Enbridge Gas New Brunswick is planning a $2.4-million expansion project that would connect the federal Dorchester Penitentiary to natural gas.

The company filed a regulatory submission package with the Energy and Utilities Board on June 10 that outlined the pipeline construction plan.

Ed Armstrong, the manager of distribution operations for Enbridge, said a pre-hearing conference with the regulatory board is scheduled for July 14 and if that process moves swiftly, construction could start by mid-August.

Armstrong said the expansion project is good news for the company and so far it has been well received by the public. The project will also add a major industrial customer to Enbridge's client list.

"All of our construction is economically feasible and is adding positively to the bottom line," he said.

'The option of converting the heating equipment to natural gas at Dorchester and Westmorland institutions has the potential to significantly improve CSC's environmental performance in this area.'— Elisabeth Baril, Correctional Service Canada

Although Armstrong would not name the customer that Enbridge is building the pipeline to service, Elisabeth Baril, the director of capital projects implementation at Correctional Service Canada, sent a letter to Enbridge Gas, endorsing the project.

The letter said the federal government is looking to hook more of its buildings onto clean energy alternatives.

"Dorchester Penitentiary's central heating plant boilers currently rely on heavy fuel," the letter said.

"Hence, the option of converting the heating equipment to natural gas at Dorchester and Westmorland institutions has the potential to significantly improve CSC's environmental performance in this area."

Baril's letter said the federal government will "expedite the implementation of this conversion project" once the company moves forward with the pipeline project.

Dorchester is a small village east of Moncton that includes 229 residential buildings, five churches and 32 commercial buildings.

Other customers sought

The natural gas company said it plans to have 20 residential and 14 commercial customers hooked onto natural gas by 2019.

Enbridge's regulatory submission indicated the pipeline project is economically feasible.

The project's total cost is estimated to be $2.8 million. The federal government is investing $350,000 in the pipeline initiative.

The preferred route would see the pipeline run along King Street for 7.1 kilometres, then southwest along Woodlawn Avenue for about 5.6 kilometres. The pipeline would connect to the penitentiary through a 900-metre-long pipeline.

The project's environmental impact assessment, which was performed by Stantec, did not identify any potential problems with the proposed route, "provided appropriate mitigation is carried out."

The Pipeline Coordinating Committee, which included representatives from 11 provincial government departments and agencies as well as the Energy and Utilities Board, included a list of 31 different requirements on Enbridge that must be adhered to if the project is to proceed.

The expansion project comes as Enbridge Gas is in negotiations to amend its franchise agreement with the provincial government.

When Enbridge Gas New Brunswick set up, it was given a 20-year agreement that offered the company exclusive distribution access to the customers in the province.

The agreement allowed the company to put all of its capital costs into a separate account during its development phase, which would be paid back at a later date. The deferral account has roughly $170 million in it. Enbridge paid $6 million into the deferral account in the first quarter of 2011.

Enbridge said in a letter to the Energy and Utilities Board in May that the negotiations with the provincial government could eventually lead to a scheme that would allow the company to charge rates based on its cost of service.

The change could allow Enbridge to be more competitive in how it charges its rates.

The rate changes could lower distribution rates for some of the province's largest natural gas customers.