Kingston Council to receive report on natural gas disconnection costs

At its meeting on Tuesday, Sep. 19, 2023, Kingston City Council will receive an information report from Utilities Kingston related to the costs of disconnecting natural gas services. The report comes after Council voted in May to direct staff to conduct a review of the fees residents face when they disconnect from the service.

According to the report, when customers wish to eliminate their natural gas service, they are left with two options: 

• Leave the meter on the building, providing a visual clue of natural gas being delivered to the building and a source to locate the underground pipe should digging or excavation be required. This option requires a minimum monthly fee to the customer to account for the meter remaining in service and Utilities Kingston’s ongoing responsibility for, and amortization of, that meter. Or,
• Remove the gas connection at the main in the street (cut and cap), purge the gas service line to the house, and remove the gas meter at the expense of the owner. The pipe remains buried on the property but empty of any combustible fuel.

The report adds that when a customer decides they no longer want natural gas, “there are safety concerns when abandonment of service is being requested that need to be addressed,” with costs paid for by the individual owner, as opposed to the gas ratepayers.

Utilities Kingston’s natural gas system currently operates as a “user pay system,” where individual users fund all expenses related to the system. If a customer wishes to establish a new natural gas system, they are able to do so with no upfront costs, as the total service costs are recovered through rates over a “10 to 15-year period.”

In accordance with the City of Kingston’s Natural Gas By-Law, “When an owner permanently discontinues the use of a gas service to a building or buildings, the service lateral must be disconnected from the distribution system, and the service lateral shall be plugged or capped at the owner’s expense.” Since the bylaw does not establish a standard price for natural gas disconnection, estimates are prepared for individual customers accounting for “length of service,” “material type,” and “infrastructure to be removed or reinstated.”

Historically, the report notes, natural gas disconnection in the City of Kingston is rare. While systems are sometimes temporarily suspended to complete repairs, “the number of customers who have abandoned a gas service in the past is not an indicator of future activity in this area. This is somewhat of a new trend.” The report goes on to state that, recently, some customers have been motivated to permanently remove their natural gas system due to “environmental or climate action reasons.”

Staff add that they are currently aware of “[two to three] customers undertaking an abandonment of their gas service. It is unknown at this point how many customers will pursue this approach going forward.”

For customers wishing to abandon their natural gas system, the report provides various cost estimates according to the material type of the service, as well as the location of the “tap” where the service lateral connects to the gas main. For 2023, the estimates are as follows:

• Boulevard Cut (no concrete or asphalt) — Plastic: $2,350; Steel: $2,600
• Asphalt Cut (no boulevard or concrete) — Plastic: $16,272; Steel: $16,600
• Asphalt and Concrete Cut (no boulevard) — Plastic: $18,506; Steel: $18,810

For City Council’s consideration, the report notes a number of questions with respect to who should pay for natural gas disconnection. Should the City leave things as is, the onus would continue to be on the individual customers who choose to disconnect their natural gas service. If the City wants to offer gas disconnection as part of wider environmental and sustainability efforts, there is a question of whether such expenses should be addressed through property taxes or the rate base.

The report notes, “The use of rate base funding would negatively impact the yearly gas utility’s contribution to the Municipal Capital Reserve Funds by reducing those contributions by costs incurred to abandon a gas service.” A “hybrid option” also exists, which could see restoration costs covered by the municipal tax base while individual disconnection expenses are covered by the customer or rate base.

The report adds that consideration may also be given to customers who disconnect their gas service and choose to reinstate it at a later date due to “energy costs.” “Existing practice would require the owner to pay all costs associated with a reinstatement of a gas service,” it notes.

The report from Utilities Kingston will be presented to City Council during its meeting on Tuesday, Sep. 19, 2023, for information only. The report notes that, should Council eventually decide to change existing policies, an amendment to the natural gas bylaw would also be required. At that time, staff would likely recommend additional amendments due to the age of the bylaw.

Tuesday’s City Council meeting will begin at 7 p.m. in the Council Chambers of Kingston City Hall. Full meeting agendas are available on the City of Kingston website. Meetings are open to the public and can be streamed live (or viewed after) on the Kingston City Council YouTube page.