January 6, 2015

Ontario Energy Board Grinches out on energy conservation

Just before Christmas, the Ontario Energy Board (OEB) quietly undermined one of the most important climate change initiatives in Ontario by putting arbitrary limits on programs designed to help us use natural gas more efficiently.

It’s never good news when a regulatory decision is slipped out three days before Christmas and this was indeed the case with the OEB’s Grinch-like announcement that it was capping spending by utilities on gas conservation programs, eliminating incentives for large industrial conservation programs, and weakening the profit link that has driven highly effective gas conservation programs in Ontario.

The OEB’s outdated rationale that not all customers directly benefit from conservation programs looks pretty silly in an age of unchecked climate change, huge damage costs from wild weather, and rising household expenses. Natural gas use is, next to transportation, the single biggest contributor to climate change in Ontario. It is in all of our interests to reduce emissions by using gas as efficiently as possible.

The new utility conservation program budgets approved by the OEB, however, total less than half of what is currently allocated for electricity conservation in Ontario despite the fact that our natural gas consumption is almost double our electricity consumption.

Eliminating incentives for large industrial efficiency efforts, meanwhile, will likely put a big dent in the enormous savings generated by some of the most cost-effective efficiency programs anywhere in North America. Union Gas, for example, calculates that for every dollar it spends on these programs, its customers save $54. Eliminating incentives will reduce the appeal of longer-term efficiency investments and the jobs linked to energy efficiency products and services.

The OEB has also removed the profit incentive for utilities to apply for larger conservation program budgets to fund more ambitious efficiency efforts. Instead, utilities will have an incentive to set more modest program targets and then earn bonuses for exceeding them. 

The OEB’s backward thinking on gas conservation flies in the face of the Ontario Government’s smart and sensible Conservation First policy. Instead, the OEB has fixated on short-term price impacts while ignoring much, much larger long-term costs. It is time for Energy Minister Bob Chiarelli to step in and remind the OEB that we have a climate crisis on our hands, that deep energy efficiency is good for our economy, and that every dollar we spend on natural gas flows straight out of Ontario.

Please contact Energy Minister Chiarelli and ask him to direct the OEB to:

  1. Allow Enbridge and Union Gas to increase their energy conservation budgets to as much as $200 million per year each by 2020;
  2. Allow Enbridge and Union to provide financial incentives to their large volume industrial customers to encourage them to increase their energy productivity; and
  3. Make the promotion of energy conservation the most profitable course of action for these gas utilities.

Thank you,

Angela Bischoff Outreach Director

P.S. Better integrating Ontario and Quebec’s energy systems is another great way to improve our efficiency. This Friday, York University will be hosting a discussion of the climate and consumer benefits of closer electricity integration between the two provinces featuring a number of experts, including Globe and Mail columnist Jeffrey Simpson (author of Hot Air: Meeting Canada’s Climate Change Challenge), Steven Guilbeault, Senior Director, Equiterre, Normand Mousseau, Professor,Université de Montréal and Co-President, Quebec Commission on Energy Issues, and Pierre-Oliver Pineau, Chair in Energy Sector Management, HEC Montreal. For more information about this free event click here.