study. Any rural properties directly located on a distribution line will also have the option to access. If a potential customer is located more than two miles from the final pipeline routing, their final contribution could be significantly different from the $0.01/btu amount because they may have to pay incremental costs for additional pipe length. The customer fee schedule is subject to approval by the Manitoba Public Utilities Board.
Why did I have to submit a post-dated cheque with my Expression of Interest form?
Customer commitment was needed to determine if this is a viable project. A project of this magnitude requires strong local support up front if it is to proceed. The amount of interested customers exceeded our expectations and was crucial for updating the project feasibility. Unfortunately, Provincial and Federal funding was not being offered at the time the cheques were stale dated. Therefore, the cheques have become invalid and will not be cashed.
When will I have to pay my customer connection fee?
When Federal and Provincial funding is confirmed Manitoba Hydro will be sending customer service representatives to collect customer fees.
Can I still submit an Expression of Interest Form?
The GPSG revised the feasibility study in October 2017, based on that information they are making an application to the Federal and Provincial government for funding. At this time the GPSG is not accepting additional requests, however, when funding is secured new customers may be added on a first come-first serve bases as capacity is available.
What if I expand and need more btu’s in the future?
If you know that you will need more capacity in the near term it assists in our planning and to reserve it for you in the future. When Federal and Provincial funding is confirmed, customer expression of interest forms will be reviewed and confirmed.
Why did the price per btu drop from $0.02 to $0.01 per btu?
The customer fee schedule for rural customers price per btu was reduced by the Growth & Prosperity group to address concerns rural agricultural customers had regarding the economic payback for their operations.
I am not sure if natural gas is for me. Can I wait and sign up later once the project goes forward? Will it be the same cost to me as it is now?
The more customers who commit to the project will build a stronger business case for building the pipeline. The current “customer fee schedule” is proposed to be in place for 10 years, afterwards it will be based on stand-alone customer costs. The customer fee schedule is subject to approval by the Manitoba Public Utilities Board.
When will we know if the project goes ahead?
The GPSG will keep the public informed of any major milestones, check the website and look for newsletter updates.
Cost Savings and Financing Options
How much will I be saving in heating costs?
Right now, natural gas is approximately half the cost of Manitoba Hydro electricity and 1/3 of the costs of propane. Natural gas prices have been stable for 10 years and are projected to continue that way. Manitoba Hydro and other natural gas marketers can lock in a price for up to a 5-year term. Manitoba Hydro Electricity rates are expected to increase. There is currently a proposal being reviewed by the Public Utilities Board that would see rates increase 75% over the next 10 years.
What is the expected future pricing of natural gas?
The inputs in the price of natural gas are approximately 1/3 transmission (get gas from Calgary to Manitoba), 1/3 distribution (get gas to customers in Manitoba), 1/3 actual market rate of gas. Increases in market prices for natural gas will only affect the 1/3 cost. For the foreseeable future, natural gas markets are to remain stable however, will increase when the Province of Manitoba implements a $25/tonne carbon tax.
Below is a link to a Graph from the Manitoba Hydro website that identifies past natural gas prices and estimates a 5 year projection. https://www.hydro.mb.ca/accounts_and_services/rates/pdf/centra_pricing_chart.pdf
What is my payback for a natural gas furnace versus electric?
Natural gas furnaces do cost more than electric furnaces, $3,500-$5,500 versus $2,000-$3,000. However, even with the carbon tax you are saving over $600 per year with natural gas, therefore over the lifetime of a furnace (25 years) this investment is paid back with over $12,000 in home heating costs.
Do I need ducting?
Ducting is required for a natural gas furnace, contact your local heating dealer if it needs to be installed. Natural gas can also be used for boilers, hot water tanks, clothes dryers, stoves and BBQ’s and fireplaces.
How do I find out what my specific cost savings would be?
Contact Manitoba Hydro Customer Service or use their online “home heating costs calculator” at https://www.hydro.mb.ca/your_home/heating_and_cooling/calculator/index.shtml
What is the approximate cost for equipment and piping downstream of the meter?
Please contact your local heating dealer for all product specific questions downstream of the natural gas meter.
Are there any differences in insurance costs between gas and electric heating?
Insurance costs are determined by your insurance agency, we are unaware of insurance companies charging premiums related to having a natural gas furnace vs electric.
What sales taxes do I have to pay for using natural gas?
5% GST and 8% Provincial Sales Tax (For SGS). Primary residence and farm is 1.4% PST.
Does Manitoba Hydro offer incentives to convert equipment to natural gas?
Unfortunately, we don’t know which programs the new Crown Corporation, Efficiency Manitoba, will be delivering when this Project becomes energized, nor do we know what the qualification criteria will be for those programs.
Information on the current Manitoba Power Smart program offers that may be applicable can be found at https://www.hydro.mb.ca/powersmart/index.shtml, including:
-Pay As You Save (PAYS) program -The cost of a new furnace can be paid over monthly installments on your energy bill, based on a monthly financing payment that is less than the estimated annual energy savings averaged out on a monthly basis. Annual interest rate is fixed at 3.9 per cent (O.A.C.) for the first 5 years.
-Affordable Energy Program- You can qualify to receive a high efficiency natural gas furnace for $9.50 per month for 5 years ($570 total cost) and/or receive a $3,000 rebate towards the purchase of a qualifying high efficiency natural gas boiler if total household income qualifies.
-There are also grants available to upgrade furnaces for large scale commercial or public facilities.
How does the Manitoba Fuel and Carbon tax impact this Project?
The Federal Government is requiring all Provinces to have a carbon tax in place by 2018 that is equivalent to $10 per tonne of CO2 equivalent emissions by 2018, increasing to $50 per tonne by 2022. The Province responded with the Made in Manitoba Climate Plan that would put a flat rate of $25 per tonne of CO2 equivalent emissions tax, being implemented in October 2018.
Based on the $25 per tonne of CO2 equivalent emissions natural gas will be taxed at $0.0474/m3. This tax will not be applicable to agricultural producers using natural gas for heating farm buildings and for drying crops if the natural gas is designated by a separate meter. The carbon tax on natural gas will be applicable to home heating. The GPSG has accounted for the carbon tax and calculated that customers in the area would still see substantial savings of $3.8 million on an annual basis.
How does the South Central Natural Gas Project align with the Manitoba Climate Plan?
The South Central Natural Gas Project would provide access to a new energy source for the area. 10 million cubic meters (m3) of natural gas would replace the annual heating requirement currently provided by propane, coal, hydro electricity and biomass.
Natural gas is a lower greenhouse gas emitter compared to coal and propane. This Project would replace 4.2 million liters of propane and 5,445 tonnes of coal thus reducing emissions produced from these sources. In addition, a natural gas network would also remove approximately 360 transportation trucks off the road, reducing wear and tear and improving traffic safety.
Natural gas would also reduce hydro electricity usage of 52 million kwh per year or 5.9 MW of hydro electricity, making this available for economic development or expansion. Local and foreign investors are drawn to Manitoba because of access to clean energy, however the reality is users often require both hydro electricity and natural gas. Alternatively, the available hydroelectricity could be sold outside the Province to offset coal or natural gas-fired electricity generation. Selling hydro electricity outside the Province is promoted in Manitoba’s Climate and Green Plan to lower global green house gas emissions. This is effective in areas of Saskatchewan and Minnesota that are using carbon-based fuels to produce electricity and deliver it to homes at an efficiency of only 30%. Transporting natural gas to produce heat in homes can be done at an efficiency of 80%-90%
The GPSG recognizes the direction set forth by the Province of Manitoba’s Climate and Green Plan to reduce GHG emissions and it is our understanding that this can be achieved through energy conservation and innovation while equipping communities with the tools for economic development and clean growth.
Is there still a ban on coal?
The new Climate and Green Plan Implementation Act did not change the ban that exists on coal and petroleum coke for space heating; therefore, the ban on coal is still in effect. The Emissions Tax on Coal and Petroleum Coke will remain in effect until December 31, 2018, afterwards coal and petroleum coke will be covered and taxed under the Fuel and Carbon Tax Act, based on the $25 per tonne of greenhouse gas emissions. Finding an alternative for coal remains one of the driving factors for the South Central Natural Gas Project.
Installation Details and Safety
How are natural gas pipelines installed, will the roads be torn up?
In most cases pipelines are installed in road right of ways to save on easement costs. They are installed at a minimum depth of between 0.75 to 1 meter depending on pipe. The majority of the pipeline is polyethylene distribution and are installed using a low-disturbance ploughing method with directional drilling under water and road crossings. For the high-pressure steel pipeline trenching is required.
Are natural gas lines safe?
Manitoba Hydro has a focus on safety and reliability, preventative maintenance is done regularly to maintain the integrity of all their transmission and high-pressure pipelines. As a part of their pipeline integrity program they do routine patrols for: monitoring the right-of-way (ROW); leak survey; cathodic protection. If you suspect a natural gas leak on your property call the MB Hydro emergency line, and always “call-before-you-dig” to prevent damaging gas lines.
Do natural gas furnaces have to be inspected prior to use?
As per CSA B149, natural gas furnace installations require a permit and have to be installed by a licensed gas fitter. MB Hydro will do a final inspection after installation.
Do natural gas furnaces have to be inspected annually prior to restart each fall?
If you suspect problems the homeowner can call MB Hydro for an inspection, there is no charge for labor but would pay to replace parts if there was damage. More information can be found on the MB Hydro website https://www.hydro.mb.ca/accounts_and_services/permits_and_inspections/index.shtml