The Ford government kneecaps provincial energy regulator

Ontario Premier Doug Ford’s government is tabling new legislation to overrule the provincial energy regulator in a move worth billions of dollars that benefits gas giant Enbridge.

If passed, the Keeping Energy Costs Down Act would give the provincial government the authority to reverse a decision from the Ontario Energy Board (OEB) ordering changes to the province’s energy systems based on evidence, detailed hearings and expert testimonies that protect customers. The move would effectively strip the regulator of its arms-length role.

At a press conference Thursday, Energy Minister Todd Smith said a recent ruling by the OEB that would require real estate developers to pay for the cost of new gas infrastructure upfront rather than spreading the costs out by charging customers over 40 years was “disappointing” and “outrageous.” The OEB “strayed outside of their lane,” Smith said, explaining why his government is taking steps to override the independent regulator.

As previously reported by Canada’s National Observer, the OEB decision requiring new gas infrastructure to be paid upfront was an attempt to grapple with the realities of the energy transition off fossil fuels. As fossil fuels are phased out in favour of clean alternatives, allowing Enbridge to pay off fossil fuel infrastructure by spreading costs over all ratepayers into the 2060s represents a significant financial risk to the public.

Ford’s government says it is overriding the regulator in the interest of keeping housing costs down, but that position isn’t supported by the evidence. In fact, high-efficiency heat pumps are more affordable over the lifetime of the equipment than new gas hookups, meaning Ontario’s decision to reverse the regulator’s decision could actually make housing more expensive.

Smith bristled at questions asking if the government was taking control of the regulator, and said the OEB decision, which emerged after a year of hearings, thousands of pages of evidence, and testimony from environmental advocates, industry representatives and utility experts alike, was simply “wrong.”

“This [decision] was rushed, it was irrational [and] didn't have the proper people providing information to the commissioners [who] were hearing the case,” Smith said. “So what we're doing is ensuring that we don't have to intervene again by making sure that the proper process is followed.”

Smith said the Ontario government intends over the coming months to publish a natural gas policy statement “to provide further direction to the Ontario Energy Board.” If passed, the new legislation will allow the province to ask for a separate regulatory hearing on matters of public interest. He also said he plans to appoint a new chair of the OEB, following the death of previous chair Richard Dicerni last year.

“To ensure the board meaningfully implements the changes outlined in the legislation, I intend to appoint a new chair for the Ontario Energy Board this spring,” Smith said. “I'll expect the appointee to help ensure the [OEB] conducts appropriate consultation before reaching any decisions, and to reinforce the government's priority of supporting affordable, reliable, and clean energy for all Ontarians.”

Together, the Ford government’s plan to reverse the OEB decision involves appointing a new chair to more closely follow the province’s priorities, authority to request new hearings, and developing a new natural gas policy statement that can be used as evidence in those hearings.

“What we're doing is we're going to bring forward our natural gas policy over the next number of months and then we're going to allow the OEB — given the policy direction that comes from the government — to do a rerun and make a decision,” Smith said.

If the do-over returns the same result, Smith wouldn’t rule out intervening again to ensure the province gets what it wants.

“It's incumbent on the Ontario Energy Board to realize what our policy is as the government [goes] forward,” he said.

Ontario Green Leader Mike Schreiner said his party won’t back down from fighting this development.

“If the Ford government even hints at appointing a Ford-connected insider who's not going to act in the interests of the people of Ontario but instead act in the interests of a multibillion-dollar fossil fuel company, then you know what? We're going to lead the charge to oppose that,” he said.

Schreiner said ratepayers shouldn’t be forced to subsidize Enbridge’s fossil fuel infrastructure expansion at a time when the climate crisis is at our doorstep.

“Ontario Greens are calling on the government to respect the Ontario Energy Board's decision to not subsidize Enbridge, a company that made over $16.5 billion and whose CEO earns more than $19 million,” he said.

“The International Energy [Agency] has said if we have any hope of meeting our climate obligations, there can be no more expansion of fossil fuel infrastructure anywhere,” he said. “And here we have the Ontario government taking the unprecedented step — the first time ever — overruling an OEB decision designed to protect homeowners and ratepayers in order to benefit a fossil fuel giant.”

Reversing the OEB decision amounts to “a subsidy of $2 billion over the next five years,” Schreiner added. “I think it's outrageous, I think it's wrong, and I'm calling on the government to do the right thing and move away from bringing this bill forward.”

Kent Elson, a lawyer representing the non-profit Environmental Defence that intervened in Enbridge's rate application, told Canada’s National Observer the Ford government’s decision to name its legislation the Keeping Energy Costs Down Act is “Orwellian.”

“It should be called the Keeping Enbridge Profits and Energy Bills High Act,” he said.

“The OEB decision would have cut capital costs covered by gas customers by approximately $600 per customer,” he said. “Reversing the decision will certainly raise energy bills.”

Previously, Carleton University research professor and policy director with Efficiency Canada Brendan Haley told Canada’s National Observer important cost savings arise when customers aren’t forced to connect to both gas and electricity.

Avoiding fitting a house with gas infrastructure and connecting it to the gas grid by switching to electric heating and cooling means only one system, which is easier to install and more cost-effective. In fact, in Policy Options last fall, Haley and Efficiency Canada research manager Kevin Lockhart outlined how cleaner homes could also increase the supply of affordable housing.

“Early studies exploring the cost of building electrification show all-electric buildings constructed to net-zero energy-ready standards can be delivered for less than the average cost of similar code-minimum buildings,” they wrote. “These marginal costs can be expected to fall further as high-performance construction becomes the norm.”