(A 7-minute read)

 

In the worst-case scenarios in scientists’ climate models, human-caused climate change is a threat to the continued existence of many species and to human society as we know it. 

In a very monster-us way Climate Change has committed numerous villainous acts wreaking havoc on our world and we know it will continue to do so long into the future.  If humans do nothing to slow climate change, then global temperatures may increase by 4.5 degrees Celsius or more by the year 2100.   The world’s efforts to address this are proceeding far too slowly and that is why 2024 is a crucial year for climate advocacy and diplomacy. 

Why do we have a fight happening, at the beginning of 2024, between the Ontario Energy Board and the Ford government, over a decision by the OEB that will expedite the energy transition from gas heating to electric heating in Ontario? 

The OEB is Ontario’s independent regulator of the electricity and natural gas sectors.  They protect consumers and make decisions that serve the public interest. Their goal is to promote a sustainable and efficient energy sector, for today and tomorrow. Their mandate and authority come from the Ontario Energy Board Act, 1998, the Electricity Act, 1998, and a number of other provincial statutes including: the Energy Consumer Protection Act, 2010, the Municipal Franchises Act, the Oil, Gas and Salt Resources Act, the Assessment Act, and the Toronto District Heating Corporation Act.  This means they make rules that energy companies must live by.   It also means they think about the long-term needs of our energy sector and develop regulatory policy to meet those needs and emerging challenges.

According to the December 2023 OEB report – 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, often referred to as the utility death spiral. In the face of the energy transition, the onus was on Enbridge Gas to demonstrate that its proposed capital spending plan, reflected in its Asset Management Plan, is prudent, having accounted appropriately for the risk arising from the energy transition.

The OEB says in their report dated Dec 21, 2023, in part, as follows: “The record is clear that Enbridge Gas has failed to do so”.  Also, “in the absence of a meaningful assessment of the risk there is a completely insufficient evidentiary basis on which to determine whether Enbridge Gas will continue to be financially viable. The OEB is left with the clear conclusion that the energy transition is underway, it creates a risk of stranded asset costs, and that Enbridge Gas has not addressed this in any meaningful way. The OEB is not satisfied that Enbridge Gas’s proposal will not lead to an overbuilt, underutilized gas system in the face of the energy transition.”

Source:  https://www.oeb.ca/sites/default/files/backgrounder-EGI-EB-2022-0200-20231221-en.pdf 

The Ford government does not like this.  It wants the status quo to continue to expedite shovels in the ground faster to help build 1.5 million new homes quicker, and this decision by the OEB will slow that down. 

While the world is being attacked by the Monster of Climate Change, the Ontario government is being controlled by the Monster of  Complacency – a monster-us case of lack of conviction to strive for anything better, and a trap humans can fall into where they don’t recognize risks, don’t try hard enough, and don’t make improvements when they can.

Here is why the OEB decision must be supported and Doug Ford’s effort to overturn it must be stopped:

An electric heat pump is a form of electric heating far more efficient than traditional baseboard heaters or electric furnaces that can operate at up to triple the efficiency compared to other kinds of heating.  It is a very positive thing that Canadians are being encouraged to switch to electric heat pumps to cut greenhouse gas emissions.  According to Environmental Defence, heating our homes and buildings is responsible for 19 percent of Ontario’s greenhouse gas emissions.  This is why heat pumps need to become the central technology used to cut heating’s climate impact.

While heat pumps have been around for decades, cold-climate air-source heat pumps are relatively new, and new compressors used in heat pumps today can get refrigerants to higher pressures using less power.  The gulf in efficiency between heat pumps and heaters comes down to how they work. Space heaters work by transforming energy from the form of electricity into another form, heat. Heat pumps, on the other hand, aren’t turning electricity into heat—they’re using electricity to gather heat and move it around. It’s a subtle difference, but it basically means that a heat pump can return significantly more heat using the same amount of electricity. 

For this reason a Canadian Institute for Climate Choices report says that to drive deeper emissions cuts, the switch to heat pumps “needs to play an essential and growing role to get Canada to net zero”.

The Province of Quebec has already responded to the wisdom of this.  After December 31, 2023, it is illegal to replace existing furnaces with any sort of heating system powered by fossil fuels in Quebec.  And in Nanaimo, British Columbia, new homes won’t be allowed to have natural gas as a primary heat source as of July 1, 2024.  Plus this is a strategy endorsed by the International Energy Agency (IEA), an intergovernmental organization affiliated with the Organization for Economic Co-operation and Development that’s focused on secure and sustainable energy.

The IEA has recommended that bans on new fossil fuel boilers need to start being introduced globally in 2025 and that most old buildings and all new ones must comply with zero-carbon-ready building energy codes. That’s because the lifetime of heating equipment can be a couple of decades.

This is also why other countries like Denmark banned installation of oil-fired boilers and natural gas heating in new buildings in 2013 and is now subsidizing the electrification of older buildings.  Norway also banned the use of oil heating in 2020 and has almost completely electrified its building heating.   These were very wise decisions that every province in Canada should be following – not just in Quebec and Nanaimo BC. 

This is why the OEB has clearly decided it is time: “The Status Quo Must Go”.  The board said: “Affordable housing has two components — the cost to buy the house and the cost to operate the home. Both are important. A home may have what appears to be an affordable purchase price, but that price advantage is diminished if the cost to operate the home, including the home’s energy costs, are higher than they need to be.”

Historically, the cost of connecting new homes to natural gas has been passed to customers, spread out over 40 years of ownership. The board decided this was “unreasonable” with the energy transition underway. It thinks this cost should be paid in full and upfront by developers — which used to pay for water and sewer connections before the Ford government passed those costs on to taxpayers — to ensure builders are “fully incentivized to choose” climate resiliency and long-term affordability for customers.  

Therefore, the OEB came to the clear conclusion that the energy transition is underway, and decided that, as of 2025, Enbridge Gas would have to ensure developers cover the full cost of connecting new homes to natural gas.  It also reduced Enbridge Gas’ spending budget on new pipelines by $250 million, or 17 per cent, and told the company to focus on repairing existing pipelines instead of rebuilding them.

This decision has greatly upset Enbridge Gas who in an attempt to expand its natural gas infrastructure across Ontario has been telling residents that gas is the cheapest way to heat their homes, when it’s not.  They have been lying.  Heat pumps are the cheapest by far due to their high efficiency – three to five times higher than gas – and upfront equipment costs can also be lower because heat pumps provide both heating and cooling in one unit and they qualify for a number of government rebate programs. 

This decision hasn’t just upset Enbridge, it has also upset the Ford government enough for them to respond in less than 24 hours after the decision was published.  The Provincial Energy Ministry said they would pause the board’s decision and introduce legislation to reverse it at the “at the earliest opportunity.” – because they say- the decision “would slow or halt the construction of new homes, including affordable housing.

So now, at a time when government commitments and science call for weaning off of fossil fuels, our province’s energy board, our Ford government and Enbridge are in a fight over whether Ontarians should continue to pay to link their homes to natural gas.

To ensure customers aren’t saddled with the cost of an expensive stranded asset, the OEB decision said going forward that gas connections must be paid for immediately (projects under a provincial expansion program are exempt) rather than over 40 years through gas rates collected from residents. The OEB eliminated a gas hookup subsidy so developers will have to pay roughly $4,400 upfront to connect a new home to the gas grid.  Or they could install electric heat pumps, which the OEB said would be “a win for homebuyers” and developers because it would keep their builds cost competitive.

It’s clear that we need to transition to electric heating if we are to have a chance at meeting our emissions reductions targets.  Unfortunately, our Premier is only focused on his plan to build 1.5 million homes by 2031, and Enbridge is a very wealthy gas company in an expansion mode, that wants to see him get his way.

Therefore, it is important that we get more people to talk about this now, and we need to organize and let our leaders know we support the OEB decision.  Time matters – 2024 is a crucial year for climate advocacy and diplomacy.

Seniors for Climate Action Now! (SCAN!) wants Doug Ford to know that we will not stand by quietly and watch this shameful exhibition of his wilful blindness to what needs to be done to slow down climate change.  The Ontario government and all Ontarians must welcome the OEB decision and let it stand.  We all need to support the OEB decision – Loudly! 

 

Robert Hicks lives in St. Catharines, Ontario. He is a member of the Seniors for Climate Action Now! (SCAN!) Education Committee.

 

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