1) Ontario Seeks To Overrule Independent Energy Board On Natural Gas Decision

Courtesy Barrie360.com and Canadian PressPublished: Feb 22nd, 2024

By Allison Jones in Toronto

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. 

NDP energy critic Peter Tabuns said not only is reversing the OEB decision bad climate policy, it will actually raise people’s natural gas bills because Enbridge will seek to charge higher rates in order to fund its capital plans. He is worried the incursion into the OEB’s independence will set a precedent.

“The regulator has said no, we’re not going to allow you to charge existing customers for expansion of your system. And so the potential impact is about $300 per customer over the next four years,” Tabuns said. 

“(The OEB) made the decision on this particular increase looking out for us. As soon as they actually acted like a regulator, they get stepped on.”

Green Party Leader Mike Schreiner said the only beneficiary of overturning the OEB decision is Enbridge.

“By trying to keep taxpayer dollars flowing to fossil fuel giants, the Ford government is costing Ontarians more,” he wrote in a statement.

“Greens support the OEB’s decision designed to help Ontarians get off fossil fuels and make the switch to cleaner, cheaper energy alternatives.”

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. The zero years idea – meaning the total cost of gas servicing is paid up front – largely came from two environmental groups.

Smith said the legislation will also require the OEB to conduct “broader engagement.” The bill would allow the government to require the OEB to notify and invite participation or testimony from specific groups that could be affected by an upcoming decision or hearing.

“(In this case), they didn’t hear from the system operator … to determine whether or not we were going to have the electricity that we needed, they didn’t hear from homebuilders, about what the impact would be on a new home, and they didn’t hear from construction companies as well,” he said. “So it’s really important that we have the proper people at the table.” 

The role of chair of the OEB is currently vacant and the government said in a press release that it will soon appoint someone “with the expectation that the board and commissioners conducts appropriate consultation – in line with the proposed legislative requirements – before reaching decisions that support the objective of an affordable, reliable, and clean energy system.”

Banner image: Ontario Energy Minister Todd Smith addresses a news conference at the Pickering Nuclear Generating Station in Pickering, Ont. on Tuesday, Jan.30, 2024. (THE CANADIAN PRESS/Frank Gunn)

This report by The Canadian Press was first published Feb. 22, 2024.

2) GST, HST On Carbon Price Could Raise Billions Over Next Seven Years: Budget Watchdog

NONE OF THAT MONEY IS DIRECTLY EARMARKED FOR CLIMATE PROGRAMS

Courtesy of Barrie360.com and Canadian PressPublished: Feb 23rd, 2024

Mia Rabson, The Canadian Press

The federal government’s carbon price could generate more than $5 billion from the federal sales tax over the next seven years, but none of that is directly earmarked for climate programs.

The latest figures come from the parliamentary budget officer. They are based on a private member’s bill introduced last fall by Conservative MP Alex Ruff that would eliminate the sales tax from carbon pricing.

The revenue from the carbon price itself is required by law to be returned to households and businesses through rebates and granting programs.

But that does not apply to the sales tax, which is collected on top of the carbon price.

The PBO estimates that will be worth about $600 million in 2024−25, rising to $1 billion a year by 2030−31 in parallel with increases to the carbon price itself.

In total, that could amount to $5.7 billion between the beginning of this April and the end of March 2031.

The figures include revenues from the eight provinces and two territories that use the federal carbon pricing system, as well as those from British Columbia, Quebec and Northwest Territories, which have their own systems.

Michael Bernstein, executive director of the climate and economic advocacy group Clean Prosperity, says Ottawa could use some sales tax revenue to create new carbon−price rebates.

“We’ve been recommending that they give a tax credit to small business,” Bernstein said in an interview.

“Even two years ago, we calculated that there was enough money within the HST on the carbon tax to fund a one−percentage−point reduction in the small business tax rate in provinces where the carbon tax applied.”

Bernstein said his organization estimates that small− and medium−sized businesses account for about one−quarter of Canada’s carbon−price revenue.

Under the original plan, they were to get seven per cent of the revenue from the carbon price itself through a couple of different programs. These would help the businesses pay for a portion of the cost of buying energy−efficient equipment, or upgrading buildings and operations to use less fuel.

But one of those programs never happened, and the other had a number of problems that meant very little money was ever paid out.

Ottawa still owes small businesses $2.5 billion from carbon price revenues since 2019.

More than a year ago, Finance Minister Chrystia Freeland said a new plan to distribute those funds was in the works.

That still hasn’t happened.

Last week, the government published the revenue it will return to businesses after this year, and it shows the share going to small− and medium−sized businesses is dropping to five per cent. That’s so the government can increase the rebate paid to rural households.

Bernstein said businesses deserve some help to keep carbon pricing from hurting them financially.

He said they can pass on some costs to consumers, but that can take time, and a tax credit makes more sense than programs that require businesses to spend money and go through an application process.

“If you provide a tax credit, that’s a broad offer of support to every business,” he said.

“You’re not requiring them to do more work or to know about the program or to hire a consultant to apply. And they’re at least showing that there’s some return of revenue.”

Conservative spokesman Sebastian Skamski said Ruff was not available to discuss his bill.

But he said the Conservatives remain committed to getting rid of carbon pricing altogether, and Ruff’s effort to remove sales tax is just an interim step.

“Until we can axe the tax completely, common sense Conservatives (call on) Trudeau to provide exemptions, pauses and to remove GST from the tax to relieve some hurt,” said Skamski.

A spokeswoman from Freeland’s office did not signal any openness to using GST and HST revenues to increase rebates.

In a statement, Katherine Cuplinskas pointed to the household rebates, which will range from a few hundred dollars to as much as $1,800 for a family of four in 2024−25.

Without offering additional detail, she said the government is “committed to returning a portion” of carbon price revenues to businesses, too.