I’m speaking today on the second reading of Bill 165, the Keeping Energy Costs Down Act, 2024. I believe the changes proposed by this act will aid in both protecting the interests of Ontario energy consumers and getting housing and energy infrastructure built faster. It will also play a role in ensuring that Ontarians and Ontario businesses will be able to access reliable and affordable energy now and into the future.

I am one of the two parliamentary assistants to the Minister of Energy. Over the past year and a half, I’ve been quite proud of what I consider our pragmatic and particularly technology-agnostic approach to energy policy. This government has built an electricity system in Ontario that I think gives customers choice and the opportunity to manage their energy use. We also, as has been stated multiple times, have one of the cleanest grids in the world.

We’ve shown our commitment to growing our clean energy advantage through early planning measures like requesting a Pathways to Decarbonization report from Ontario’s Independent Electricity System Operator. This report resulted in the government’s Powering Ontario’s Growth plan, which was released in July 2022. We also created the Electrification and Energy Transition Panel in 2021, which has provided critical recommendations to support the province’s first integrated energy plan.

Ultimately, our clean grid has become a clear competitive advantage in world markets. Countries and industries around the world are seeing the need to reduce emissions. Many consumers appreciate seeing a focus on clean energy. As Minister Smith described, Ontario is quickly becoming a leader in electric vehicle and battery manufacturing as well as green steelmaking, as demonstrated by the major investments made in our province by companies like Stellantis and Volkswagen.

I remember being particularly struck by an anecdote that I think Minister Fedeli gave us about the Volkswagen decision to relocate to St. Thomas. At the time, they had been looking at several other American jurisdictions which, from a price perspective, may have made more sense than St. Thomas. However, those jurisdictions were operating on coal, and Volkswagen felt that it would be somewhat hypocritical to produce electric vehicle batteries on a coal-based system, which ultimately led to St. Thomas in Ontario being chosen.

In Ontario, we’re doing what we can to support electrification through the province. To go briefly into an anecdote before I get into it more, lowering emissions is very important to many people in Waterloo region. Just last month, I was at an announcement regarding a sort of tripartite, federal-provincial-municipal funding grant to Grand River Transit. Thanks in part to that funding, about $5 million of which came from the province, Grand River Transit is getting 11 fully electric 40-foot buses and new charging units.

I was there for the unveiling of the first new hybrid bus in its new vinyl wrap design, which introduced me to several amateur transit enthusiasts, which I had heard rumour of, but I’d never had the pleasure of meeting any in person. I ended up sitting next to a young man who I believe was named Gordon, who regaled me for a solid 10 minutes with stats about the efficiency and benefits of the new electric buses, which I was very grateful for because, as is usual—with the exception, frankly, of this—I hadn’t actually prepared any notes on what I was going to say at this announcement. I more or less got up and just parroted what Gordon had told me, which worked out wonderfully. So there is no doubt that there are a lot of people who are excited by these new electrified transit options, and that Grand River announcement was a great example of three levels of government coming together in support of something.

Ontario’s population is, as we have commented on regularly, growing at an incredible rate, with us expecting to see millions more people just by the end of this decade. With growth comes demand. Now, for the first time since 2005, Ontario’s electricity demand is rising. The IESO’s most recent analysis indicates that electricity demand in the province could more than double by 2050. If demand doubles, as we expect it to, then of course, so must supply.

It’s absolutely imperative that we start now if we’re going to build the homes and the infrastructure to support the Ontario of the near future and provide the power that we’ll need to thrive. That said, Speaker, this rapidly expanding growth and associated calls on energy bring forth many thoughts and opinions from Ontarians. We need to make sure that all voices are heard, which brings me to my main point.

Last December, the Ontario Energy Board made a decision to bring the 40-year revenue horizon, which had been set back in 1998, down to a zero-revenue horizon, to take effect, by this point, in less than a year. This is a decision that, regardless of what one feels about it, will have a huge impact on families and businesses.

It appears that the OEB made the decision in the absence of some vital evidence from a number of major players and stakeholders that have a significant and important understanding of this sector. The decision was also made without consulting with IESO about a significant point, which is the impact that this decision would have on the province’s electricity grid, particularly the impact it would have given that this decision would essentially require a massive and sudden increase in electrification demands, which would have a huge impact on the province’s grid. That was not covered.

Herein lies the central purpose of the Keeping Energy Costs Down Act. It’s making some changes to the Ontario Energy Board’s regulatory processes to make sure that this kind of oversight doesn’t happen again.

I am a lawyer, but I was a criminal prosecutor and therefore I have, at best, only a nodding acquaintance with the complex law surrounding regulatory bodies such as the OEB. Although, that said, having sat here this afternoon, I was initially feeling somewhat hesitant about getting up and speaking on something that I have so little authority on, but I now feel completely comfortable, after having listened to several of the past speakers, to speak loudly and proudly about something that I don’t necessarily have any specific expertise on, because it appears to not be a prerequisite. Essentially, I don’t require any special knowledge to look at this decision and see what I would call a very concerning dissenting opinion.

So, Speaker, please bear with me as I, again, read out this quote from the dissent—it’s authored by Commissioner Allison Duff—as it’s lengthy but relevant. Commissioner Duff wrote, “I do not support a zero-year revenue horizon for assessing the economics of small volume gas expansion customers. I do not find the evidentiary record supports this conclusion. The CIAC comparison table filed by Enbridge Gas did not even consider zero within the range of revenue horizon options. Zero is not a horizon. It is fundamentally inconsistent with the intent of E.B.O. 188 by requiring 100% of connection costs upfront as a payment, rather than a contribution in aid of construction. There was no mention of zero in E.B.O. 188—yet a 20 to 30 year revenue horizon was considered. To me, the risk of unintended consequences to Enbridge Gas, its customers and other stakeholders increases given the magnitude of this ... change.”

Commissioner Duff continues: “The rationale provided in the majority decision to support zero is predicated on understanding the considerations and circumstances facing developers.” However, “this rationale is conjecture as no developers intervened or filed evidence in this proceeding. In contrast, a recent OEB proceeding regarding a proposed housing development in Whitby included intervenor evidence, oral testimony and submission by the affected developer group, enabling the OEB to render a decision based on the evidence.

“A zero-year revenue horizon implies an indifference as to whether these developers decide to connect, or not connect, any gas expansion customers. Is the scenario of no-new-gas-connections, replaced by construction of all-electric developments, feasible? For example, would electricity generators, transmitters, distributors and the IESO be able to meet Ontario’s energy demands in 2025?” She concludes that by writing, “I don’t know.”

Speaker, regardless of where one stands in the discussion around energy, every person in this chamber should be worried when one of the three presiding commissioners says that she was not presented with the necessary evidence to reach any decision, let alone such a drastic change as this, going from a 40-year revenue horizon down to a zero-year revenue horizon in less than a year.

Frankly, it’s not just me reading a dissenting decision and commenting as an armchair expert. Other experts themselves are concerned. I’ll point here to a column written by Aleck Dadson, the former chief operating officer of OEB, and Ed Waitzer, the former chair of the Ontario Securities Commission, who described their frustration with the Ontario Energy Board’s decision.

Mr. Dadson and Mr. Waitzer stated as follows: “In our view, adjudicators should focus on deciding specific matters in a transparent, fair and non-partisan manner. They should do so by applying a legal and regulatory framework to findings based on evidence and arguments presented in an adversarial process. And they should avoid trying to resolve complex policy issues, in which any decision will affect unrepresented stakeholders and other areas of concern. In short, adjudicative panels shouldn’t stray.”

The Keeping Energy Costs Down Act is proposing legislative changes that will ensure major OEB decisions with far-reaching applications, like this one, don’t happen again without adequate stakeholder consultation.

I’m going to change course for a minute here to talk briefly about regulatory agencies such as the OEB and to have a bit of background. Again, I go back to my feeling of inferiority about speaking about this, because it’s not my area of competence. However, what I have heard this afternoon has indicated that there’s a terrifying dearth of understanding about what regulatory agencies actually are present in this House.

Regulatory agencies are critical to the operation of modern society. Because of their importance, it’s essential that they be subject to effective governance. Essentially, regulatory agencies take very, very specific areas of practice that the courts, the government, the Legislature don’t have the time or expertise to delve into in order to establish their individual application in individual cases. So it becomes delegated. Essentially, every regulatory agency is exercising powers that were delegated to them by Legislatures, which is necessary in the complex specialized economy that we operate on. Ultimately, when you are delegating power from a Legislature to a regulatory body, the delegation entails carrying out the objectives of the legislation that was enacted, but frankly that also entails carrying out the government policies that inform the legislation. That’s what makes a regulatory body, particularly a government regulatory body, significantly different than, say, a court. A court is a judicial decision-maker, whereas a regulatory agency is a quasi-judicial decision-maker, but only in limited circumstances.

So given that regulatory agencies are tasked to some extent with carrying out government policies informing their enacting legislation, they’re not independent of the government, and they never will be. At the same time, however, I will say that being able to properly exercise that type of delegated authority does require a certain amount of independence, because you need to have that in order to operate as a quasi-judicial decision-maker, which requires them to have, as I said, that measure of independence. However, the truth is regulatory agencies are not courts. They are subject to oversight to varying degrees and in different ways, by the Legislature, by the government and by the courts. In other words, they’re subject to three sources of external governance already.

The OEB itself, specifically, was created by a statute, the Ontario Energy Board Act, 1998. It’s an independent regulator. If you go into the act, you will see that the stated purpose of the OEB is to serve the public interest. What’s interesting is we don’t have a very clear definition of the public interest, but frankly, that’s not uncommon in this type of legislation. At the same time, however, the OEB is required both in its governing legislation and also by the accepted practices of governance to be responsive to provincial government policy. That’s not an oversight or a problem; that’s literally how it was created and how it functions.

In doing what its primary purpose is, which—let’s be clear: The objective of the OEB is predominantly related to determining the prices to be paid for the transmission and distribution of gas and electricity in the public interest. So when the OEB is exercising this primary goal, which is approving these rates, it’s ultimately required to balance competing interests: residential consumers, large and small business, the government and utility shareholders. The key here that, again, this discussion so far has missed is that the OEB does not serve the interests of just one group, and to understand the OEB as some sort of consumer protection agency is a completely incorrect understanding of how it functions as a regulatory agency.

The OEB’s role and their purpose, as I said, is to balance interests, and those interests often compete, which is how we end up in the public interest, which is a grand final assessment of what is best for the general public, understanding that the general public, once you divide it, in itself has a number of competing interests. The thing is there’s no way that the OEB can appropriately balance competing interests in a situation such as the one we heard, where a decision was made without appropriate input or information from a number of industry experts and stakeholders in this area. So it was this nature of the decision, which, frankly—what it shows is not necessarily some sort of over-dominance on one position by the OEB but perhaps a failure of policy to make it clearer that the OEB as an institution needs to focus more on that type of public consultation and stakeholder recipient opinions than it currently does.

What we are proposing is that the OEB would have to conduct more public engagement to ensure that any impacted individuals and organizations have the opportunity to participate, because, as happened here, it’s clear that OEB hearings, while discrete events apply to individual cases, have the potential to tread into matters that have a significant public interest for a number of people. But the thing here as well is that you have to understand what is happening with this decision. When you’re looking at judicial review of a regulatory agency, what happens is that a court would take issue with how it essentially exercised its power, as versus the nature of the decision, which is why it requires government involvement in this case. So what the government is doing is not inserting its own decision in place of the OEB’s decision but remitting the decision that the OEB made back to the OEB with additional policy considerations that the government wishes the OEB to consider, which is entirely within the rights and power of the government—any government, regardless of political stripe—based on how the OEB functions, how any regulatory agency functions. So this is a completely appropriate way of doing it in order to hand that back.

But ultimately, we’ve talked about the OEB decision’s impact on a number of areas, and I think the one that I want to focus on more remains the housing, because the practical impact of this is to make the cost of gas connection something that has to be paid up front, as versus amortized over the current 40-year time period. So in the world of this decision, builders would be required to pay the entire cost at the time of the gas application and then bear that cost up until the point that the house sells, which substantially increases the total costs. We’re looking at between $4,500 to $6,000 per residential unit. So for a large subdivision, we’re driving that, theoretically, up into the millions. And that burden then transfers quickly to homebuyers as they pay up in the form of those higher prices for new houses.

What I have not heard here today is that home builders and residential construction professionals in Ontario have a long and, I would say, well-illustrated track record of supporting and incorporating climate change initiatives. Homes are ever more energy-efficient and the industry itself has followed and employed hybrid heating technologies. The key here, though, is this: Realistic timelines must be respected because we have seen what happens when ideology overrules reality. In fact, we’ve lived it. Ontario suffered under it. We won the 2018 election because of it, and we won’t be subjecting Ontarians to that again.

In the circumstances we face currently, which is an affordability crisis and a housing supply shortage, we simply must still support the pipeline infrastructure required to deliver low-carbon fuels such as natural gas, which is a readily available, reliable and competitively priced energy source. Doing so is absolutely crucial to maintaining affordability in the immediate and near future.

I also note there are a number of other spinoff issues that I haven’t heard mentioned. If we’re talking about natural gas hookups, we’re not just talking about heating, we’re talking about water heaters. We’re talking about gas dryers. Essentially, what the opposition would have us do—or, rather, have the OEB do—is immediately cut off the access to natural gas hookups. Because, yes, we can’t possibly put that type of financial burden on builders right now when we’re already struggling to make housing affordable.

You then also force your consumer into suddenly having to make a million different decisions about how they’re going to heat their home, how they’re going to heat their water, how they’re going to do their laundry—all, again, to support a purely ideological narrative.

Ultimately, I feel very strongly that this is the right course of action. It puts us in the realm of realism versus ideology, and I certainly will be voting in favour.

To the member across, thank you very much for your presentation. The OEB ruling could, in fact, make building new homes more affordable because it means you would have to build only one type of energy infrastructure—the electricity—and not require a very expensive and obsolete second one. And it will be obsolete at some point as we move towards a climate-neutral economy.

Reversing the OEB ruling could result in building methane gas infrastructure that will take about 40 years to pay for—infrastructure that will be delivering fossil fuels into the year 2064, Speaker, 14 years beyond the time when the world has agreed to achieve net-zero fossil fuel consumption; infrastructure that will be made obsolete by the ongoing energy transition.

To the member across: What in this bill will actually meet the needs of the citizens of Ontario tomorrow, because this bill is being passed and pushed forward today, but we need to plan for the climate emergency?