It is a pleasure to rise in the House this afternoon, on behalf of the hard-working residents of Simcoe–Grey, to join the debate on Bill 165, Keeping Energy Costs Down Act, 2024.

In light of the debate and discussion I have heard so far, my comments today are going to focus on the question of a sustainable Ontario and the competing challenges of housing and energy costs for the residents of our beautiful province.

After listening to the debate yesterday, I’d like to start by reviewing the mandate of the Ontario Energy Board, or OEB, and the December 21, 2023, decision and order in Enbridge Gas Inc. application for 2024 rates – phase 1 that is the reason for Bill 165.

The OEB is a statutory creature of the province with a mandate to regulate Ontario’s energy sector as required under provincial legislation. It is, in fact, governed by seven separate pieces of provincial legislation, including the Ontario Energy Board Act, 1998, the Electricity Act, 1998, and the Energy Consumer Protection Act, 2010.

The fact is that the OEB is a regulator, not a consumer protection agency. The OEB has regulated the natural gas sector since 1960 and the electrical sector since 1999. As a government agency, the OEB has been delegated the authority and responsibility for setting the delivery rates that electricity and natural gas utilities can charge and to monitor the financial and operational performance of these utilities.

According to its website, the OEB’s vision is to be a trusted regulator that is recognized for enabling Ontario’s growing economy and improving the quality of life for the people of this province, who deserve safe, reliable and affordable energy. And its mission statement is to deliver public value through prudent regulation and independent adjudicative decision-making processes that contribute to Ontario’s economic, social and environmental development. Indeed, these three headings are central to the sustainability of our province—economic, environmental, and social sustainability. They are part of a continuum and cannot be considered in isolation, and any change in one will impact the others.

The OEB’s decision in the Enbridge rate application of December 21 last year was phase 1 of a multi-phase process to determine the parameters for Enbridge’s 2024 rates. Rate-setting is a complex process in which the utilities provide detail and extensive information about their maintenance plans, their projected capital costs for expansion, the cost of supply, the long-term market for their utility and forecasted changes to their sector, all of which is subject to scrutiny by interested stakeholders or intervenors, such as industry groups, consumer groups, environmental groups, municipalities, First Nations and others. In all, there were 33 organizations that applied for intervenor status, of which 20 were approved by the OEB.

Speaker, the decision itself is 145 pages. It is technical and extensive, and it refers extensively to the OEB’s guidelines for assessing and reporting on natural gas system expansion in Ontario, otherwise known as EBO 188, which sets out the factors and parameters the OEB must take into consideration in deciding such rate applications.

Section 2 of EBO 188 sets out the standard test for financial feasibility and has a number of subsections. Subsection 2.2 is of particular relevance to our discussion today and sets out the specific parameters for the common elements, including the following subsections:

“(a) a 10-year customer attachment horizon;

“(b) a customer revenue horizon of 40 years from the in-service date of the initial mains (20 years for large volume customers);...”

Speaker, the intent of these provisions is to set the assumptions for the horizon or, as referred to in the OEB decision, the amortization period for the recovery of the capital costs of the common elements or lateral infrastructure necessary to connect the customer to the utility service. In fact, the term “amortization” will be familiar to anyone in this House or in this province who has a mortgage, and it allows the customer to spread these capital costs over a set period of time rather than pay them all at once, up front. The amortization period is there to make life more affordable. Without this mechanism, many would not be able to afford to connect to an essential service to heat their homes, their water heaters and their clothes dryers.

To cut to the chase, Speaker, EBO 188 sets out the parameters for the OEB to determine the utility rates based on two critical and essential considerations: first, that a customer will use the utility for 10 years; and, second, that the capital costs of the necessary infrastructure to service the clients will have a 40-year horizon for standard clients or 20 years for large-volume customers such as industrial clients. That distinction—to shorten the amortization period for large industrial clients—makes perfect sense. Larger industrial clients will have more consumption and have the ability to pay their share of the capital costs faster. They can afford to pay faster, and the corollary to that is that the residential customers need a longer period in which to pay those costs. This practice has been in place for many, many years and, until this recent decision of the OEB, has been a guiding parameter for the OEB.

The amortization of capital costs has been central to the OEB’s process to make access to safe, reliable and affordable energy, as set out in its mandate. We, on this side of the House, think it should remain that way, pending further discussion.

That is why Minister Smith and this government are introducing Bill 165 to pause the implications of the OEB’s decision in phase 1 of Enbridge’s ongoing application, pending review of the regulations and policy, and then send it back to the OEB for reconsideration.

To be very clear, at issue in the recent OEB decision, which was a split 2-to-1 decision, which is very unusual in the context of the OEB—to not only ignore the amortization period parameter, but to eliminate it entirely and rule that all capital costs for connecting a new Enbridge customer must be paid forward up front. The OEB found that the connection cost of a new home will increase by approximately $4,400, on average, across the province, at a time when this province and this country is facing a housing shortage and the cost of home ownership is beyond the reach of so many Ontarians, young and old. That cost will be significantly more—tens of thousands, in fact—for farms and residents in rural ridings like my riding of Simcoe–Grey.

For example, a recent 311-home subdivision in eastern Ontario would see an upfront connection cost of approximately $925,000, and those costs will need to be carried by the builder for multiple years until those homes are occupied, at which point they will be passed on to the purchaser in the upfront purchase price.

A small greenhouse in eastern Ontario will have an upfront connection charge of approximately $36,000, a crippling charge in an industry that is growing in Ontario and is, in fact, one of our largest economic drivers—$45 billion annually, one in 10 jobs across this province in the agricultural sector. This is a stumbling block which will prohibit many from going into that sector.

A recent seven-year commercial strip mall plaza in southwestern Ontario has an upfront cost of approximately $49,000.

And a recent restaurant project in a commercial plaza, also in western Ontario, would have upfront connection costs of $18,000.

Speaker, these are just a few real-life examples of the scale and scope and the impacts of the OEB’s decision to eliminate the amortization period completely. They are untenable, they are unaffordable, and they will cripple the development across all sectors, be it residential, commercial, agricultural or industrial.

Subsection 2.2(b) of EBO 188 requires the OEB to consider a horizon for the amortization of the capital costs, and in its decision the OEB disregarded that completely. In her dissent, Commissioner Duff spoke to that issue and made the following comments:

“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 EBO 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 EBO 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 conclusive change.”

Speaker, I agree with Commissioner Duff’s comments. Zero is not a horizon. The OEB decision chose to ignore the status quo, ignore the current and long-standing practice, and it did so despite the lack of evidence as to the impacts of such a drastic departure. As Commissioner Duff stated, the risk of unintended consequences to Enbridge, its customers and other stakeholders is massive because of—in her words—“the magnitude of this conclusive change.”

It is for this reason that the Minister of Energy has introduced Bill 165 to pause the impacts of the OEB’s decision, to maintain the current status quo, and to look at changes to the policy framework for the OEB, in consultation with stakeholder groups across the province, and then to send the issue back to the OEB for reconsideration. This is the responsible thing to do, given the magnitude of this conclusive and drastic change and the dearth of evidence before the OEB about the potential unintended consequences.

No one in this government, despite what they might say on the other side, disputes climate change, its dramatic impacts on Ontarians and the importance of meeting our commitments to reducing our carbon footprint by 2030 and beyond. We’re committed to ensuring Ontario fulfills its obligations to make our province more sustainable, more resilient and better equipped to meet the challenges of climate change.

As I said in my comments on my private member’s motion to push the federal government to eliminate the carbon tax on transportation fuels—a motion, I’m proud to say, that was supported by the official opposition. Interestingly, the minivan caucus of the Liberal Party sat on their hands and abstained from voting—perhaps they had a minivan mechanical that day.

As I stated at the outset, sustainability is a critical topic for Ontarians and for hard-working residents of Simcoe–Grey, and it comes in many forms: environmental, economic, and social.

And 2030 is a big year for Ontarians, for a number of very important reasons. It is the year by which we are to reduce our GHG emissions by 30% from 2005 levels, and it is the year by which the CMHC, in its 2023 housing update, made a stark prediction about the housing shortage in Canada and Ontario.

Starting with greenhouse gas emissions, based on the Auditor General’s report of last spring, the State of the Environment in Ontario, we have reduced our greenhouse gas emissions by 27%. We’re 90% of the way to our target with six years to go now, and I’m proud to say that we will exceed that target, when we look at our projects in terms of converting our steel producers to green steel through arc furnaces and eliminating coke furnaces—a deal that is costing this province approximately $1 billion.

And I’m very proud to say that we have one of the most diversified electrical grids in Canada, utilizing nuclear energy for approximately 60%, hydroelectric for about 24%, renewables for 9%, and natural gas and biomass for approximately 8%.

These numbers in aggregate show that we are over 90% GHG-free in Ontario, and those numbers will increase when we get our four new small modular nuclear reactors online, which will power 1.2 million homes. The first one will come online by 2028.

I’m also very proud to say that Ontarians have one of the smallest per capita GHG footprints in Canada—we’re 10.1 tonnes per individual; the national average is 17.7, so we’re 43% below that. Ontario, with approximately 38% of Canada’s population, only emits 22% of our greenhouse gases.

We are being proactive, and we are being aggressive, and we have a plan to move forward.

Recently, at COP28, Minister Guilbeault was able to sign an undertaking to increase our nuclear capacity as a nation by 300%; he could only do that because, two days earlier, our very capable Minister of the Environment and Minister of Energy signed the very same one. Ontario has 90% of Canada’s active nuclear reactors.

Speaker, the real crisis facing Ontarians and Canadians is a housing shortage, and that is why it is a priority for our government. We are committed to building 1.5 million new homes by 2030. We ran on that in the last election, and we won convincingly—so convincingly that we bulged our caucus so that it sits between the NDP and the independents.

But let’s be very, very clear. CMHC predicted, in its recent 2023 housing update, that if Canada continues along its current rate of 200,000 new housing starts per year, 100,000 of which are in this province, we will be 3.5 million homes under-housed by 2030. At the same time, we’ll be crushing our GHG emissions. That is a crisis of massive proportions. If we look at issues of homelessness and affordability and food security today, if you magnify that, on the projection by CMHC, it will be a much more dire situation in 2030.

That is why this government is focused on making housing affordable. That is why this government is trying to push down upfront costs and eliminate barriers to new homeowners moving forward. And that is why the OEB decision that brings us here today is another roadblock to housing affordability. It disrupts the status quo by eliminating the long-standing 40-year horizon to amortize the cost for new customers. It forces homebuyers to pay for these costs upfront and puts another significant financial barrier in the way of prospective purchasers.

In the recent report on barriers to housing supply in Ontario, the Fraser Institute said, “Housing affordability has eroded significantly in many parts of Ontario in recent years, prompting a more thorough review of governments’ role in facilitating or impeding the construction of needed homes. While recent policy initiatives signal positive shifts, formidable obstacles persist.” And the OEB has just dropped another major obstacle in the way of home purchasers.

Ontario is now the third-biggest economy behind the US and Canada only. We’re attracting international attention and investment as a safe, reliable and sustainable partner for global businesses. This is all part of our plan to build a sustainable province environmentally and economically. So that third branch, social sustainability and housing, faces the real crisis, and that is why it is a priority for this government.

Speaker, this government is committed to the sustainability of our province and making life more affordable for Ontarians. We are committed to protecting our environment, meeting our GHG emissions targets. I have every confidence that we will not only meet that target, but we will exceed it, and we will do that while continuing to grow our economy and make us one of the most dynamic, diverse and sustainable economies in North America and internationally. To do that, we must solve the housing shortage. We must get critically needed homes built so that our residents, our workers, our students and our future can live there and continue on the path that we are on today.

If we contrast ourselves with the now-empty seats over there and their green energy program that drove 300,000 jobs south of the border, we know—and we heard it this morning in debate from our Minister of Economic Development—that we have brought 700,000 jobs back to this province since 2018, that we have made Ontario the third-biggest economy in North America behind the US and Canada, that we are seen internationally as a safe haven for industry and commerce.

We, on this side of the House, believe that the environment and the economy can go together. That is why we are focused on growing a green economy, reducing our greenhouse gas emissions.

The big roadblock to getting us where we need to go is housing supply, and we’re seeing that across—when I go to town hall meetings in my riding, I hear from the social sector, from the commercial sector, from the retail sector: “We can’t attract employees here, because they have nowhere to live.” The speed bump for this great province is that we need to make sure we have housing for our residents and for our future.

This OEB decision is putting a major roadblock in the way of our prospective homebuyers. We are not usurping the jurisdiction of the OEB. We’re pausing their decision. We’re re-looking at their policies. We’re going to stakeholder engagement, and we are going to go back to them to re-examine their decision, with new policies in place to ensure that we can continue to grow while respecting the need to reduce our greenhouse gas emissions and our carbon footprint.

Thank you to the member opposite for your question.

It is a regulator. It’s not a consumer protection agency. It has to consider a broad spectrum. When I went through the implications and the process for rate reviews—and I can tell you, in the town of Collingwood, we sold our local electrical distributor, and both transactions had to be approved by the OEB. The test is to see what the impacts are for the local ratepayers, given the long-term needs of the area.

There’s a balancing act in the pricing process, not just about the current supply, but about updating your current infrastructure to make sure that you are ready for the needs of tomorrow. In the electrical sector, it’s like looking at the smart meters, where you can now understand where a power outage is without even leaving your office.

To invest in those up-to-date types of infrastructure—that has costs, and those costs have to be borne by the ultimate user on a responsible timeline, not up front.

It goes, again, to the long-term viability of our utility providers, which serve our residents. If you have an out-of-date utility, you’re going to have brownouts, power outages and heating losses.

Infrastructure is a critical process, and it costs millions and millions of dollars to put in the ground. The whole exercise on the pricing regulation regime is, how do you amortize those costs responsibly to make sure that the residents of Ontario have access to safe, reliable and affordable energy? “Safe energy” means you’re not having explosions in your power boxes, or gas leaks; “reliable” means it’s going to happen when you flip the switch—and “safe” means it gets there with up-to-date processes. Those costs have to be borne and amortized over an appropriate period of time; otherwise, connecting becomes unaffordable.

This government, on this side of the floor, has the clean home energy heating initiative, which is giving a grant to people to buy heat pumps, but many heat pumps require backup sources, whether it be electrical or gas.

Let’s be very clear: 70% of Ontarians heat their homes with gas. They use gas for their dryers; they use gas for their water heaters. Gas is not going to disappear. We need to maintain that infrastructure, and we need to give Ontarians a choice about how they wish to heat their homes.

Heat pumps are more expensive. I can tell you that in my family, we recently had a discussion. In my area, a heat pump is $14,000 and still requires a backup of gas. So you can buy a $5,000 heating system, or you can upgrade. Many have chosen to upgrade, as have our minister and the PA. It’s a good thing. We’re not discouraging that. We’re promoting—

I want to thank the minister for her hard work and for the question.

She’s absolutely right; we’ve seen the carbon tax impact the drying operations of our local farmers. A lot of those drying operations are using gas. These facilities are in place, and the intent here is to make sure—

At the same time, we have massive, massive plans to expand our nuclear sector, which will increase our already clean grid from over 90% upwards to 98%. It’s all part—

For years and years, implementation of capital costs have been paid. So if you’re on gas now, you’re paying for the infrastructure that you use and everybody else uses across the province. It has been going on for years. This is not new.

And if you want to tell us about the federal government—you’re taking us backward decades. We’re going to meet our target. We’re going to crush it; the federal government is not. They are so woefully behind, so we will not take any lessons on GHG emissions from the federal government.

I’ll tell you another thing. In Alliston, Ontario, when the federal government switched from hybrid cars and GHG emissions for the automotive sector to electric vehicle quotas, they’re crushing the industry and they’re kneecapping a planned way forward—and this is a planned way forward—just like the feds. The feds should be watching this. They should be listening to us, because we’re leading the country.