Let natural gas install subsidy die, Durham Region may ask Ontario

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Published March 25, 2024 at 5:10 pm

Durham Region Council is set to ask the Ontario government to drop its appeal of the Ontario Energy Board’s decision to end a subsidy for natural gas infrastructure.

Back in December, the OEB ruled that new natural gas infrastructure hook-ups during home construction should have to be paid for all at once. Typically, this costs developers around $4,400 per build.

Prior to this ruling, the cost could be spread out over 40 years. The board found this previous amortization plan assumed natural gas would remain the standard for home heat production over the next forty years. However, the OEB stressed the standard will change to an increasing push toward electric heating.

The ruling came following a rate application from Enbridge Gas, which has declared it will appeal. The board called Enbridge’s plan “business as usual” and stressed it would create an asset risk. This is because some customers will inevitably leave the natural gas network, resulting in higher costs for future ratepayers.

The board continued saying the costs should be paid upfront to incentivize developers “to choose the most cost-effective, energy-efficient choice.”

About a month later, Energy Minister and Bay of Quinte MPP Todd Smith vowed to overrule the OEB. He said the board was “out of its lane” with the ruling and pledged to overturn it in Queen’s Park. He claimed making developers pay for the hook-up all at once would raise the price of new builds.

However, Environmental activists celebrated the decision as a major victory. In February, Environmental Defence released a statement calling the ruling an “excellent decision on that
will help to lower the energy bills of your residents and help achieve municipal climate targets.”

Citing the OEB’s math, Environmental Defence said eliminating the subsidy would save Ontario homeowners $2.25 billion by 2030. “The OEB decision promotes housing affordability and
avoids the risk of gas prices spiralling out of control in the future due to excessive spending on fossil fuel infrastructure today,” they wrote in a letter to Ontario municipalities.

They further claimed new natural gas infrastructure has a life span of about 60 years and must be amortized over a long period to remain financially viable, resulting in a $250 million annual subsidy. Natural gas is also a form of methane, which contributes to about a third of Ontario’s greenhouse gas emissions.

Conversely, more recently developed heat pump technology is much more cost-efficient in the long run, according to studies by the Canadian Climate Institute. “Standard heat pumps are the lowest-cost heating and cooling option for most households, generally offering a cheaper option than gas-fired heating with air conditioning,” the report reads. However, the Institute noted heat pumps do have a higher upfront installation cost.

Ahead of the March Durham Council meeting, Whitby Regional Councillor Chris Leahy forwarded a motion to call on the Province to back down on overturning the ruling. Leahy’s motion was seconded by Clarington Mayor Adrian Foster.

The motion says the Province’s decision to overturn the OEB ruling runs counter to the Region’s climate goals. “The construction of new methane gas pipelines…should not be subsidized because they are inconsistent with…Durham’s climate targets,” the motion reads

It continued to say overturning the ruling “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.”

If passed a notice of the Region’s disapproval will be sent out to Premier Doug Ford, Smith, Finance Minister and Pickering-Uxbridge MPP Peter Bethlenfalvy and other municipalities to request support. It will be debated this Wednesday.

With files from The Canadian Press.

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