Ontario seeks to overrule independent energy board on natural gas decision

Ontario’s energy minister introduced legislation Thursday to overturn a decision on natural gas connections by the province’s independent energy regulator, a move decried by environmental advocates as a setback to progress on clean energy.

The December decision by the Ontario Energy Board would increase costs for homebuyers by making them pay up front for the connection instead of seeing it amortized over 40 years, Todd Smith said.

The bill would give the province authority to reverse the OEB decision, reset the amortization period to 40 years, and enable the government to direct the regulator to conduct a separate hearing on any matter of public interest.

‘The last thing we want to be doing is intervening here, but we do have the best interests of the people of Ontario in mind,” Smith said.

“We want to ensure that we keep the cost of building new homes down, because we set a goal to build (1.5 million) of them over the next 10 years. The last thing we want to see is the price of new homes going up.”

But environmental groups have said the decision was a huge win for the environment and Ontarians, as it would have encouraged the uptake of greener home heating and cooling such as heat pumps and actually be beneficial for consumers.

“If the Ford government overrules the Ontario Energy Board, homeowners will get stuck with higher costs and more air pollution,” Keith Stewart, senior energy strategist with Greenpeace Canada wrote in a statement.

“We should be installing the cleanest and lowest-cost options for heating and cooling new homes, even if that makes some of the Ford government’s well-connected friends at Enbridge and in the property development industry unhappy.”

The OEB decision relates to a rate application from Enbridge, which serves the majority of natural gas customers in the province, and Enbridge has filed a motion with the energy board asking it to reconsider its decision and has also asked the Divisional Court to set aside four key parts of the ruling.

The energy board ruled that Enbridge’s long-term plan is unreasonable because it assumes that every new housing development will include gas servicing and that homebuyers will remain on gas for 40 years, despite an energy transition toward electrification being underway.

Amortizing the cost of a natural gas connection over 40 years for customers will leave a large stranded asset risk as some customers inevitably get off natural gas, and that’s a cost that would be paid by future ratepayers, the decision said.

Instead, the OEB said the connection cost, which Enbridge estimated at about $4,400, should be paid up front by home developers to address that risk and incentivize developers “to choose the most cost-effective, energy-efficient choice.”

Enbridge said in its notice of appeal that the OEB has historically directed it to use 40 years and erred in law by “rendering a decision in the absence of any evidence considering the effect of a 0 year revenue horizon and with no evidence that any other jurisdiction has adopted this approach.”

The OEB heard submissions from a large number of groups and heard suggestions to lower that 40-year amortization period to either 30, 20, 15 or zero years.

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