Council has rejected a bid from Enbridge Gas for municipal support in its fight against the province’s independent energy regulator, the Ontario Energy Board (OEB).

Last year, Enbridge went to the OEB seeking permission to impose a rate increase on new customers, part of a $14-billion plan to expand natural gas pipelines across Ontario.

Enbridge raises long-term rates to pay for new infrastructure, meaning homeowners carry the load, for forty years, of connection costs over the long term. As it has a near-monopoly, Enbridge must apply to the OEB for permission to do this.

In a landmark ruling, issued in December, the OEB pushed back, noting Ontario has pledged to cut emissions by 30 per cent over 2005 levels by 2030. 

Its decision challenged the glacial pace of Enbridge’s version of the energy transition. 

The OEB found that Enbridge failed to prove that expanding natural gas infrastructure and connecting new homes to it would be cost-effective in the long term. Or even the medium one.

It ruled that developers, not homeowners, must bear new natural gas connections costs, in the hopes that they will find cheaper, cleaner ways of heating new homes.

The OEB also suggested heat pumps are the way forward.

About Face

Council’s refusal to support Enbridge is quite a reversal. Three short years ago, in 2021, Council championed Enbridge’s plan to pipe natural gas to about 200 new homes in Cherry Valley. 

Much has changed since then. That pipeline will likely never be built.

As Councillor Kate MacNaughton put it, “Enbridge has come twice to explain why it wants to put in a pipeline for several dozen homes in Cherry Valley. The costs of providing that energy for those new users who will have to pay for it is going to be staggering. I see no savings for them, no benefits – the only way forward is to move to new technology.”

The County is moving away from natural gas, despite Enbridge, and the Ontario Government’s, insistence that the way ahead means more fossil fuels, not less.

The OEB Case

In a letter sent to the Ontario EnergyBoard, the Environmental Defense noted, “new gas pipelines generally have a 60-year lifetime, extending far beyond 2050, and are only financially viable if they can be paid off over a long period extending far beyond 2050.” Enbridge had argued that expanding the natural gas network in the short-term would facilitate the energy transition, with “cost-effective, secure, reliable and resilient energy.”

“This is not logical,” the OEB said in its ruling. It noted homeowners would first pay to be hooked up to gas, then would have to pay again to install heat pumps.

Beginning in 2025, developers must cover the cost of connecting new homes to natural gas. 

The board also reduced Enbridge Gas’ spending budget on new pipelines by $250 million, or 17 per cent, and told the company to focus on repairing existing pipelines instead of building new ones.

“There is no way that it is better for customers to help developers put gas into new developments,” said Kent Elson, a lawyer for the Environmental Defence, in The Narwhal. “This is a pro-affordability, pro-consumer decision.”

The OEB is clear that climate change is forcing an energy transition that will make new natural gas infrastructure essentially useless, what it called “a stranded asset” by 2030, if not before.

Gas, in short, is being displaced by less expensive technologies with lower emissions, namely heat pumps. The board’s decision stresses the consensus around “electric heat pumps as an alternative to gas heating equipment.” 

The OEB found, for example, that the operating cost of new house with a heat pump is lower than the same house heated with natural gas, as noted by the Auditor General of Ontario in a November 2020 report. That report pointed to a prior OEB approval of Enbridge Gas’ $10-million pipeline proposal to connect new customers in North Bay.

Existing ratepayers paid for most of that project, amounting to a subsidy of about $65,000 per new home connected. Yet the Auditor General found the new homeowners had higher heating costs than if electric heat pumps had been installed in the first place.

The operating cost of a new all-electric house 
that uses a heat pump 
is lower 
than a new house heated 
with natural gas.

Both Energy Minister Todd Smith and Enbridge Gas are fighting the independent regulator’s ruling.

Enbridge is appealing to municipalities across the province. In a letter to County Council seeking support, it argued, “the disappointing decision puts future access to natural gas in doubt and sets a deliberate course to eliminate natural gas from Ontario’s energy mix.”

Council wasn’t having it. As Councillor MacNaughton put it, “It is important to identify the disingenuous nature of the appeal Enbridge has put before the Eastern Ontario Wardens’ Caucus — it is disingenuous because we have cheaper and more efficient tech available, much better than digging pipelines.”

After hearing deputations from Don Wilford and Mary Warner, Council approved a motion to “direct the Mayor to write to the Eastern Ontario’s warden’s caucus to urge they pause their support position on Enbridge’s request, and that the wardens instead explore the OEB decision and more current, cleaner technologies.”

Read the Gazette’s coverage of Enbridge’s plans for Cherry Valley on the  pictongazette.ca website in a special collection called Enbridge Gas.