Ontario had to change gas subsidization program: infrastructure minister

Ontario's infrastructure minister says the province had to change its subsidization program for the expansion of natural gas pipelines into rural and northern communities, but several northern Ontario municipalities are still worried about the impact.

A $230 million program consisting of $30 million in grants and $200 million in loans was scrapped in favour of a $100 million grant program, according to provincial officials.

• Northern Ontario mayors speak out over loss of natural gas pipeline loans

Even though there's more money available to communities that doesn't have to be paid back, some municipal officials, like Daryl Skworchinski, the chief administrative officer in Marathon, Ont., says having less money in total to draw from is concerning.

"So, [if] we happen to get a portion of the $100 million allocated, where do we get the rest for our project?" he said. "The municipalities certainly aren't in a position to borrow that amount."

A number of communities north and east of Lake Superior, including Marathon, Schreiber, Terrace Bay, Manitouwadge and Wawa, have been working for the past couple of years with a Toronto-based company, Northeast Midstream, on a liquefied natural gas distribution project that would connect those municipalities to natural gas.

We had to go back to the drawing board- Infrastructure Minister Bob Chiarelli

Currently, residents and businesses have to rely on electricity, fuel oil, propane or wood for heating, which Skworchinski said means very costly utility bills.

The provincial loan program was expected to help pay for that work.

But Bob Chiarelli, Ontario's Minister of Infrastructure, said hearings in front of the Ontario Energy Board showed the old program would only have been realistically affordable to a fraction of rural or northern communities, instead of the 40 or so that are expected to benefit from the switch to grants.

"So we had to go back to the drawing board and find a mechanism to proceed," Chiarelli said.

In a joint press release issued Monday, the mayors of the five northern Ontario municipalities said they had a business plan to repay the loans, but on Tuesday, Chiarelli said the proposal submitted to the former program through Northeast Midstream was "not acceptable to the province," due to how much of the project would have been funded by loans.

Skworchinski said he knew the province had concerns with the amount of debt involved, and the two sides subsequently met several times to tweak the municipalities' submission. He added the communities weren't told their proposal under the loan program was unacceptable until it was cancelled.

Chiarelli and Skworchinski both spoke of the need to meet further about the issue.

"I will speak to several of them (northern Ontario municipal officials) as well over the next couple of days," Chiarelli said. "To ensure them that the project is still possible."

In a written statement issued Wednesday, Chiarelli said he's encouraging the five municipalities and Northeast Midstream to re-apply for funding.

"At this time, we want to learn as much as we can about the [new] program," Skworchinski added.

"Really, is there a fit for our project, and if there is, how do we have to remodel it to make sure we are successful."