Energy giant Enbridge is proposing to hike Ontario heating bills higher than its rates from two years ago, following a decision by Premier Doug Ford's government to cancel climate change policies and fight a federal carbon tax.
The numbers proposed by the Calgary-based energy company's subsidiary, Enbridge Gas Inc., show that the increase would actually be greater than a similar increase introduced under the climate policies of former Ontario premier Kathleen Wynne's government.
This means that the Ford government’s policies, ostensibly made to save taxpayers money, have in fact opened the door to federal policies that would raise the cost of natural gas used to heat the province’s homes and business and cook its food.
On Jan. 11, Enbridge applied to the provincial energy regulator Ontario Energy Board (OEB) to increase its rates by about $86 per year to compensate for federal climate change policies that are now being imposed because the Ford government scrapped the Wynne's cap and trade program.
The cap and trade program was an international market that was designed to allow the private sector to find the cheapest costs for reducing emissions through a system that required polluters to pay and allowed greener companies to earn extra revenues.
Under this program, the OEB had approved an increase in November 2017 of about $70 to $80 per year for Enbridge's 3.7 million Ontario customers, depending on their location.
Enbridge later dropped that increase in October 2018, a few months after Ontario's Progressive Conservative government took power in June and dismantled the province's existing climate framework as their first act in office.
The elimination of Ontario's climate policies prompted Prime Minister Justin Trudeau's government to intervene and impose a price on pollution — a policy tool that governments around the world, economists and environmentalists agree is the most cost-effective way to reduce carbon pollution in order to prevent severe economic disruptions caused by impacts identified in peer-reviewed scientific literature, including melting ice caps, extreme weather, ocean acidification and disappearing species.
In Canada, the Trudeau government used this scientific evidence as a basis for establishing the December 2016 pan-Canadian climate framework agreement that allowed provinces to impose carbon pricing and then decide on their own how to spend that revenue. The federal, provincial and territorial governments said at the time that it would "contribute" towards reaching Canada's international climate commitments.
Ottawa wasn't planning to intervene under the climate policies of former Liberal premier Kathleen Wynne's government, since it believed that Ontario was previously working to meet the federal standard.
But, since Ontario's Tory leadership has failed to keep the province's climate progress, the Trudeau government now has control over the carbon tax revenues in Ontario and is using the money to send carbon rebates directly to taxpayers as part of its plan. This will allow many Ontario households to earn more in rebates than what they would be paying in Enbridge's proposed rate increases.
The federal government estimates the rebate would be about $307 for an average family of four in 2019. This rebate would increase every year, reaching about $718 for the average Ontario family by 2022.
'Is that what you're writing?'
Nevertheless, the Ford government is pointing the finger at Trudeau for the looming rate increases, under the proposal from Enbridge Gas, a near-monopoly provider of natural gas to much of southern Ontario.
The office of Ford's energy minister, Greg Rickford, also expressed concern, when asked by National Observer if its own policies are to blame for rising prices.
"Your questions seem to imply that this is somehow Ontario's fault or responsibility because of the end of cap and trade," wrote Rickford's spokesman Brayden Akers, in an email. "Is that what you're writing?"
In a subsequent email, he said it would be unfair to blame Doug Ford's government for the proposed hikes.
"Any suggestion that this is a result of policy actions by the Ontario government is a torque like I've never seen before," Akers wrote. "It's fully within their (federal) powers to stop this unconstitutional tax — and they should."
Ontario's Ford government has also teamed up with conservative-leaning allies in other provinces, including Saskatchewan and Alberta, to challenge the federal carbon pricing plan in court. But most constitutional experts agree that the federal government has full powers to introduce taxes. The Manitoba government has even published independent legal advice that confirms the federal government's authority to impose a carbon tax.
Meantime, the Trudeau government is pushing back.
"Conservative politicians like Andrew Scheer and Doug Ford want to take us back to the Harper days and make it free to pollute again," Sabrina Kim, federal Environment Minister Catherine McKenna's spokesperson, told National Observer in an email, adding that eight out ten families will be better off under the federal carbon pricing program. "We will continue to focus on the issues that matter most: protecting the environment and growing the economy for the middle class and those working hard to join it."
In Alberta, the provincial government has warned that the oil-rich province could face the same fate as Ontario if Opposition United Conservative Party Leader Jason Kenney wins the next election expected this spring. Kenney, a former federal Conservative minister in Stephen Harper's government, has promised to dismantle climate change policies and polluter-pay rules introduced by Premier Rachel Notley's NDP government just as Ford did in Ontario.
Notley's environment minister, Shannon Phillips, said last fall that this would open the door for Trudeau to intervene.
“Our plan is specifically tailored to Alberta’s economy,” Alberta's Environment Minister Shannon Phillips told reporters in Ottawa in November. “That’s one of the reasons why we have the fastest growing economy last year and this year and projected next year even within the context of carbon pricing in an energy economy, because we tailored it to work with our economy. Jason Kenney would prefer a situation where Justin Trudeau is making those decisions. I would rather a situation where we have spent the last three years consulting Albertans on what they want to see going forward, and we’ve made that plan based on their feedback.”
Rickford writes to the regulator
Back in Ontario, Rickford has used Enbridge's proposal to express his — and the Ontario government's — displeasure with the federal carbon pricing plan. The provincial minister also wrote to the OEB on Feb. 20 to encourage them "to have regard to the government's objective of transparency for natural gas bills" in any proceeding related the federal carbon tax."
Rickford also told the OEB in his letter that if Ontario's constitutional challenge of the federal carbon tax was not resolved prior to April 1, the OEB "will be responsible for addressing the implications of this new charge for natural gas bills." Rickford said that he was aware that the OEB had ruled that cap and trade charges could be noted as a "delivery charge" on customer's natural gas bills, indicating that the same should be done for the federal carbon tax.
"I encourage OEB to have regard to the government's objective of transparency for natural gas bills in any proceeding related to the implementation of the federal carbon tax, and to ensure that stakeholders have an opportunity to present their views to the OEB on the appearance of this new charge on natural gas bills," Rickford wrote.
Although the regulator is supposed to be independent from government as it reviews the proposed increase, Rickford suggested the hike was a done deal.
"The federal carbon tax is adding $86 to your natural gas bills this spring," he wrote on Twitter on March 6. "By 2020, this will increase to $205. Worst of all this is a hidden tax, that will hurt northern seniors and families who need natural gas the most to heat their home."
#ICYMI: The federal carbon tax is adding $86 to your natural gas bills this spring. By 2020, this will increase to $205. Worst of all this is a hidden tax, that will hurt northern seniors and families who need natural gas the most to heat their home. https://t.co/eE6bloSREL— Greg Rickford (@GregRickford) March 6, 2019
When asked if Rickford or his staff were actively involved in the OEB's decision-making process, his office said the OEB "is a quasi-judicial body. As such, the minister and the government is not involved it its rate decisions.
However, the OEB now has a former Conservative colleague in its ranks. Jenni Byrne, Ford's former principal secretary and a previous Stephen Harper staffer, was appointed on Jan. 11 as a full-time member of the OEB to fill a vacant position. This was coincidentally the same day that Enbridge filed its renewed application for a rate increase.
Between Rickford's tweet and the letter, NDP MPP and energy critic Peter Tabuns believes that "at minimum, (Rickford) is being presumptuous."
"Is fair for him to talk about it but to suggest that the OEB has already made its decision seems pretty arrogant to me unless they've already told him what they're going to do and that would be another matter," Tabuns told National Observer in an interview. "The reality is the OEB should be looking at how much gas Enbridge consumes in its operations and how much leaks out of its systems, and how much should be stuck to Enbridge and how much is going to be stuck on people's bills," he said.
Tabuns said neither the Liberals nor the Conservatives are interested in having an independent regulator.
"If (the OEB) was truly independent, in my opinion, they would get the application from the company, they would look at the application very skeptically, look to see how much the company should actually be carrying instead of consumers and apply those expenses to the company accordingly," he said. "I don't think that's going to happen."
OEB to hold public hearing on rate increase
In a statement to National Observer, OEB spokesperson Mary Ellen Beninger said "the OEB will consider the comments of stakeholders and submissions of parties before making a decision on any new charges. Those new charges could include the recovery of costs incurred by Enbridge Gas Inc. since April 1, 2019."
On Feb. 28, the board denied Enbridge's request to add the new federal carbon charge and facility-related charge to customer bills, pending a hearing with all stakeholders. "The OEB is committed to reviewing applications in an efficient and timely way, while ensuring that our processes are fair and allow for a thorough review and testing of the evidence and a decision that is in the public interest," Beninger said.
What is a hearing? It’s a public process, kind of like a court hearing, during which your utility explains why they want to change your rates. Here’s a short video on how it all works: https://t.co/VOG7e3uZQf— Ontario Energy Board (@OntEnergyBoard) February 12, 2019
In an interview, Enbridge spokeswoman Andrea Stass told National Observer the company will begin incurring costs next month "with no mechanism to charge customers" until the OEB approval. The utility has applied to open several deferral accounts to accrue and collect the costs in without passing it on to the customers in the interim. "We're assuming we'll have to remit the costs to the federal government," she said.
The federal government has provided some direction about what the rate will be and who is required to pay that fee, Stass said, but the OEB would determine how we would bill customers.
"We are the conduit through which customers are being charged but its not our program nor are we making any money of it," she said.
But, several comments already submitted to the OEB, and publicly available on their website, show that natural gas customers, including seniors, are opposed to Enbridge's proposal to increase gas rates. Many of them note in their comments that if approved, this will be the second rate increase they will have experienced in the last 18 months. Several comments also note that the company should be reducing their carbon footprint and greenhouse gas emissions rather than passing on costs to customers.
Ontario resident Chris Butler writes that he cannot afford, and does not support, Enbridge's cost increased because he survives on pensions. "I have zero cash flow to invest in the now depleted government funded energy improvement programs and am barely hanging on to my home," he writes.
Sarah Buchanan, Environmental Defence's clean economy program manager, told National Observer noted that the federal government's tax rebate, effective April 1, "is meant to make up for small increases in people's home energy bills" that will be more than the actual costs incurred.
Environmental Defence has requested to be an intervenor in the hearing for Enbridge's rate increase. "It's not a surprise that costs are being passed on to customers. That's what we saw Enbridge do under cap and trade," Buchanan said. "It's just confusing for customers. Now we have a situation where people's bills have changed a couple of times. Enbridge has had to adjust and change to a couple of new carbon pricing systems. Customers have had to adjust and change to the same."
"It could have been avoided if Ontario had stuck to cap and trade," she said.
These are costs 'that Enbridge Gas cannot avoid or control'
In its initial Oct. 10, 2018 application pertaining to the federal carbon pricing program, Enbridge said it was preparing for it "assuming Ontario will be a covered jurisdiction." Since that is no longer the case, Enbridge Gas Inc is seeking certainty from the OEB in its renewed January 11 application, noting that "the resulting accumulation of unbilled and uncollected amounts from customers will have a larger impact on bills when such amounts are added to bills and retroactively recovered in the future."
A delay in charging customers with the related carbon charge even by two months would mean Enbridge would have to collect almost $140 million from customers later on, in addition to the regular monthly carbon charges that will need to be applied, the utility said in its application. The carbon pricing program "imposes costs based on GHG emissions generated by Enbridge Gas’s business activities that Enbridge Gas cannot avoid or control," the application reads.
Enbridge isn't the only one that has applied for a rate increase.
OEB spokesperson Mary Ellen Beninger said that EPCOR Natural Gas Limited Partnership, which services over 8,000 customers in southern Ontario, filed its application on March 8, 2019 for approval to recover costs associated with the carbon pricing program.
"That application is currently under preliminary review by OEB staff," Beninger said.