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The rise of energy poverty

The rise of energy poverty

The Ontario government has pumped billions of dollars into energy conservation programs over the past 25 years in an effort to combat the province’s soaring power costs but the outcomes are meagre, says a new study by independent think-tank the Fraser Institute.

While the programs themselves are often “good news” stories, touting proactive and targeted efforts aimed at tackling energy efficiency, the reality is a little disheartening, says Tom Adams, an independent energy and environmental consultant who co-authored the report with University of Guelph economist Ross McKitrick.

“We went and looked at what’s underneath the good news story – it’s just disgusting what you find,” he says.

Case in point: between 2007 and 2011, the Ontario government ran twin programs – a home energy audit and home energy retrofit program.

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“From the provincial side alone it cost (a combined) $573 million,” say Adams. “That’s not chump change.”

The programs, he explains, were never audited to gauge success.

In 2013, the Ontario Power Authority (OPA) spent nearly $400 million on conservation and closely related programs, in addition to federal, provincial and municipal programs like the City of Toronto’s Home Energy Loan Program. An additional $3.1 billion has been set aside for these OPA programs leading into 2020.

“But what do we get?” says Adams.

He points to a study on the comparable U.S Weatherization Assistance Program by researchers at Berkeley University which found that the program costs households about $2 per $1 in energy savings.

Adams notes that while the cost of running these programs in Ontario is only about two or three per cent of hydro users bills, the struggle to find solutions comes at a time when the rest of the country is grappling with rising energy costs.

Between 2010 and 2013, electricity prices climbed by an average of 1.31 cents per kilowatt-hour (kWh), with increases of over four cents in some Canadian cities according to another study by the Fraser Institute.

“As a giant energy producer, Canada exports huge amounts of energy so you’d think that the energy sources can be used to derive power for their own citizens at a lower cost,” says Kenneth Green, senior director of natural resource studies at the Fraser Institute.

Yet between that same period, 2010 to 2013, the number of Canadian households spending more than 10 per cent of their budget on energy – known as “energy poverty” – grew from 7.2 per to 7.9 per cent. Atlantic Canada had the highest amount of energy poverty in 2013 at 20.6 per cent of households with P.E.I. paying 17.9 cents/kWh, New Brunswick paying 14.3 cents/kWh, Nova Scotia at 14 cents/kWh and Newfoundland paying an average of 13.5 cents/kWh during that year’s spring and summer.

Ontario, where energy prices reached a crippling 23.6 cents/kWh – the highest in the country – saw energy poverty climb to 7.5 per cent, just below the country average. British Columbia, where electricity was 8.3 cents/kWh had the lowest incidents of energy poverty at 5.3 per cent.

Adams points out that energy is a provincial matter, with most having one or a small number of government-owned electric utilities like hydro dams and natural gas.

“Every province developed its own controls on the system, including the costs,” he says. “Provinces with old, financially-depreciated hydro-electric plants supplying all or almost all of their power – Quebec, Manitoba and B.C. – have a huge advantage in cost today.”

But in provinces like Ontario, where coal is being phased out in favour of cleaner energy sources, costs are apt to rise. It’s only a matter of time before that spreads across the country, says Green.

“Right now Canada is poised on some fairly radical energy generation changes if we’re going to live up to the promises made at the Paris (climate change conference),” he says. “Major changes are looming ahead as to how we generate out energy – that will really translate into an impact on prices and that’s going to impact our households and energy poverty as prices go up.”