Ontario’s first OEB approved renewable natural gas program

As Canada’s transition to a low-carbon economy accelerates, one of the features of that transition has been the adoption of Renewable Natural Gas (RNG) programs by public utilities. RNG, also referred to as bio-methane, is a renewable energy source composed of methane from biological sources that would otherwise be emitted to the atmosphere and, as a result, has an overall lower greenhouse gas (GHG) emissions impact relative to conventional natural gas.

Ontario’s support for RNG programs has been slower than in some other provinces, such as British Columbia.^[1] However, on April 6, 2021, Enbridge Gas Inc. (Enbridge Gas) launched its Voluntary RNG Program – the first of its kind in Ontario – after securing approval from the Ontario Energy Board (OEB) in September 2020. The program, and the OEB’s approval of it, supports Ontario’s desire to move forward in the RNG space and in its transition to a low-carbon economy.

The OEB Approval Process

In 2011 and then again in 2017, Enbridge Gas filed two separate applications with the OEB seeking rate approval for the sale of natural gas that included the cost consequences of the purchase of RNG as part of its supply portfolio. Both of these applications were rejected by the OEB (EB-2011-0242/EB-2011-0283 and EB-2017-0319).

After these two unsuccessful attempts, on March 5, 2020, Enbridge Gas again applied to the OEB for approval to implement a Voluntary RNG Program. On September 24, 2020, the OEB approved Enbridge Gas’ proposal to establish its voluntary $2 monthly RNG charge to be added to relevant Rate Schedules on a pilot basis, effective January 1, 2021.

A key consideration in the OEB’s decision to finally approve the Program was the release of Ontario’s Made-in-Ontario Environment Plan, [PDF] which was published on November 29, 2018. The Plan identifies policies to achieve reductions of GHG emissions, including the goal of “[requiring] natural gas utilities to implement a voluntary renewable natural gas option for customers” (p. 33). While the OEB rightly noted that “[a]t present, there is no Ministerial Directive, provincial legislation or regulation, or any other government imperative requiring natural gas utilities to implement voluntary RNG programs”, the Government’s policy shift in support of RNG was highlighted at the outset of the OEB’s decision approving the Program.

How does Enbridge’s Voluntary RNG Program work?

Although RNG lowers GHG emissions, the cost to produce RNG is significantly higher than for conventional natural gas. Enbridge Gas’s new Program, known as the “OptUp Program”, gives its customers the option to sign up and contribute $2 each month to the Program. Each payment made by participating customers goes towards the purchase and addition of RNG to Enbridge Gas’s natural gas supply.

Today, 75% of Ontario households heat their homes with conventional natural gas, and the government has made efforts to expand Ontario’s natural gas distribution system. Enbridge Gas anticipates that, during the first five years of the Program, up to 28,000 of its customers will participate, which would reduce CO2 emissions by approximately 8,000 tonnes.

Both residential and commercial customers can participate in the Program so long as they are system gas customers (i.e., they receive their commodity from Enbridge Gas and not a retailer) and are in prescribed rate classes. Participants will receive the same gas supply as before while, at the same time, contribute towards the “greening” of Enbridge Gas’ overall system gas portfolio.

Conclusion

This Program is a first for Ontario and could spur further developments in the RNG space. The Ministry of the Environment, Conservation and Parks has touted the Program as evidence of progress under the Made-in-Ontario Environment Plan. Although programs of this nature are not mandated by legislation, the support of the Ontario government is critical to getting these programs off the ground – including regulatory approval. Other provinces have chosen to legislate in this area^[2] to give more teeth to government policies supporting RNG developments. Observers and stakeholders in the quickly-growing RNG industry (including municipalities, agri-businesses, waste processors and others managing large sources of organic materials), both in and outside of jurisdictions with RNG programs, will no doubt be following Program uptake closely.