Warm Toes

Manitoba Hydro, which provides natural gas distribution service in that province, is reporting that approximately 4,000 customers in a cluster of rural municipalities south of Winnipeg toward the border with Minnesota are without gas supply. The outage is the result of a dramatic explosion early yesterday of a very large natural gas pipeline linking TransCanada’s east-west pipeline with markets in the US Midwest and Southern Ontario through the Great Lakes Gas Transmission system.

With temperatures in southern Manitoba in the -20 range, many affected gas customers will be facing hardship. As of the notice linked above, the utilities involve have not yet estimated a return to service time but customers could be without gas supply for days.

Without in any way diminishing the challenges the affected customers face, natural gas customers in the rest of Canada might appreciate how rare such service interruptions are — a particularly comforting thought as many parts of the country cope with a tough winter.

Although gas utilities occasionally experience equipment failures, service interruptions very rarely impact large numbers of customers. To my knowledge, the Canadian Gas Association does not even maintain annual statistics on service interruptions to firm customers like households. The gas distributor servicing my house in Toronto, Enbridge Gas Distribution (EGD), definitely does not track such records. EGD keeps detailed records of individual failures but those failures are so case specific that aggregated annual outage statistics would not be particularly meaningful.

Several factors contribute to such extremely reliable service. Network integration between interconnected and looped gas systems is a proven strategy. Another contributor is system planning.

In 2012, EGD negotiated a deal with its regulatory stakeholders to tighten up the criteria it uses to guide its reliability planning for meeting the peak winter delivery needs of its customers. The first step of the tighter rules was implemented in time for the current tough winter in the EGD service territory.

The story of how this tighter standard came about illustrates the value of effective public utility regulation. There is often a necessary trade-off between cost and utility service reliability with no perfect answers. In this case, the original proposal of EGD would have increased annual costs for ratepayers by over $66 million if fully implemented. After an extensive factual examination, ratepayer groups involved in the OEB case EB-2011-0354 agreed with EGD to allow the utility to increase its winter delivery reliability criteria by about half of the original increment proposed by the utility. The annual rate impact across EGD’s approximately 2 million Ontario customers once the settlement is fully implemented will amount to about $33 million (as best as I can determine). The settlement is recorded in Exhibit N1 of EB-2011-0354 pp. 22-23 and was filed with the OEB October 26, 2012. The settlement provides a funding mechanism for EGD to commit to additional winter peak delivery service on TransCanada’s Mainline. The bumped up pipeline capacity is being phased in over two years, with the first increment of contracted pipeline capacity available for the current winter.

As luck would have it, the new capacity arrived just in time for a colder than usual winter. So far, southern Ontario’s actual weather has not quite been cold enough to reach the new colder design criteria but winter isn’t over yet either. It is nice to know that new capacity is available, just in time to help keep the toes of millions of folks in Ontario warm.

2 Comments

  1. What is included in the new colder design criteria?

    At present North America is dealing with a polar vortex with temperatures not seen since the late 1970s and some years in the 1980s.

    Ohio is experiencing shoratges of propane which has also driven up the price for consumers.

    • The original design criteria for the coldest weekday of the year for Toronto was 39.5 Heating Degree Days (HDD) (a little higher for Ottawa and lower from Niagara). EGD asked to move the Toronto criteria to 43.7 HDD but settled for 41.4, with the increase phased in over two years in approximately equal steps. Ottawa and Niagara got similar treatment.

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