Ontario Construction News staff writer
Enbrdige Gas has decided to “pause” a planned $200 utility locate delivery charge for each utility locate request after contractors and industry associations expressed outrage and concern about the proposed charge.
The fee was to go into effect on May 1. But after hearing loud and clear about the opposition to the fee, the utility decided to put a hold on it.
“Enbridge Gas has made the decision to put the implementation of the locate delivery charge on pause,” a utility spokesperson said on Friday. “We will use this time to continue our industry consultations and will provide additional information once we have confirmed our approach. Enbridge Gas remains committed to the safe and timely delivery of locates.”
If implemented as originally communicated, the fees could generate more than $65 million in annual revenue for Enbridge – and contractors with fixed price contracts would have needed to pay the fees because the utility locates are mandatory.
More concerning, is these fees could just be the tip of the iceberg on unwelcome new charges, indicates Kathryn Sutherland, executive director of the National Capital Heavy Construction Association (NCHCA) in Ottawa.
“We have heard unofficially that other utilities and the city of Toronto are considering the same,” she wrote in an email to Ontario Construction News last Thursday.
“The imposition of such a charge will have a profound impact on the Ontario construction industry,” she wrote in March 22 letters to Ontario Energy Minister Todd Smith and Kaleed Rasheed, Minister of Public and Business Service Delivery.
In her letters, Sutherland observed that according to information on ON1Call’s website, Enbridge received 379,388 “actionable requests” from July 2022 to January 2023 “which infers at least 650,379 locate requests over a 12-month period.”
While Enbridge in its original communication about the fees said they won’t be levied on homeowners or businesses seeking locates on their own properties, there was confusion within the industry about whether these fees would still apply if contractors need to request locates on private properties. Before pausing the fees, however, Enbridge made it clear that it intends to charge the fees on municipal and public projects.
“We have asked ON1Call to confirm how many of these requests are from homeowners but have not been provided with this information,” Sutherland wrote in her letters. “If we assume that approximately half of of these requests will be from homeowners, 325,190 would be from contactors.” She wrote that 325,190 requests at $200 each would equal $65,038,000.
Joe Salemi, executive director of Landscape Ontario, wrote in March 23 memo that “I can count over 120 emails, phone calls, texts and tagged social media posts,” about the issue.
“I heard you loud and clear that this is a massive issue for many of you. So I started digging to find out who was on the executive team at Enbridge and reached out to all of them.
“Yesterday, I met with two Enbridge officials who provided quite a bit of clarity,” Salemi wrote. “They started by apologizing for a very badly worded announcement.
“Next, they let me know what they meant by “third-party excavator” was any contractor hired by Enbridge or any other utility to work on their behalf would be subject to the $200 fee per locate request.
“What should have been following was, any excavator doing work on behalf of a property owner would not be subject to that fee. This includes residential, commercial, industrial and institutional properties. Those that are doing work on behalf of a municipality are subject to the per locate fee.”
Salemi also noted that “because the announcement was worded so poorly, it has caused a significant amount of backlash against Enbridge. “While they wouldn’t follow up in writing officially, they did let me now that I should stay tuned because it is very likely they are going to hit the pause button on this entire thing.”
In her letter to the ministers, Sutherland says that the new fee for already-awarded projects will “impact contractors directly as there is no assurance that project owners will cover the cost of this new unforeseen charge.”
“Some of our contractor members request 5,000 locates in a season. This charge will result in a cost of $1 million for those contractors for Enbridge locates alone.
“For projects not yet tendered, the cost of the locate charges can be factored in during the tendering process, resulting in increased costs to owners. This may result in a $65 million reduction in work being tendered while municipalities and private sector owners work to absorb the impact of the Enbridge locate delivery charges.
Sutherland says she believes the planned locate delivery charges are contrary to the intent of the Ontario Underground Infrastructure Notification System Act, 2012, “which is to ensure safety and minimize risk by providing locates for contractors and homeowners alike at no charge. This service is free of charge in all other Canadian jurisdictions,” she wrote.