Enbridge appeals Ontario Energy Board ruling on natural gas costs

Enbridge Gas is taking the Ontario Energy Board to court over a decision the utility said would increase costs for consumers, but which environmental groups have applauded as encouraging less reliance on natural gas.

Enbridge has filed a notice of appeal in Ontario's Divisional Court asking the court to set aside four key parts of the late December OEB ruling that would see customers pay the total capital cost of a natural gas connection upfront instead of spread over 40 years.

"As a result of the errors of law or jurisdiction made by the OEB in relation to the appeal Issues, the OEB failed to set rates that are just and reasonable," Enbridge wrote in its court filing.

Energy Minister Todd Smith has said the OEB strayed "out of their lane" with the decision and said he will introduce legislation to overturn it because it would increase the cost of new homes.

But environmental groups 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 like heat pumps. The reversal would be just a gift to Enbridge Gas, the advocates said.

"Enbridge can fight this ruling in court, but the rapidly dropping price of renewably powered heat pumps make the energy transition inevitable regardless of who wins the next election," Keith Stewart, senior energy strategist with Greenpeace Canada, wrote Tuesday in a statement.

"Their attempts to delay, however, could cost us all dearly in both higher energy bills and a greater disruption of our climate fueling more extreme storms, wildfires and flooding."

The OEB decision relates to a rate application from Enbridge, which serves the majority of natural gas customers in the province.

The energy board said the utility'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.

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."

This report by The Canadian Press was first published Jan. 23, 2024.