Wynne Government's Decision to Pull Plug on Natural Gas Loan Leaves Northern Ontario Communities Feeling Let Down

TORONTO, ONTARIO--(Marketwired - Jan. 30, 2017) - Gaining access to natural gas is a key to survival and prosperity for the 11,000-plus residents and businesses along the North Shore of Lake Superior who are struggling with soaring energy bills. A stunning reversal today by the Provincial government on a promise to launch the Natural Gas Access Loan program has darkened the future for one natural gas project and the economic viability of these communities.

For the past 27 months, the Northern Ontario communities of Marathon, Schreiber, Manitouwadge, Terrace Bay and the Municipality of Wawa have been working with Northeast Midstream on an innovative liquefied natural gas (LNG) distribution project that would deliver natural gas to these communities, which are not now served by traditional pipelines. The anticipated savings are more than $6 million per year for homeowners, businesses, and municipalities, according to a feasibility study supported by the Northern Ontario Heritage Fund Corporation.

The viability of that project is now in jeopardy after the government's last-minute announcement today to cancel the Natural Gas Access Loan program.

"We are incredibly disappointed by today's announcement," says Chris Wray, Chief Administrative Officer and Clerk/Treasurer of the Municipality of Wawa. "The Natural Gas Access Loan program was going to finance a creative solution to connect communities and businesses to natural gas, grow the northern economy, support economic development and create jobs. Today's announcement effectively shrinks a $230 million commitment, $200 million in loans and $30 million in grants, to a $100 million grant. We had a business plan to repay money that the government is now taking away."

The Natural Gas Access Loan program funding was allocated in the 2016 Budget.

The impetus for the North Shore project was a government commitment in 2014 to create the $200-million Natural Gas Access Loan program. The Premier and various ministers subsequently provided numerous assurances to the Northern Ontario communities that the loan program was going to help them by funding projects such as theirs.

Since 2014 the message from government has been clear - natural gas would continue to play a critical role in the province's energy mix, and the loan program would enable communities to switch to natural gas, a cheaper, cleaner energy source. The three main sources that now heat these Northern Ontario communities are fuel oil, electricity and propane, and all are very expensive.

"For years our dependence on expensive sources of energy like electricity, heating oil and propane has hindered our growth," says the CAO of the Town of Marathon, Daryl Skworchinski. "It's even had serious health and environmental implications. Today's about-face by the government now puts in jeopardy the very kind of energy infrastructure we so desperately need. Fulfilment of the government promise was going to be the shot in the arm for the very economic viability of our community."

What North Shore Mayors Are Saying

"Having only limited availability to funding programs will greatly impede project development in small-town Northwestern Ontario. New, affordable energy solutions are greatly needed in our communities as soaring energy costs are making them unlivable and unsustainable."

Mayor Rick Dumas

Town of Marathon

"We have been anxiously awaiting the launch of the Natural Gas Access Loan program since it was first announced in 2014. The announcement today that this program has essentially been defunded by $130 million is certainly disappointing and concerning, as it will no doubt adversely affect our ongoing LNG project. Ever-increasing energy costs represent a significant obstacle to living and doing business in Northern Ontario Communities."

Mayor George Davis

Township of Terrace Bay

"We hope this new program will allow us to keep to the very aggressive timelines that have been put in place based on the program announced two years ago. It is clear our residents and businesses are desperate to have an affordable alternative to oil and electric heat and have it now. We are anxious for the details but this change appears to be a roadblock to implementation."

Mayor Mark Figliomeni

Township of Schreiber

"We are very disappointed in the recent announcement. A great deal of work and money has gone into the North Shore Liquefied Natural Gas project and the delays in this announcement are unacceptable. This announcement is significantly less funding than was expected and puts this project in jeopardy. With ever-increasing costs, reducing energy costs for the north should be a priority for this Government and it appears that once again the north is not being considered. There are limited alternatives for communities in the north, and many homeowners and businesses struggle with energy cost. A solution to make living in the north more affordable was presented to this Government and is being ignored once again."

Mayor Andy Major

Township of Manitouwadge

"The Municipality of Wawa has been working in conjunction with our neighbours along the North Shore of Lake Superior to bring LNG to our area thereby providing opportunities for cheaper energy costs and business development. The announcement made today that effectively cuts the funding required for a successful NGAL program seriously jeopardizes our initiative and others in the north."

Mayor Ron Rody

Township of Wawa

About the North Shore Communities

Schreiber, Terrace Bay, Marathon, Manitouwadge, and Wawa are communities along the Highway 17 corridor between Thunder Bay and Sault Ste. Marie. They do not currently have access to natural gas. North Shore residents and business pay up to four times more than others in Ontario for space and water heating. Access to natural gas, a more affordable and reliable source of energy, would provide significant socioeconomic benefits to the region. In addition, the expansion of natural gas service is consistent with objectives of the Provincial Growth Plan for Northern Ontario, including facilitating strategic infrastructure investments, regional partnerships, community planning and environmental leadership.

About Northeast Midstream LP

Northeast Midstream LP is a Toronto-based energy partnership focused on expanding natural gas service to communities and industries not currently served, or proposed to be served, by the traditional pipeline delivery model.