Governments need to step up; finance clean, efficient energy for Canada’s most vulnerable, experts say

In 2017, a video went viral of an elderly Ontario woman shaking her electricity bill at Prime Minister Justin Trudeau, tearfully asserting the $1,000 cost was higher than her monthly mortgage payments. 

The story of the disabled grandmother who spent summer days in the heat, working approximately 75 hours per week, eating instant oatmeal and soup to make ends meet, took over the internet, garnering a lot of attention to her story. But that woman was not alone in 2017, and in the seven years since, more and more people are finding themselves in the exact same situation. 

“People who can't afford basic energy needs make very hard choices about whether they pay their natural gas bill, or they put food on the table. Whether they pay their electricity bill, or they pay for their medication,” Stephen Thomas, clean energy manager at the David Suzuki Foundation, said.

Estimates of the percentage of households experiencing energy poverty across Canada.

(Efficiency Canada)

According to the 2021 Census, 5.6 percent of Canadian households were energy poor. The premise for this calculation was anyone who spent more than 10 percent of their after tax income on energy bills. Other studies estimate the number could actually be much higher. A study from researchers at McGill University estimates that, depending on the method of calculation used, the total proportion of energy poor households across the country could be anywhere from six to 19 percent.

Energy poverty is classified as a situation in which a household faces significant barriers to meeting essential home energy needs — including the heating and cooling of their homes — or are facing challenges affording energy costs. 

“Energy is the diet that our houses consume, to help us maintain well being in our home. And so people who experience energy poverty find it difficult to attain, broadly speaking, wellbeing in their home, because they can't access adequate energy,” Abhilash Kantamneni, research manager at Efficiency Canada, told The Pointer.

But energy poverty is not commonly defined in Canada, which in order to fix the problem, is one of the first things that needs to be tackled, Thomas says.

As costs of living climb at rates much higher than the average income, an increasing number of Canadians are struggling to make ends meet. A report from the Financial Accountability Office of Ontario found that in 2019, the average cost of electricity and heating across the province was $180 per month, rounding up to approximately $2,160 per year. According to various sources, including the Energy Hub, the average cost of electricity in Ontario has climbed to $141 as of 2023. Coupled with natural gas prices for home heating, Ontario households are paying, on average, approximately $200 per month for energy, totalling $2,400 per year.

According to housing and demographics data, the median household income in Ontario after taxes sits around $79,500 per year. At this level, the average annual energy costs make up about three percent of total income. However, it is generally not the established, dual income households who are struggling. Energy poverty is increasingly impacting young people, the elderly, newcomers and other minority groups.

“Energy poverty describes a set of circumstances in which your existing vulnerability to negative health and housing outcomes is exacerbated due to energy related risk factors,” Kantamneni explained. For example, seniors who are at elevated risk of cardiovascular disease because they cannot afford to heat their homes to an appropriate temperature. 

He said it is really hard to narrow down a specific number of people experiencing energy poverty, but rather thinking about the groups that are most likely to experience the negative outcomes of the issue, could help put things in perspective. 

One of the groups that stands out are newcomers or recent immigrants.

“What data shows is that newcomers spend a disproportionate amount of their time commuting to work. And so regardless of your income profile, regardless of whether you're a renter or homeowner, if you're spending a lot of time commuting, you have depleted resilience to every other thing. And so you don't have the ability to access programs that will help you improve the energy efficiency of your home to deal with high energy bills,” he gave as an example.

Other groups that have elevated risk profiles are Indigenous communities and single parents.

“So when we are thinking about addressing these issues, I think we need to keep in mind that there is no one size fits all solution,” Kantamneni said.

Just like any type of poverty, he stressed it is a cumulation of socio-economic challenges. In the case of energy poverty, it can be addressed by leading with energy efficiency.

“Energy poverty is, of course, a problem that impacts low and middle income households greatest,” Thomas told The Pointer. “It's a problem that's disproportionately affecting Black and brown communities. It's certainly disproportionately affecting Indigenous communities, on reserve and off reserve.”

Eligibility criteria for the Ontario Low Income Energy Assistance Program.

(Ontario Energy Board)

Every province in Canada, except for Alberta, has low income energy efficiency programs that provide low income households with subsidies or financial support to undertake energy retrofits to increase the efficiency of their homes. 

Electricity pricing has been a central issue in Ontario for over two decades. Following the marketization of the electricity sector and a blazing hot summer in 2002, the Ontario government responded by freezing electricity prices for consumers at 4.3 cents/kilowatt hour as of December 1, 2002. But within a year, the freeze was overturned. 

Shortly after, a collection of social activism groups formed the Low-Income Energy Network (LIEN) to advocate to the Ontario Energy Board (OEB) on matters of energy wellbeing. The LIEN asserts that total home costs become unaffordable if they exceed 30 percent of total income. In addition, utility costs should not exceed 20 percent of shelter costs; therefore energy prices become unaffordable if they exceed six percent of total household income.

In 2004, the Ontario government, for the first time, introduced a one time Emergency Energy Fund. In 2005, the fund was brought on annually, providing approximately $468 to over 37,000 households. 

In 2009, the OEB introduced the Low Income Energy Assistance Program which supplied temporary financial assistance for consumers in need, more flexible customer service rules, and targeted conservation and demand management programs for energy efficiency upgrades to homes. 

More recently the OEB has implemented the Ontario Electricity Support Program which provides a direct on-bill credit ranging from $35 to $113 per month — depending on household size and income — for eligible low-income households. In the final report and recommendations from the Ontario Electrification and Energy Transition Panel, it noted that many consumers had trouble accessing information about these programs and didn’t know whether they were eligible.

The Panel also concluded that subsidies like the Ontario Energy Rebate, which are not tied to income, could potentially become unsustainable as they often reduce the energy bills of those who are not struggling to meet energy costs.

“The Financial Accountability Office has estimated that the Ontario Electricity Rebate, which disproportionately benefits high-income homeowners, will cost taxpayers $45.4 billion over the next two decades,” leader of the Ontario Green Party, Mike Schreiner, wrote in a press release at the beginning of February. “Think of how that money could be used to make life better for everyday Ontarians.”

In the past couple of months, the Ontario government has also made two decisions that will greatly inhibit the accessibility of energy efficient solutions. This month, the rebate for homeowners wishing to install heat pumps ended. The rebate provided up to $6,500 for the purchase and installation of a heat pump with an additional $600 for a home energy audit. Opposition parties have called on the Ontario government to extend the rebate to better serve low and middle income households in the transition to more efficient energy systems—which can also save them money— but there has been no indication that the province plans to do so.

In early February, the Province also overruled a decision made by the OEB that would begin to charge consumers for new gas hookups. Minister of Energy Todd Smith claimed the reversal was made to “keep costs down” for energy consumers, but in reality it continues government subsidization of natural gas, which in turn is a more expensive form of energy.

“It's absolutely true that rising energy prices, and the reason why our energy bills are rising in Canada is because the price of fossil fuels are rising so rapidly in Canada,” Thomas said. “And that's a big element of why we're seeing energy poverty, as a problem, increase in Canada.”

Another pitfall of these energy assistance and retrofit programs is that they often operate in silos and have to meet certain cost effectiveness tests. 

“That really constrains their ability to do the energy savings, or their ability to do things like fuel switching,” Kantamneni said. “If you have a natural gas furnace in some provinces, and you participate in the program, you'll get a more efficient natural gas furnace, but they might not switch to the heat pump, even if the math works.”

This is where he said the federal government is uniquely positioned to play a role. Rather than implement its own program, confusing consumers across the market, Kantamneni said the federal government should work with the provincial and territorial governments to elevate existing programs for low income assistance and energy retrofits.  

“What the federal government can do is define what energy poverty is, have some high level metrics, and have some guidelines and criteria that local programs can meet,” he said.

Up until now, the federal government’s actions to promote energy efficiency and affordability have been very piecemeal, Thomas said. Some provinces and municipalities are doing really innovative things, but there is no overarching criteria set by the federal government.

“By and large, too many people are falling through the cracks. And there's no consistent delivery of energy poverty solutions to the people who need it in Canada,” he said. “So that's why we think that the federal government has a role to play for that consistency across Canada, giving the provinces and the municipalities the tools that they need to address this problem.”

Federal Minister of Environment and Climate Change Steven Guilbeault (above), and Minister of Energy and Natural Resources Jonathan Wilkinson, have received flack from environmental organizations for legislation that is leaving loopholes for oil and gas producers.

(Government of Canada)

For the 2024 federal budget, the David Suzuki Foundation (DSF) has three big requests to help alleviate energy poverty Canada-wide. 

The first is for a national energy poverty reduction strategy “and from that strategy, we hope will flow the kinds of programs and policies and funding that are most needed to fill the gaps,” he said. 

But before a strategy can be implemented, Thomas noted greater investment is needed into energy efficiency and home retrofits. The DSF is asking the federal government to commit $20 billion over five years for no-cost retrofits for those experiencing energy poverty. 

“That is home upgrades, energy efficiency upgrades, to make homes more comfortable and healthier, and to reduce energy bills, but are done in a way where the cost of those retrofits is zero for low and middle income households,” he said.

They are also asking for an additional $2.7 billion in 2024 for retrofits for housing specifically in Indigenous communities.

Kantamneni said it is crucial the federal government connects energy retrofits and health and safety measures like asbestos abatement and mold remediation, which have yet to be part of the mandate of these programs.  

“A lot of households that need these programs most often become disqualified from the program because someone will come to your home and they'll notice mold and they don't have the mandate to fix it … But these are households that need help the most,” he said. Meanwhile, the federal government ended its own Greener Homes Program a year earlier than expected.

There is also an increasing challenge of ensuring energy well-being for renters. Over 30 percent of Ontarians rent as opposed to owning their home. While there are many benefits to renting, including flexibility of location and duration of stay, shifted responsibilities and sometimes cheaper costs, renters have no control over the built environment and have no authority to make changes to infrastructure that could lead to energy savings. 

“Even for long term renters who live in one home for a long time, (they) are at risk of paying high energy bills, but they're also at the risk of other consequences,” Kantamneni said. Renters who are facing extreme temperatures might turn down the thermostat in the summer or use portable electric heaters in the winter which consume greater electricity and contribute to higher costs. But they can also increase the risk of accidents like home fires.

The transition to renewables will decrease the costs of electricity, but that alone will not solve energy poverty in Canada.

(Alexis Wright/The Pointer)

Energy savings will also be created as the country shifts to renewable energy sources. Ontarians could be waiting longer to see these savings as the Ford government continues to tout natural gas procurement as the solution to increasing energy demand. Gas furnaces, for example, are up to three times less efficient than a heat pump, and are higher cost than wind, hydro and nuclear energies. 

“One of the reasons why we're so excited about the transition away from fossil fuels to clean energy sources, like wind and solar, is because that is a move toward efficiency and a move toward affordability in itself,” Thomas said. 

In December, the Ontario government ended its five year freeze on new renewable energy contracts by announcing a procurement of 2,000 megawatts of electricity from non-emitting sources, including wind, solar and hydro. It is also looking to update existing facilities and contracts to procure an additional 3,000 megawatts over the next decade. While the announcement was welcomed by environmental organizations, which have berated the government for its failure to take renewable energy seriously, the announcement came after another procurement of additional natural gas resources.

Even on the federal stage, investments in renewable energy have been lagging. While the Canadian government signed onto the historic agreement at the end of COP 28 that aims to triple renewable energy capacity and double the global average annual rate of energy efficiency improvements by 2030, little detail has been given on how the ambitious target will be achieved. 

The federal government also released a second draft of its proposed Clean Electricity Regulations last month, within which environmental organizations identified several loopholes that will allow for the continued burning of natural gas, greatly impacting Canada’s ability to have a net zero energy grid by 2035. 

“The federal government says that they're still committed to meeting this target. But this policy won't get us there, and we don't see any other policy that they're developing in Canada that will fill in that gap,” Thomas previously told The Pointer. 

But both Kantamneni and Thomas said the renewable energy transition alone will not solve the energy poverty crisis.

Kantamneni said greater attention needs to be paid to those struggling the most. This means allocating resources to households that do not have the ability to make the transition on their own “and not leave them behind in the transition to a secure future”. 

He pointed to the United Kingdom which has a series of policies to ensure no low-income household is living in an inefficient home. Every building across the country is placed on a scale from A to G, with A being the most energy efficient and G being the least. Over time and in phases, the government will make it unacceptable to buy, rent or sell a home in the lower categories, encouraging home energy retrofits and providing financing where needed. 

Kantamneni said a similar system could be used in Canada to reduce vulnerability to energy poverty.

“If you build a new home today, whatever standard that is, whatever building code that is in your province … all existing homes vulnerable communities live in should be renovated and retrofitted to that standard,” he said. “It puts the focus on housing and the built environment and less so on people because people are not the problem.”

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Twitter: @rachelnadia_

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