Toronto mulls ending Enbridge’s free pass

Over the coming months, Toronto city councillors are considering ending a multimillion-dollar fossil fuel subsidy, marking a new front in the battle against Enbridge’s gas grid expansion plans in Ontario.

Gas companies in Ontario do not pay the municipality for the right to use an underground network of pipes to deliver gas to customers. In other provinces like Alberta, Saskatchewan, and Nova Scotia, municipalities charge companies an access fee that has raised tens of millions for cities where charges apply.

By not requiring a similar fee in Ontario cities, money is left on the table and the cost of gas companies using the infrastructure is shouldered by the public.

“This equates to a subsidy,” reads a white paper from the City of Ottawa analyzing the issue because it means cities take on higher costs while losing potential revenue.

In Toronto, Coun. Dianne Saxe is at the forefront of the city’s charge. She served as Ontario’s environmental commissioner — a watchdog position — where she criticized Premier Doug Ford’s government’s lack of climate plans until his government scrapped her position in 2018. An environmental lawyer before getting into politics, she now also serves on the boards of Toronto Hydro and the Toronto Transit Commission.

In an interview with Canada’s National Observer, Saxe said ending the city’s gas subsidies to Enbridge could generate $200 million annually in revenue for Toronto. For reasons of fairness, finance, air quality and climate change, stopping these “wrong” subsidies needs to happen, she said.

“This is a classic example of private profits being made by dumping costs onto the public,” she said. “And it's amazing to me that provinces like Alberta don't have this subsidy.

“Edmonton gets tens of millions of dollars from its gas utilities … but in Ford's Ontario, the gas utilities get to use and damage public assets for free.”

According to the white paper, many municipalities in the province are experiencing unprecedented growth and are under pressure to manage booming populations while ensuring good environmental, social and economic results. Moreover, the underground space for gas pipes to be installed is needed by other infrastructure, like storm and sewage infrastructure upgrades, fibre optic cables to meet high-speed Internet demand and burying electrical infrastructure to protect it from extreme weather.

“Space in the public right-of-way is at a premium to support intensification (density), in particular underground space,” according to the white paper. “As a result, it is in the public interest to protect underground space in the rights-of-way through market pricing mechanisms.”

The white paper notes different provinces structure their fees differently but from coast to coast, communities do charge gas utilities to use the grid. Among cities requiring a gas company to pay a fee are Edmonton, Halifax, Surrey, Kelowna, Regina and Winnipeg. The fees range from a two per cent charge in Halifax to a 32.9 per cent charge in Edmonton.

If Edmonton’s rate was applied to a city with one million people, it could generate $66 million in new revenue each year, according to the research.

The Clean Air Partnership, a 24-year-old charitable environmental organization, endorses Saxe’s plan to charge gas companies for the use of public infrastructure.

“As we shift to decarbonize and move our home and water heating systems from gas to electricity and other low-carbon energy sources (such as ground source heat pumps), this step will help level the playing field and equalize the right-of-way costs paid by electricity and low-carbon energy utilities and gas utilities,” wrote Clean Air Partnership executive director Gabriella Kalapos in a letter filed with the city’s infrastructure and environment committee.

“As Toronto accelerates efforts to mitigate and adapt to climate change and implement a community-wide TransformTO Net Zero Strategy with an estimated implementation cost of $145 billion over the next three decades, these right-of-way charges from for-profit fossil fuel utilities will address a significant fossil fuel subsidy and support the city in securing much-needed capital for implementing ambitious climate actions,” she added.

Before any amendments are passed, Toronto city council intends to further study Saxe’s proposal.

Toronto’s efforts to end this fossil fuel subsidy to Enbridge comes as the Ontario government finds itself knee-deep in a gas controversy. Following an Ontario Energy Board (OEB) ruling that ordered developers should pay for the cost of new gas infrastructure upfront rather than the cost being spread out over 40 years, Ontario’s Energy Minister Todd Smith tabled new legislation in February kneecapping the regulator.

If passed, the legislation will essentially allow the regulator, with a freshly appointed board chair, to rerun Enbridge’s application with an eye toward securing a new order that allows the cost of gas infrastructure to be paid off over multiple decades instead of upfront.

Last week, Toronto city councillors also discussed a motion brought forward by Saxe calling on the city to write to the provincial government urging it to let the OEB’s decision stand. The motion follows a similar decision taken by the City of Hamilton in mid-February, endorsing the OEB decision against the Ford government.

Toronto won’t be sending a letter, though. Instead, councillors chose to back a motion from Deputy Mayor Jennifer McKelvie to co-ordinate the city’s response to the province by referring it to the city manager for consideration. The city manager will report back to council in late May.

While discussing the motion, Saxe said the Ford government is “picking the pockets of the people of Toronto in order to subsidize sprawl, which damages all of us.”

“There’s no guarantee, of course, that the province will listen, but we have seen that this premier does change his mind if he encounters enough opposition,” she said. “If everybody just rolls over and says nothing, then he does terrible things.

“This is a terrible thing, it’s bad for the people of Toronto, it does no harm to send a letter saying, ‘This is a bad idea, we oppose it.’”

Ford’s office did not return a request for comment by deadline.

As previously reported by Canada’s National Observer, the OEB decision would have effectively ended a fossil fuel subsidy to Enbridge. Saxe’s motion noted the subsidy “exceeds $250 million each year,” breaching Canada’s “repeated international commitments to phase out fossil fuel subsidies.”

“It causes higher energy bills for both existing gas customers and new homebuyers. It encourages developers to install gas equipment, which locks in fossil fuel dependence and adverse health effects,” according to the motion. “And it undermines municipal climate progress. Toronto cannot achieve net zero without eliminating the use of fossil gas for building heating.

“With climate damage accelerating so quickly, it is financially and environmentally irresponsible to subsidize new pipelines and to install gas equipment in new units.”

Experts have previously told Canada’s National Observer that the Ford government’s move to override the independent regulator could push the cost of housing further out of reach.