Subsidies for Enbridge paid by you

When a vice president from Enbridge, the sixth richest company in Canada, decides to grace  the opinion pages of Hamilton’s local paper —  not the whole TorStar chain, specifically just The Hamilton Spectator —  you know there’s something big going on here.  

On April 25th, an opinion piece appeared in The Spec titled “The importance of factual information in Ontario’s energy system”. The article was a response to two-op eds that appeared around Earth Day, submitted by environmentalists, decrying the Ford government moving energy policy in Ontario backwards with the announcement of Bill 165. And contrary to the title, the opinion piece was full of misleading and inaccurate statements. 

Enbridge is a powerful corporation: they made more than twice as much profit as Loblaws in 2023. In Ontario, Enbridge Gas has systematically bought up the competition since 1996 to become a near-perfect monopoly. After acquiring Union Gas in 2017, Enbridge now controls 99.8% of pipeline gas distribution with 3.8 million customers, leaving just 8000 customers in Alymer and South Bruce hooked up to Epcor, the only other provider in the province.

So why would Malini Giridhar, vice president of business development and regulatory affairs at Enbridge, take time out of her highly paid day to respond to opinion pieces in The Hamilton Spectator? 

Because there’s a movement building across Ontario that has Enbridge scared, and Hamilton is leading the charge.

Hamilton was the first city to throw support behind a groundbreaking decision from the Ontario Energy Board (OEB) that put the public interest ahead of Enbridge’s interests. 

On Dec 22, 2023, the OEB issued a landmark decision that Environmental Defence called “a win-win for everyone but Enbridge”. When the Ford government announced almost immediately they would overturn the decision to send Ontario’s energy policy back to gas-guzzling usual, environmental groups called for the OEB to be allowed to do its job fairly without interference. But instead the PCs introduced Bill 165, the ironically titled “Keeping Energy Costs Down Act” to sideline the independent OEB. Bill 165 (and now Bill 185 as well) are designed to give Enbridge more money via rate hikes, and some additional goodies like less oversight and the green light to expand their network indefinitely.

A point of pride for Hamilton, our council stood up against this by unanimously passing a motion called “Support for the Decision of the Ontario Energy Board to End the Gas Pipeline Subsidy”, asking the Ford government to withdraw the changes and let the original decision stand. After Hamilton took the lead, Kingston, Guelph, and half a dozen other municipalities followed. And based on public correspondence, Enbridge certainly wasn’t thrilled by all this.

So Enbridge’s VP went on the PR offensive.

In the op ed that ran here in Hamilton, Enbridge’s VP argued that the word “subsidies” can only be used for taxpayers and doesn’t apply to energy ratepayers, which they call their customers. But a crucial piece of information is that Enbridge isn’t any old business; it’s a regulated monopoly. The government directly sets the rates Ontarians pay for gas distribution. And it’s absolutely fair to call a political choice to raise rates Ontarians need to pay by $250 million dollars a year a “subsidy” — for Enbridge, it’s basically the same as if the government simply wrote them a $250 million cheque every year from now on. 

Raising the rates is actually less equitable than a subsidy from government spending would be because high-income households can afford to switch to cheaper heat pumps and lower their bills, while renters and low-income households are disproportionately unable to make upgrades to their homes. 

Enbridge’s op ed also claims a decision called EBO-188 prevents any customer-funded subsidies. This is also not true, and understanding it takes a bit of history and the help of some documents obtained via records request.

Issued in 1998, EBO-188 was the decision that set out a framework for determining gas rates going forward — and it was contentious even at the time. The hearing process started back in 1995, when the green energy transition wasn’t on the horizon and climate change was still being suppressed from public discourse. But even still, over the course of the hearings in 1996, opponents raised significant concerns about where the framework favoured by the gas distribution companies would lead us. 

The gas companies proposed a system where new customers would not pay up front for new pipelines; instead they would pay it back through their gas bills over 40 years. Those bills would be set high enough for gas companies to make back their pipeline investment money, plus a 9% annual interest. Despite company assurances, there was no real safeguard to prevent existing customers from funding new expansion bills. Companies could each decide how to do the math on profitability, and that math just needed to show that customers in the expanded area were forecast to make up all the initial costs over a 40-year payback period.

Even back in 1996, the critics pointed out that the OEB had no way to follow up to ensure new customers actually did foot their bill as the companies forecasted. There was also no mechanism to prevent new customers in already serviced areas from overpaying for pipeline costs when no new pipelines were actually built to reach their homes. And the dissent opinion thought 40 years was far too long a horizon for accountability, they recommended only approving projects if the company could show it made business sense within 5 years.

Unfortunately, when the final decision was reached in 1998, the OEB sided with gas companies. Over the next 25 years this framework incentivized sprawl development, increased the number of new gas appliances spewing toxins into homes, and made returns from gas utilities so reliable and profitable they would become critical investments for banks, pensions, and institutions.

It wasn’t until December 21, 2023 that the OEB would issue a new decision to change course back to what some wise dissenters had said in 1996. It was time to ditch the framework that prioritized expansion and returns for Enbridge and make changes to put the interest of Ontarians first. But only 15 hours later, on December 22, the PC government announced it would overrule the board in favour of Enbridge. 

As reported by the Narwhal, there is a pattern of corruption in Bill 165 that matches the Greenbelt Scandal. David Donovan, currently Chief of Staff to PC Energy Minister Todd Smith, was working for Enbridge as a senior government affairs strategist before getting into public service with the PC government in 2018. Documents obtained by the Narwhal show that Donovan personally directed staff to work on the energy policy changes after phone calls and meetings with Enbridge after the OEB decision was released. 

In Enbridge VP Giridhar’s op-ed, she says that Enbridge needs a “supportive regulatory environment”. It’s hard to think of a more supportive relationship than having a friend in the Energy Minister’s office work staff overtime to overrule the independent regulator for Enbridge’s gain.

Factual information about Ontario’s energy future does matter, but readers in The Spec (or anywhere else) won’t get it from Enbridge. It’s disappointing a short version of this piece wasn’t published in The Spec in response to Enbridge’s misinformation. Decisions made now about Ontario’s energy future will shape our lives for decades to come. And on such a critical issue the public needs to get the full picture of what our governments are doing, who benefits, and who pays the price.

Lucia Iannantuono is an environmental activist with Hamilton 350, Environment Hamilton, and the Green Party of Ontario. CATCH is honoured to circulate her essay.