Ford government's Bill 165 overrides regulator, raises your Enbridge bill, increases gas use

OR: How closely the 4th largest publicly-traded Canadian company works with the government

Since 1998, the cost to install new natural gas connections to new homes has not been paid for Enbridge, housing developers or homebuyers.

Instead, system expansion is paid for by all existing natural gas customers’ delivery fee lines on their gas bills over a 40 year period. The cost added each year is over $250M.

As a gas customer, I am shocked to understand that I am subsidizing new pipelines.
Hamilton Councillor J.P. Danko

Enbridge Gas’ 2024 application to the Ontario Energy Board (OEB) to set customer fees looked to continue this expansionary policy.

Contents

OEB’s decision would make rates cheaper, slow Enbridge’s expansion

The OEB’s decision would require new residential and small commercial customers to bear the full upfront cost of gas connections effective January 1, 2025 and would apply throughout the four year rate-period up to December 31, 2028.

Given evidence that:

Homeowners will move away from natural gas sooner than later in light of the energy transition taking place globally
Federal government’s legislated target to reach net-zero GHG emissions by 2050 (in 26 years)
Ontario government’s non-statutory target of reducing GHG emissions 30% below 2005 levels by 2030 (in 7 years)

the OEB decided it was time to stop subsidizing the expansion of fossil fuel distribution systems to avoid a potential future situation where gas customers were stuck paying higher delivery fees than necessary, which would happen if pipelines installed in 2025 became obsolete before they had been paid off in 2065. Customers would be on the hook for paying the return on investment to Enbridge’s shareholders 15 years past the 2050 target set by Canada to reach net-zero emissions.

The OEB decision would save gas customers over $2B over 5 years, or approximately $600 per customer, according to Environmental Defence. OEB also reduced Enbridge Gas’ spending budget on new pipelines by $250M, or 17%.

This meant housing developers would have to cover the full cost of connecting natural gas service (~$4.5k) if they wanted to include that service in the homes they sell. Their homes wouldn’t be supplied with natural gas services for “free” (paid for by existing customers), so they would have to decide what heating/cooling system to install.

Cold climate heat pumps – which run on electricity and provide both heating and cooling – enable the operating cost of a new all-electric house to be lower than a new house that uses both gas and electricity by being roughly 3x as efficient as gas furnaces and avoiding the fixed monthly charges for gas connections (~$310 per year). They would likely become a more common choice and reduce demand for natural gas powered furnaces.

Currently, developers can receive a subsidy worth up to $6k per home, with an average of $4.5k per home. The OEB said eliminating this subsidy would encourage developers to install heat pumps instead, which will improve affordability by lowering heating costs while also reducing risks and costs for all other gas ratepayers.
Environmental Defence

Ford government’s Bill 165 reverses OEB’s decision

Energy Minister Todd Smith – who has a heat pump in his own home, as he doesn’t have natural gas connection – and the Ford government enacted Bill 165 to override the independent regulator and reverse their decision, continuing to make gas customers subsidize Enbridge’s new pipelines, keeping customer gas bills more expensive.

Allowing Enbridge to continue raising rates is actually less equitable than a subsidy from government spending would be because high-income households can afford to switch to heat pumps to avoid these fees and lower their bills, while renters and low-income households are disproportionately unable to make upgrades to their homes.

Once again, we have the Ford government intervening in a way that benefits, in this case, a wealthy corporation at the expense of everyday Ontarians

Just like they opened the Greenbelt and helped a handful of wealthy, well-connected insiders, this is the exact same story.
Mike Schreiner, Ontario Green Party leader

Background

Gas pipelines have 40 to 60 year lifespans
Prior to the OEB decision, gas utilities use 40 years from the installation date of a gas mains as a revenue horizon for residential and small commercial customers, which was determined by the OEB in 1998. The capital cost of new gas connections are financed and recovered from gas customers over 40 years.
The Federal government has a legislated target to reach net-zero GHG emissions by 2050 through the Canadian Net-Zero Emissions Accountability Act as well as its 2030 Emissions Reduction Plan and associated progress reports.
The Ontario government currently has a non-statutory target of reducing GHG emissions 30% below 2005 levels by 2030, and does not have any legislated net-zero targets or plan related to 2050.
Several jurisdictions including Montreal and New York State have banned methane gas connections in new buildings.
Natural gas is the most common heating source in Ontario, and one of the cheapest and last remaining fossil fuel-based sources of energy. It is 95% methane gas, a greenhouse gas that is 80 times more potent at warming than carbon dioxide over a 20 year period when it leaks into the atmosphere.
Heating our homes and businesses with methane gas accounted for almost 19% of Ontario’s total greenhouse gas emissions
Ontario’s electricity grid is one of the cleanest in the world – 87% emission free in 2023 (down from 93% in 2019 due to using more natural gas and oil, and less nuclear power.)
Only 7.5% of households in Ontario use a heat pump
Enbridge is being investigated by the Competition Bureau for claiming that gas is the most cost-effective way to heat their homes and suggesting that it is “clean energy” and “low carbon.”

Enbridge Gas

Enbridge Gas Inc. is a for-profit regulated monopoly owned by Enbridge Inc., the 4th largest Canadian publicly-traded company by market cap and largest energy company in Canada. Since 1996, they have bought up the competition to become a near-perfect monopoly, controlling 99.7% (3.8 million) of the pipeline gas distribution customers in Ontario and 20% of all gas consumed in the US. Acquiring Union Gas in 2017 left just 8000 customers in Alymer and South Bruce, Ontario hooked up to EPCOR, the only other provider in the province.

It must submit periodic rate applications to the OEB and get their approval before changing the rates it charges customers.

Ontario Energy Board (OEB)

The Ontario Energy Board is the independent arm’s-length energy regulator responsible for setting the rules that energy companies operating as natural monopolies (electricity utilities such as Hydro One and methane natural gas companies such as Enbridge Gas) must follow. They protect the interests of consumers by acting as a substitute for the economic forces that would provide the checks and balances if these utilities operated in a competitive market. They have regulated the methane gas sector since 1960.

Their job is to balance keeping customer bills as low as possible while ensuring Enbridge earns a return on invested capital.

Timeline

The most glaring thing in these documents is that Enbridge clearly has very good access to the highest levels of this government

We see staffers working after hours to issue this press release and essentially do Enbridge a favour.
Keith Brooks, programs director with Environmental Defence

January 30, 1998 – Framework set for determining gas rates in E.B.O. 188

The gas companies proposed a system where new customers would not pay up front for new pipelines; instead they would pay it back through their gas bills over 40 years. Those bills would be set high enough for gas companies to make back their pipeline investment money, plus a 9% annual interest. Despite company assurances, there was no real safeguard to prevent existing customers from funding new expansion bills. Companies could each decide how to do the math on profitability, and that math just needed to show that customers in the expanded area were forecast to make up all the initial costs over a 40-year payback period.

Over the next 25 years this framework incentivized sprawl development, increased the number of new gas appliances spewing toxins into homes, and made returns from gas utilities so reliable and profitable they would become critical investments for banks, pensions, and institutions.
Subsidies for Enbridge paid by you

December 20, 2023 – Enbridge and Ministry of Energy closely working together

Enbridge staff also routinely emailed the energy minister’s office with social media posts and other online items, including an Enbridge-sponsored post in The Globe and Mail about carbon capture and storage opportunities in Ontario.

“Making sure you’ve seen this positive piece,” the Enbridge official wrote to members of the energy minister’s office.

“Excellent piece by Enbridge,” one government official responded.

Fatima Syed for The Narwhal

December 20, 2023 – Ministry of Energy and Enbridge Gas policy teams meet for regular virtual meeting

December 21, 2023 11:47 am – David Donovan, Energy Minister Todd Smith’s Chief of Staff, who worked for Enbridge as senior government affairs strategist from September 2013 to August 2018, sends out a meeting invite to 15 people, including:

Patrick Sackville, Ford’s Chief of Staff
Travis Kann, Ford’s Deputy Chief of Staff for Strategic Communications

December 21, 2023 5:55 pm – Ford’s staff unworried about legal risks associated with their statement

Legal will inevitably flag risks with pausing a decision and signalling legislation. We need to tell them that we understand those risks and are proceeding

We’ve had this risk flagged to us countless times before and each time it isn’t in any way a material factor. We need to proceed with saying we will introduce legislation otherwise the message is weak
Travis Kann, Ford’s deputy chief of staff for strategic communications

December 21, 2023 6 pm – OEB decision orders Enbridge Gas to stop passing the cost of connecting new homes to natural gas onto existing customers after assessing their application to set fees for 2024

The energy transition poses a risk that assets used to serve existing and new Enbridge Gas customers will become stranded because of the energy transition. Enbridge Gas has not provided an adequate assessment of this risk
OEB decision

The risk that arises from the energy transition results from gas customers leaving the gas system as they transition to electricity to meet energy needs previously met by natural gas. This departure gives rise to assets that are not fully depreciated but are no longer used and useful. This results in stranded asset costs that Enbridge Gas would seek to recover from the remaining gas customers. This in turn would increase rates for those gas customers, leading more customers to leave the gas system, potentially leading to a continuing financial decline for the utility.
OEB Decision and Order – Enbridge Gas Inc. Application for 2024 Rates, pgs. 20-21

To address that risk, the OEB says the cost to connect a new Enbridge gas customers – which averages of $4,412 according to Enbridge – should be paid up front by home developers to address that risk and incentivize developers “to choose the most cost-effective, energy-efficient choice.” This help ensure that cost recovery for natural gas infrastructure investments is sustainable as Ontario proceeds with the energy transition.

The OEB would not care about stranded assets if Enbridge was the one taking on the risk by paying for new pipeline construction themselves in order to earn a return on their investment. However, existing customers are the ones footing the bill, so the OEB must consider the chance of stranded assets when regulating the utility.

Its decision came after a yearlong process that involved tens of thousands of pages of documents analyzed in public hearings, and dozens of interviews with experts across the industry. In the end, the board concluded developers, not homeowners, should bear the cost of gas infrastructure — a burden that might push them to consider more eco-friendly, economical alternatives such as heat pumps to cool and heat buildings.
Ontario sides with Enbridge Gas in fight to connect new homes to natural gas

Impact

According to the OEB

The primary impact of [the decision] would be higher costs paid directly by many newly connecting customers and correspondingly lower capital costs to be included in rate base to support new customer connections, if the developer chooses to proceed with gas servicing.

When a developer is faced with the full cost of including gas service in a development, that developer will be fully incented to choose the most cost effective, energy efficient choice in a manner that not only achieves efficiency in the cost of housing in a competitive market and lowers the operating cost of that housing, but also maximizes the contribution to the government’s decarbonization policy goals. It also eliminates the split incentive problem [under which the developer makes the energy choice while the future home owner pays the cost of that choice]
OEB decision

To customers and homebuyers

The difference in costs would be a 0.53% increase in the average cost of a new home in Ontario as of July 2024 ($4,412/$837,685)

Lower energy bills for existing gas customers: Eliminating the subsidy will lower energy bills for existing gas customers by avoiding over $250 million each year in unnecessary gas pipeline costs covered by gas rates.

Encourage the most cost-effective development decisions: Developers do not have the right incentives now because they do not pay for gas infrastructure and do not pay the ongoing energy costs to run the expensive gas equipment they install. Eliminating the pipeline subsidy will encourage developers to install equipment that is best for the homebuyers.

Many benefits for new homebuyers: Better incentives for developers will encourage them to install heat pumps and induction stoves, which have many benefits for new homebuyers, including the following:

Lower energy bills: Heat pumps and induction stoves are much cheaper to operate than gas.

Avoid future retrofit costs: Installing electric equipment now will avoid retrofit costs that would otherwise be needed in the future for homes to get off fossil fuels for heating and cooking.

Eliminate carbon monoxide poisoning: Electric equipment fully eliminates the risk of carbon monoxide poisonings and fatalities from gas appliances.

Indoor air quality: Gas equipment, especially stoves, emit toxic gases into homes, which can contribute to respiratory problems, especially in children, seniors, and asthma sufferers. One study found that 13% of childhood asthma in the United States is attributable to gas stove use. Electric equipment results in cleaner air and healthier families.

Safety and convenience: Induction stoves heat water faster than gas, are easier to clean, and are much safer for children as the surface does not get hot. Heat pumps are stronger and more efficient than traditional air conditioners, providing better and cheaper cooling in the summer. These are just some of the additional benefits of electric equipment.

Lower carbon pollution: Encouraging less gas helps to avoid the carbon pollution that is already causing more frequent wildfires, drought, and green Christmases.

Environmental Defence letter to MPP Todd Smith

The effect of a new-home builder choosing to include gas service and paying the associated gas connection cost up front would be to increase the cost of the house by $4,400 on average, and less in new developments, while at the same time reducing the operating cost of the house through lower gas rates – largely a wash for homebuyers.

The other choice for new home builders is to decide against gas servicing and avoid the up-front connection cost, thus lowering the cost of housing and lowering the operating energy cost of the house – a win for homebuyers and an outcome for developers that keeps them competitive on price in the housing market.

Electrifying heating in a single-family Toronto home would result in energy savings over the useful life of the heating equipment of $16,750.
Why bother with an independent energy regulator? – Gowling WLG

To Enbridge

The new OEB policy would mean that, starting in 2025, [Enbridge’s] rate of asset and earnings (i.e. business) growth would drop off significantly.
Why bother with an independent energy regulator? – Gowling WLG

[The records] seem to indicate a growing concern at Enbridge regarding the future of regulatory treatment of natural gas in Ontario
Ian Mondrow, energy lawyer with Gowling WLG to The Narwhal

December 21, 2023 – David Donovan, Energy Minister Todd Smith’s Chief of Staff asks Enbridge’s President, others for a “quick response on a number of questions” about the decision from Enbridge Gas’ perspective

December 22-23, 2023 – Doug Ford’s office very involved in crafting Minister Todd Smith’s statement

Also would be great to add something about the magnitude of these costs — I expect it to be tens of thousands of dollars in additional costs

Additionally, the consequence of this decision would be slowing/halting thousands of new units of housing (including affordable housing) across the province. Need to keep costs down and improve certainty to keep building in face of all other headwinds.
Patrick Sackville, Premier Doug Ford’s Chief of Staff

Enbridge communicates with Smith’s office in crafting the statement

Enbridge will get us more tomorrow morning
David Donovan, Minister of Energy Todd Smith’s Chief of Staff

December 22, 2023 – Enbridge policy advisor thanks David Donovan for “the government’s early engagement” on the issue 30 minutes before the government announcement is released

December 22, 2023 – 15 hours after the OEB decision was released, Energy Minister Todd Smith says he is “extremely disappointed” in the decision as it will lead to “skyrocketing costs” and will use “all authorities” to reverse it

Our government was elected with a mandate to rebuild Ontario’s economy as we keep costs down for people and businesses and build the homes our growing province needs.

I am extremely disappointed in yesterday’s split decision by the Ontario Energy Board to reduce the amortization period for the cost of installing new natural gas connections for homes. This decision, which would mean costs that are normally paid over 40 years would be owed in full up front, could lead to tens of thousands of dollars added to the cost of building new homes. At a time when Ontario, like the rest of Canada, is already dealing with the difficult headwinds of high interest rates and inflationary pressures, the Ontario Energy Board’s decisions would slow or halt the construction of new homes, including affordable housing. We will not stand for this.

In response, I will use all of my authorities as Minister to pause the Ontario Energy Board’s decision. At the earliest opportunity, our government will introduce legislation that, if passed, would reverse it, so that we protect future homebuyers and keep shovels in the ground.
Energy Minister Todd Smith

Minister of Energy Todd Smith, MPP of Bay of Quinte previously served as the Official Opposition’s energy critic from 2015 to 2018 before the election of the Doug Ford government.

Critical response to the government’s statement

They facts as determined in the OEB’s decision do not, however support a “tens of thousands of dollars” increase in home costs, and it does not appear that the decision will in fact “slow or halt the construction of new homes.”

The conclusions expressed in the Minister’s statement are inconsistent with the facts relied on, and determinations made, by the OEB’s three-member expert panel of commissioners as a result of the comprehensive hearing process undertaken.
Why bother with an independent energy regulator? – Gowling WLG

The government’s assertion that the OEB decision would halt the construction of homes is false. Developers can just forgo gas connections and install heat pumps instead, which would be “a win for homebuyers” in the OEB’s words. If the government wants to subsidize the cost of new homes even more, they should do that through a subsidy for green electricity infrastructure.
Environmental Defence

December 22, 2023 – David Donovan sends the Minister’s statement to Enbridge executives, describing it as a “disappointing decision”, asks them for additional information, including the “cost impacts” to various housing customers and to keep the government informed

It would be helpful to have a few ‘scenario’ examples from run-of-the-mill to worst case

We’d appreciate it if you keep us informed with Enbridge Gas’s next steps, communications and otherwise

And we hope you can still salvage some downtime this holiday season and look forward to continuing to work together in the new year.
David Donovan, Minister of Energy Todd Smith’s Chief of Staff

The idea that the government would jump and say something and ask Enbridge to give them the data to support it, well, the government shouldn’t do that.
Jay Shepherd, energy lawyer

December 22, 2023 – Enbridge official thanks David Donovan, Patrick Sackville and others for their support

We appreciate the Ontario government’s ongoing efforts to support our common priorities to deliver reliable, affordable and sustainable natural gas to Ontario homes and businesses across the province
Enbridge official in email to Energy Minister Todd Smith’s and Doug Ford’s chiefs of staff

December 22, 2023 – Enbridge challenges the decision at Ontario Divisional Court, arguing the board went beyond its mandate

December 22, 2023 – Todd Smith: OEB strayed “out of their lane”, reframed the amortization period as a housing issue, instead of an energy issue

December 22, 2023 – Environmental Defence says OEB decision is a win-win for everyone but Enbridge

The OEB specifically found that developers opt to put in gas because they don’t have to pay for the gas pipes (because of the subsidy) or for the higher energy bills that home buyers pay from having gas instead of heat pumps.
Environmental Defence

January 2024 – Ivey Business School associate professors say OEB decision should have virtually no effect on affordable housing

the Government’s decision to override the OEB should have virtually no effect on affordable housing in the province. Based on our admittedly rough estimates, their policy might reduce the annual cost of buying a home by $92.74 or it could possibly increase it $32.90. Hardly seems worth damaging regulatory independence for.
When Housing Policy meets the Energy Regulator: Understanding the Minister of Energy’s Decision to Effectively Overrule the Ontario Energy Board – Ivey Ivey Business School associate professors

January 9, 2024 – Enbridge can appeal the decision, appeal the OEB’s decision to a fresh panel of OEB commissioners, and if needed, to the Ontario Court, there is no need for Ford government tip the scales

There are well-established mechanisms for addressing such concerns.

There is no need at this point for the Minister to override the considered and well-reasoned determination of the independent and internationally very well-respected Ontario energy regulator.
Why bother with an independent energy regulator? – Gowling WLG

February 22, 2024 – Ford government introduces Bill 165 “Keeping Energy Costs Down Act” to overrule the OEB’s decision and considerably limit their power and independence

Bill 165 amends the Ontario Energy Board Act, 1998 to:

Reverse the OEB’s decision, reinstating the amortization of gas connections over 40 years
Increase government authority over the OEB, allowing it to overrule it as it sees fit
Removing procedural fairness, the idea that processes that resolve disputes and allocate resources should be fair and free of bias

Procedural fairness does not apply

(7) Neither the issuance or approval of a directive under this section nor any action taken by the Board to implement or comply with it is subject to any duty of procedural fairness, including any requirement to provide notice, reasons or an opportunity to make submissions.

Bill 165 would

re-introduce a cross-subsidy for new connections to the natural gas grid1 that would impose hundreds of dollars in additional costs on Toronto ratepayers for little, if any, savings for new developments in Toronto, most of which are expected to forego connecting to the natural gas grid for reasons of cost (lower lifecycle cost of electric heat pumps) and policy (future City-led emission standards applying to new developments and eventually existing buildings);

maintain an uneven playing field by creating incentives for new gas connections that put ratepayers at risk, especially economically vulnerable ratepayers, of bearing the future costs of an energy transition away from fossil fuels including natural gas;

conflict with the City’s TransformTO Net Zero Strategy, Toronto’s Official Plan, and key City of Toronto policy measures (such as the Toronto Green Standard for new development and forthcoming Emission Performance Standards for buildings), which altogether envision a broad transition away from natural gas as the primary energy source for heating buildings between now and 2040; and

disregard the conclusions of the OEB as an expert, independent energy regulator that makes decisions based on evidence and an inclusive and transparent process – relatedly, Bill 165 also appears out of step with the findings and recommendations of the Government of Ontario’s own independent Electrification and Energy Transition Panel.

Impact of Bill 165 & Gas Utility Use of Public Property in Toronto by James Nowlan, City of Toronto Executive Director of Environment & Climate Division

January 11, 2024 – Competition Bureau launches investigation into Enbridge over deceptive marketing after complaint

The complaint:

Enbridge is telling potential customers that gas is the most cost-effective way to heat their homes and suggesting that it is “clean energy” and “low carbon.” None of these representations are true.

These representations are causing real harm. Customers in gas expansion areas stand to lose approximately $20,000 on average if they switch to gas instead of installing a high-efficiency electric heat pump (over the lifetime of the equipment). This will also create far more carbon pollution, making it more difficult and expensive to reach federal climate targets.
June 19, 2023 – Enbridge Gas Deceptive Marketing Practices – Environmental Defence

January 18, 2024 – Environmental Defence letter to MPP Todd Smith

Many jurisdictions, including New York State and Montreal, are prohibiting methane gas connections in new construction. This makes a great deal of sense as a way to lower energy bills now and avoid expensive retrofit costs down the road. It also shows that housing development does not require gas. It would be ill-advised to not only allow new gas-heated subdivisions, which saddle new homebuyers with needlessly high energy bills, but to pass legislation to maintain a subsidy for new gas connections and overrule the independent adjudicative body that found that those subsidies harm Ontarians and result in unnecessarily high energy bills.

January 19, 2024 – Ontario advisory body recommends clear government leadership to support the rapid but orderly energy transformation

The current transition to clean energy is driven by an emerging global commitment to reduce greenhouse gas emissions and the use of unabated fossil fuels as a primary driver of climate change. This transition involves a strategic evolution towards clean and renewable energy sources, greater electrification of energy end-uses and a comprehensive effort to enhance energy efficiency.

Short-term: present-2030 – A period of innovation and change during which government is needed to provide clear leadership in setting up the planning and regulatory frameworks that will be required to support the rapid but orderly transformation, much of it customer-driven, that can be expected to intensify after 2030.
Ontario’s Clean Energy Opportunity – Electrification and Energy Transition Panel (EETP)

January 22, 2024 – Enbridge appeals OEB decision in Ontario Divisional Court

At issue in this appeal are the following four issues (the “Appeal Issues”):

(a) The reduction of the Residential and Small Volume Customer Revenue Horizon from 40 years to 0 years (“Customer Revenue Horizon Issue”);

(b) The reduction in the Capital Budget (“Capital Budget Issue”);

(c) The Lengthening of the Average Useful Life of 7 Asset Classes for Depreciation purposes (“Asset Lives Issue”); and

(d) The Deemed Equity component of Enbridge Gas’ Cost of Capital (“Equity Thickness Issue”).

February 14, 2024 – Associate Professor at Ivey Business School says OEB has the economics right

In the end, the OEB got the economics right. Reducing the revenue horizon to zero is the best way to reduce the fixed cost share of customer gas utility bills in the face of energy transition risk, “protecting the interests of consumers with respect to price … [and] facilitating the rational expansion of the gas system” (OEB, 2023, pg. 22).

Regardless of your opinion on the path selected, the OEB’s Decision contains substantial foresight in how it tackled the energy transition. The OEB should be commended on this decision.
Brandon Schaufele, Associate Professor at Ivey Business School at Western University

February 1, 2024 – Township of Severn votes to support OEB decision to lower energy bills

Severn Council pass the following resolution:

WHEREAS: Residents are struggling with energy bill increases and need relief;

AND WHEREAS: Natural gas is no longer the cheapest way to heat homes because electric heat pumps are now much more efficient, can provide all heating needs even in the cold climates, and result in far lower energy bills compared to gas heating;

AND WHEREAS: Natural gas is methane gas, which is a fossil fuel that causes approximately one-third of Ontario’s GHG emissions, and must be phased out because it is inconsistent with all climate targets, while heat pumps result in the lowest GHG emissions and are consistent with a zero-carbon future;

AND WHEREAS: The Ontario Energy Board (“OEB”) decided to end a subsidy for methane gas pipelines to be built in new construction developments, effective 2025, finding that this would lower energy bills for existing gas customers and improve affordability for new homebuyers, but this decision is at risk of being overturned by the provincial government;

AND WHEREAS: The OEB decision will help lower energy bills and encourage heating systems that are consistent with climate targets and plans;

AND WHEREAS: The construction of new methane gas pipelines, which have 60-year lifetimes, should not be subsidized because they are inconsistent with climate targets and will result in higher carbon emissions, higher energy bills, higher future decarbonization retrofit costs to get off fossil fuel heating, and a continued financial drain as dollars leave the province to pay for fossil fuels extracted in other jurisdictions.

NOW THEREFORE BE IT RESOLVED:

THAT the Township of Severn expresses its support for the decision of the Ontario Energy Board to end the gas pipeline subsidy and ask the Ontario Government to allow the decision to stand.

AND THAT this resolution be circulated to the President of AMO, Colin Best, Premier Doug Ford, the Minister of Energy, Todd Smith, The Minister of Finance, Peter Bethlenfalvy and all regional municipalities requesting support of the proposed changes.

Support for OEB Decision to Lower Energy Bills

February 6, 2024 – City of Toronto votes refer decision to Executive Committee, then to City Manager for consideration

Fossil fuel subsidies are bad for consumers, bad for air pollution, bad for climate pollution, and bad for human health. This motion is to support a decision by the Ontario Energy Board (“OEB”) to stop forcing existing customers to subsidize construction of new methane gas pipelines, effective 2025. The Ford government is contemplating overriding this very sensible decision, and forcing Toronto customers to keep subsidizing new fossil fuel pipelines.
No More Subsidies for New Gas Pipelines that Drive Up Torontonians’ Energy Costs

February 7, 2024 – Enbridge Vice President sends letter to Toronto City Council, saying the $250M subsidy is not true

The motion states that new natural gas connections are subsidized in the amount of $250M annually. This is simply not true.
Sharing this misleading misinformation with municipal leaders could have damaging ramifications if decisions are
made without accurate facts.
Malini Giridhar, Vice President, Regulatory and Business Development of Enbridge Gas Inc.

February 14, 2024 – City of Hamilton votes to support OEB decision

Support for the Decision of the Ontario Energy Board to End the Gas Pipeline Subsidy

WHEREAS, residents are struggling with energy bill increases and need relief;

WHEREAS, natural gas is no longer the cheapest way to heat homes because electric heat pumps are now much more efficient, can provide all heating needs even in the cold climates, and result in far lower energy bills over the long term compared to gas heating;

WHEREAS, natural gas is methane gas, which is a fossil fuel that causes approximately one-third of Ontario’s GHG emissions, and must be phased out because it is inconsistent with all climate targets, while heat pumps result in the lowest GHG emissions and are consistent with a zero-carbon future;

WHEREAS, the Ontario Energy Board (“OEB”) decided to end a subsidy for methane gas pipelines to be built in new construction developments, effective 2025, finding that this would lower energy bills for existing gas customers and improve affordability for new homebuyers, but this decision is at risk of being overturned by the provincial government;

WHEREAS, the OEB decision will help lower energy bills and encourage heating systems that are consistent with climate targets and plans;

WHEREAS, the construction of new methane gas pipelines, which have 60-year lifetimes, should not be subsidized because they are inconsistent with the City’s climate targets and will result in higher carbon emissions, higher energy bills, higher future decarbonization retrofit costs to get off fossil fuel heating, and a continued financial drain as dollars leave the province to pay for fossil fuels extracted in other jurisdictions;

WHEREAS, Hamilton City Council declared a climate emergency in 2019;

WHEREAS, transforming our buildings by supporting actions that improve the energy efficiency and GHG profile of new buildings within the City is one of 5 low-carbon transformations from ReCharge Hamilton, the City’s Community Energy and Emissions Plan (CEEP); and

WHEREAS, the City of Hamilton is actively working to support the decarbonization of heating and cooling systems in existing and future building stock within the community, as demonstrated by the Better Homes Hamilton Home Energy Retrofit Pilot Program, which will provide 0% interest loans to up to 50 Hamilton homeowners to enable them to transition away from fossil-fuel powered heating and cooling equipment to low carbon air or ground source heat pump systems.

THEREFORE, BE IT RESOLVED:
(a) That the City of Hamilton expresses its support for the decision of the Ontario Energy Board to end the gas pipeline subsidy and requests that the Ontario Government allow the decision to stand; and

(b) That this resolution be circulated to the President of Association of Municipalities of Ontario, Colin Best; Premier of Ontario, Doug Ford; Minister of Energy, Todd Smith; Minister of Finance, Peter Bethlenfalvy and all Ontario Municipalities requesting support for the proposed changes.
City of Hamilton Motion CARRIED by a vote of 12 to 0

February 22, 2024 – Environmental Defence condemns Ontario government’s move to overrule OEB decision

This legislation would be bad for new homeowners, bad for existing gas customers, and bad for the environment. The only one that benefits is Enbridge gas. This is all too similar to the Greenbelt scandal: the government is legislating against the public good in the services of a few private interests, namely Enbridge and housing developers.
Environmental Defence

February 22, 2024 – Ford government requests feedback on Bill 165

February 26, 2024 – MPP Todd Smith has a heat pump and doesn’t have natural gas connection

It was interesting to me that, again, the minister said he’s got a heat pump. He said when it gets really cold, the electric furnace backup in the installation comes on. Fair enough. I’ve got a heat pump at home. I’ve never been cold; I’m assuming the backup comes on when it gets really cold.
MPP Peter Tabuns

Clearly, you didn’t listen to the minister because he said, “I have a heat pump because there’s no natural gas servicing me.” So he doesn’t depend on natural gas when it gets cold. His heating unit has an electric-resistance backup, just as mine does. So when it gets too cold for the heat pump, he uses electric heating. So he doesn’t use gas at all.
MPP Peter Tabuns

[Other parties] can be beholden to the environmental groups; they can be beholden to those who are ideological. We are not going to do that. We’re going to stand up for the people of Ontario.
MPP Todd Smith

February 27, 2024 – County of Prince Edward votes to support the OEB decision

February 27, 2024 – MPP Todd Smith responds to questions from Green MPP Aislinn Clancy

The Minister of Energy actually told us that he even has one in his own home. How great is that? A leader. The minister actually believes in renewable energy for himself and yet axes that opportunity for others.
Liberal MPP Mary-Margaret McMahon

Speaker, my question is for the Premier. I didn’t see the part in the Conservative playbook where it says we need bigger government and subsidies for monopolies. But last week, the government chose to reverse the OEB’s decision that supports fairness for all ratepayers and would have created an open and fair market to help Ontarians get off fossil fuels and switch to cheaper, cleaner alternatives. But the Premier is sticking you and you and you—and all of us—with the bill again. Customers would have saved $2 billion in the next five years, but they sided with Enbridge and the $19-million CEO.

Last year, global spending in the clean economy was $1.8 trillion, up 17% from the year before, but we are missing out on jobs and investments. Why? Because ratepayers are subsidizing fossil fuel gas.

Will the Premier commit to subsidizing heat pumps and stop funding a gouging, greedy, polluting energy monopoly?
MPP Aislinn Clancy

You know what? It’s really, really important that the people of Ontario understand that the Green Party has been fairly consistent in their views on where we’re going, while the NDP and the Liberals continue to try and figure out what it is that they want to do.

What I can tell you is what we’re doing here in Ontario, as the government of Ontario and the Progressive Conservative government, is ensuring that we have a diverse energy system, one that is reliable for the people of Ontario so that we will continue to see the growing economy that we’ve been experiencing that the minister of economic development just explained to the Liberal members in their small caucus here. We are seeing thousands, hundreds of thousands, of jobs coming back to our province, because we have a reliable, affordable and clean energy sector here in Ontario, one that’s seeing Ontario become the engine of Canada’s economy—
MPP Todd Smith

Mr. Speaker, what raises energy bills is making four million ratepayers pay more and giving those dollars to Enbridge, a company that made $16 billion last year in profits, so that you can pay, you can pay and you can pay for a bad investment. That’s what the OEB said: It’s a bad investment.

This will raise energy bills. It will stick homeowners with outdated polluting technologies and higher heating costs for decades—technologies that make us sick, that are burning our province down. And the fires are coming this summer.

We are in a housing crisis, and we need to build more homes, not lemons that need retrofits in a few years. For years, we’ve seen report after report after report showing that renewables are cheaper, safer and cleaner than fossil fuels. So why the double standard?

Speaker, will the Premier save Ontarians money? Will they create jobs and allow Ontarians to start switching to clean energy sources instead of giving money to Enbridge and make a fair market that will create jobs for everyone?
MPP Aislinn Clancy

Speaker, this is why the Green Party has hit their ceiling: two seats in the Legislature.

Yeah, they’re on their way up, but this is as far as they’re going to go if this is the way they’re going to talk to the people of Ontario, because what we need is a diverse energy sector.

The Green Party members and the NDP can look up at the members of the Canadian Propane Association who are here today and tell them, “Get out of our province. We don’t want you anymore”—because, basically, that’s what they’re saying—when there are people across this province who live in rural and northern parts of our province who need propane; they need natural gas to heat their home. They need a reliable, affordable, clean energy system.

We’re very, very lucky that we live in one of the cleanest jurisdictions in the entire world when it comes to energy. Some 3% of the province’s emissions are coming from our electricity sector, but they want us to shut down natural gas plants. The NDP energy critic wants to shut down natural gas and nuclear. Where would that—
MPP Todd Smith

March 4, 2024 – Town of Whitby votes to support OEB decision

March 12, 2024 – Lake of Bays votes to support OEB decision

March 19, 2024 – City of Kingston votes to support OEB decision

March 27, 2024 – Town of Pelham votes to support OEB decision

March 27, 2024 – Macdonald Laurier Institute, funded oil and gas billionaires the Koch Brothers, says decision is likely to cause energy shortages

The decisions share these flawed assumptions:

(1) that climate policies should be accepted as determinative of future energy system design, rather than as aspirational targets;

(2) that more risk should be assigned to the possibility of stranded assets than to the threat of energy shortages;

(3) that Canada has the ability to generate and deliver the amount of electricity needed to replace natural gas in the timeframes policymakers prefer; and

(4) that the natural gas market will erode due to the energy transition, even as we observe increased consumption to meet not only a growing population but new sources of energy demand from data centres, AI, and other drivers.
Don’t overthink it, Canada—we need natural gas now more than ever by Heather Exner-Pirot, Director at the Macdonald Laurier Institute (funded by oil interests such as ExxonMobil and oil and gas billionaires the Koch Brothers) and Special Advisor to Business Council of Canada (funded by CEOs of 150 leading Canadian companies)

March 26, 2024 – Guelph votes to supports OEB decision, 8-4

April 10, 2024 – Ford government introduces Bill 185, part of which makes it

SCHEDULE 11
ONTARIO ENERGY BOARD ACT, 1998

The Schedule amends the Ontario Energy Board Act, 1998. Currently, subsection 90 (2) of the Act provides that the requirement to obtain leave to construct does not apply to the relocation or reconstruction of a hydrocarbon line unless the size of the line is changed or the acquisition of additional land or authority to use additional land is necessary. The subsection is re-enacted to provide that the requirement to obtain leave to construct applies to the relocation or reconstruction of a hydrocarbon line only if the conditions prescribed by the regulations are met. A complementary re-enactment of subsection 92 (2) of the Act is made.
Bill 185 “Cutting Red Tape to Build More Homes Act”, 2024

These changes streamline processes for constructing or modifying natural gas infrastructure by clarifying when approval is necessary, potentially reducing bureaucratic delays.

It makes it easier for Enbridge to build natural gas pipelines, aligning with the province’s goal to build more homes, but promotes the use of natural gas in Ontario, which increases greenhouse gas emissions.

response to two-op eds that appeared around Earth Day, submitted by environmentalists, decrying the Ford government moving energy policy in Ontario backwards with the announcement of Bill 165

Ontario’s Bill 165 will increase energy costs and fuel global warming – Hamilton Spectator Opinion

April 20, 2024 – Canadian Health Association for Sustainability & Equity (CHASE) says Bill 165 will increase energy costs and fuel global warming

Buildings are a major source of climate emissions in Canada. In the Greater Toronto and Hamilton Area, which is home to about 20 per cent of Canada’s population, buildings are responsible for nearly one half (44 per cent) of all climate emissions. Most of those emissions come from the burning of natural gas to heat our buildings. These emissions are no longer necessary.
Ontario’s Bill 165 will increase energy costs and fuel global warming – Hamilton Spectator Opinion

April 25, 2024 – Vice President of Enbridge Malini Giridhar responds to “disinformation” in CHASE opinion piece

the correct rate impact of all matters is approximately two per cent, less than $25 per year for the average customer for 2024. Rate impacts beyond 2024 are unknown as they have not been determined or approved by the OEB.

Bill 165 would not have the effect of subsidizing Enbridge Gas in any form. Enbridge Gas does not receive direct subsidies or taxpayer money from the Government of Ontario, unlike the electricity sector.
The importance of factual information in Ontario’s energy system – Hamilton Spectator Opinion

argued that the word “subsidies” can only be used for taxpayers and doesn’t apply to energy ratepayers, which they call their customers. But a crucial piece of information is that Enbridge isn’t any old business; it’s a regulated monopoly. The government directly sets the rates Ontarians pay for gas distribution. And it’s absolutely fair to call a political choice to raise rates Ontarians need to pay by $250 million dollars a year a “subsidy” — for Enbridge, it’s basically the same as if the government simply wrote them a $250 million cheque every year from now on.

Raising the rates is actually less equitable than a subsidy from government spending would be because high-income households can afford to switch to cheaper heat pumps and lower their bills, while renters and low-income households are disproportionately unable to make upgrades to their homes.

It’s hard to think of a more supportive relationship than having a friend in the Energy Minister’s office work staff overtime to overrule the independent regulator for Enbridge’s gain.
Lucia Iannantuono is an environmental activist with Hamilton 350, Environment Hamilton, and the Green Party of Ontario.

May 7, 2024 – Ontario Greens Leader requests audit into PC decision

The government’s choice to overturn such a decision by an independent body sets a dangerous precedent, and it once again puts the interests of wealthy, well-connected insiders before everyday Ontarians.
MPP Mike Schreiner

May 7, 2024 – Peterborough votes to support OEB decision, 5-4

Reverse OEB Decision on ENBRIDGE – Bill 165

WHEREAS Residents are struggling with energy bill increases and need relief;

AND WHEREAS Natural gas is no longer the cheapest way to heat homes because alternatives such as heat pumps are available;

AND WHEREAS Natural gas is methane gas, which is a fossil fuel that causes approximately one-third of Ontario’s GHG emissions, and must be phased out because it is inconsistent with all climate targets, while heat pumps result in the lowest GHG emissions and are consistent with a zero-carbon future, and other alternatives such as solar, and wood also lower GHG emissions;

AND WHEREAS The Ontario Energy Board (“OEB”) decided to end a subsidy for methane gas pipelines to be built in new construction developments, effective 2025, finding that this would lower energy bills for existing gas customers and improve affordability for new homebuyers, and also cut an additional $1.25 billion in pipeline costs, but this decision is at risk of being overturned by the provincial
government;

AND WHEREAS The OEB decision will help lower energy bills and encourage heating systems that are consistent with climate targets and plans;

AND WHEREAS The construction of new methane gas pipelines, which have 60-year lifetimes, should not be subsidized because they are inconsistent with the municipal climate targets and will result in higher carbon emissions, higher energy bills, higher future decarbonization retrofit costs to get off fossil fuel heating, and a continued financial drain as dollars leave the province to pay for fossil fuels extracted in other jurisdictions.

NOW THEREFORE BE IT RESOLVED THAT the City of Peterborough expresses its support for the December 21, 2023 decision of the Ontario Energy Board and asks the Ontario Government to withdraw further carriage of Bill 165 in the legislature.

AND FURTHER THAT this resolution be circulated to the President of AMO, Colin Best, Premier Doug Ford, the Minister of Energy, Todd Smith, The Minister of Finance, Peter Bethlenfalvy and all regional municipalities requesting support of the proposed changes.

June 6, 2024 – MPP Todd Smith moved from Minister of Energy to Minister of Education

June 25, 2024 – Brantford votes to support OEB decision

12.2.7 Support for the Decision of the Ontario Energy Board to End the Gas Pipeline Subsidy

WHEREAS residents are struggling with energy bill increases and need relief; and

WHEREAS natural gas is no longer the cheapest way to heat homes because electric heat pumps are now much more efficient, can provide all heating needs even in cold climates, and result in far lower energy bills over the long term compared to gas heating; and

WHEREAS natural gas is methane gas, which is a fossil fuel that causes approximately one-third of Ontario’s GHG emissions, and must be phased out because it is inconsistent with all climate targets, while heat pumps result in the lowest GHG emissions and are consistent with a zero-carbon future; and

WHEREAS the Ontario Energy Board (OEB) decided to end a subsidy for methane gas pipelines to be built in new construction developments, effective 2025, finding that this would lower energy bills for existing gas customers and improve affordability for new homebuyers, but this decision is at risk of being overturned by the provincial government; and

WHEREAS the OEB decision will help lower energy bills and encourage heating systems that are consistent with climate targets and plans; and

WHEREAS the construction of new methane gas pipelines, which have 60-year targets and will result in higher carbon emissions, higher energy bills, higher future decarbonization retrofit costs to get off fossil fuel heating, and a continued financial drain as dollars leave the province to pay for fossil fuels extracted in other jurisdictions; and

WHEREAS the City of Brantford declared a climate emergency in 2019; and

WHEREAS transforming buildings by supporting actions that improve their energy efficiency aligns with the goals outlined in Brantford’s Climate Change Action Plan.

NOW THEREFORE BE IT RESOLVED:
A. THAT the City of Brantford EXPRESS its support for the decision of the Ontario Energy Board to end the gas pipeline subsidy and RESPECTFULLY REQUESTS that the Ontario Government allow the decision to stand; and

B. THAT this resolution BE CIRCULATED to the President of the Association of Municipalities of Ontario, Colin Best; Premier of Ontario, Doug Ford; Minister of Energy, Todd Smith; Minister of Finance, Peter Bethlenfalvy all Ontario Municipalities, The Honourable Marit Stiles, Leader of the Official Opposition, and The Honourable Bonnie Crombie, Leader of Ontario Liberal Party.

August 16, 2024 – MPP Todd Smith resigns as Minister of Education, Enbridge Gas thanks him on Twitter

August 19, 2024 – MPP Todd Smith received a lot of interesting offers from the energy sector and beyond after being removed from Minister of Energy

September 16, 2024 – Most feedback objects to Bill 165, Ontario decides to proceed as-is

Many industry stakeholders supported the proposal, noting that it was the government’s role to set energy policy, not the OEB’s, and broader engagement by the OEB is desirable. Some also noted that the proposal would improve policy certainty.

However, some industry stakeholders objected to the proposal due to unintended consequences for allowing preferential treatment of select economic sectors and interference with an independent regulator with long-standing processes that keep energy prices down.

The majority of comments received by individuals objected to the proposal. The majority of these comments objected, citing concerns with overturning a decision by an independent regulator and noting that the OEB held a thorough public hearing process with expert advice. Other comments included objections to subsidizing new natural gas connections and the role of fossil fuels contributing to climate change.

Environmental and health stakeholders and some large municipalities objected to the proposal as it contradicts efforts to reduce greenhouse gases, there are better options for space heating such as electric heat pumps, that the proposal creates financial risks for gas customers, and that the proposal compromises OEB independence.

Other objections included that the OEB had not “overstepped its mandate” noting government direction to the OEB to push for further electrification and innovation from the OEB to transition to cleaner energy. Some also noted that the government did not have to intervene as there are other options to challenge an OEB decision available.

We decided to proceed with the proposal without modification to provide the government with legislative authority to prescribe regulations and issue directives to ensure fair and informed decision-making at the OEB. Also, the government proceeded to file Ontario Regulation 273/04, which took effect on July 1, 2024, to prescribe the revenue horizon for low-volume gas customers to 40 years (and 20 years for all other customers).
ERO decision

Ford government’s Bill 165 overrides regulator, raises your Enbridge bill, increases gas use