03/03/2001

Province overturns Ontario Energy Board decision.
The Ontario Energy Board, in a recent decision agreed with the  Association of Municipalities of Ontario (AMO) that municipalities should be able to recover the costs related to permits for gas pipelines on municipal roadways.  The Board's decision said, "The reasonable costs to a municipality arising from approval of construction activities of Gas Companies in the course of their businesses should be borne by the Gas Companies (and ultimately the gas ratepayers) and not by the municipal tax payers."

The Minister of Municipal Affairs and Housing has disagreed and has enacted a regulation that overturns this aspect of the decision.  The Regulation (61/01) also prohibits municipalities from collecting user and permit fees not only from gas companies, but also electricity utilities.  

AMO is taken aback by this latest action of the Province, particularly since it gave municipalities the authority to charge fees in 1995 to recover service costs as a means of dealing with the withdrawal of $700 million in  provincial funds.  In fact, the Minister of Energy, Science and Technology assured AMO in January 1999 that as a result of Bill 35, Electricity Restructuring Act, "if municipalities lose their right to collect legitimate costs relating to easements, you have my assurance that we will take whatever steps are necessary to correct this."  This new Regulation is not the corrective action that was anticipated.  

AMO President Ann Mulvale expects municipalities will be outraged when they receive the Minister's Regulation.  " We followed the rules.  We took our case to the OEB, which is charged with protecting the consumer and ensuring a viable industry.  We made a reasonable case for protecting the interests of the property tax payer and because the Province doesn't like the decision, the rules get changed," said President Mulvale. A Municipalities were simply seeking the same fee privileges that we were led to believe the Province has with the gas companies for its highways.  The question is, has the Province terminated its own agreements with the gas industry for pipelines on provincial highways?"

The municipal permit process ensures that a utility=s installation activity is properly sited and does not interfere with other utilities and services that use public lands.  The permit system allows municipalities to coordinate construction activities on roadways, and to ensure that road reconstruction is done properly and that public safety is a priority. 

Mulvale said, "As a result of the Minister=s regulation, municipal governments and their property tax payers are to continue subsidizing the operating costs of the natural gas industry. It is clear that the Province=s action is not based on a clear, enunciated strategy and it certainly lacks any form of reasonable consultation or notice that one would expect between two orders of democratically elected government."  

In terms of the impact of a municipal permit fee cost to the gas consumer, it is pennies when compared to the more than $400 a year average increase for Ontario gas consumers as a result of their supply and distribution costs.  AMO questions why the Province did not come forward during the OEB process to voice its concerns on either the massive rate increase or the permit fee issue since it was following the situation and had all the information that AMO members had about the issues going before the OEB.

The result of these actions and other parts of the OEB's decision means that municipalities cannot charge these utility companies a fee for activity or the use of the municipal rights-of-way, nor charge a fee for any long-term damage to the roadway resulting from the installation or maintenance of the gas works.  As well, property tax payers are to remain 35% responsible for the relocation costs of any part of a gas system and the gas company will only pay 65%.

The Association of Municipalities of Ontario (AMO) is a non-profit organization with member municipalities representing 98 per cent of Ontario's population.  AMO supports and enhances strong and effective municipal government in Ontario and promotes the value of municipal government as a vital and essential component of Ontario and Canada's political system.

- 30 -