Minister to overrule energy board

Todd Smith says decision would increase costs for gas-heated homes

The Ontario Energy Board strayed “out of their lane” with a decision that would increase costs for new homes heated with natural gas, the province’s energy minister said Friday as he promised to overturn it.

But environmental groups said the OEB’s 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 with heat pumps, and the reversal would be just a gift to Enbridge Gas.

The OEB decision relates to a rate application from Enbridge, which serves the majority of natural gas customers in the province. The energy board said the utility’s longterm 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.

Despite this trend, Enbridge’s forecasts show continued growth in natural gas peak demand, with $14 billion in capital spending over the next 10 years, the board wrote in a split decision.

“The OEB is not satisfied that Enbridge Gas’s proposal will not lead to an overbuilt, underutilized gas system in the face of the energy transition,” the majority of the board wrote.

Enbridge’s “business as usual” plan to amortize 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 costeffective, energy-efficient choice.”

Consumers would benefit if developers chose to forego that upfront cost and opted against gas lines, the OEB wrote.

“The effect of this choice would be to lower the cost of housing, depending on the capital cost differential between gas and electric equipment, by avoiding paying a (cost) for gas servicing, and lower the operating energy cost of the house – a win for homebuyers and an outcome for developers that keeps them competitive on price in the housing market.”

Energy Minister Todd Smith said the OEB “was a bit out of their lane on this.”

“The majority of the meetings that I have with municipalities are municipalities that want to see natural gas expanded into their communities because it is the most affordable and efficient way to heat their homes,” he said in an interview.

Smith said he plans to introduce legislation that would reverse the OEB decision.