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Energy

Unpacking the Growing Cost of Home Heating Bills

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8 minute read

From EnergyNow.ca

By Canada Powered by Women

Bills are one of life’s certainties, and in Canada, so is winter. When combined, the two add up to a growing affordability crisis across the country.

Lots has been said about the rising cost of daily essentials such as groceries and gas, but another factor weighing heavily on Canadians’ pocketbooks is the cost of heating their homes.

According to data from Statistics Canada:

  • 15% of Canadians reduced or had to forgo necessities such as food or medicine for at least one month to pay an energy bill last year. To put that in perspective, based on the number of households there are in Canada today, roughly 2.5 million households had to forgo necessities in 2023.
  • 14% of Canadian households kept their home at an unsafe or uncomfortable temperature because of unaffordable heating costs (approximately 2.3 million households).
  • High energy prices also caused 10% of Canadian households (approximately 1.7 million households) to be late or unable to pay their energy bills in the past year.

In total, nearly 27% of households (4.5 million households) said it was difficult, or very difficult to meet financial needs in the second quarter of 2023.

These numbers concern us, and we know they are also a big concern for women across Canada who have told us they are adjusting their living conditions to keep costs down.

Engaged women are making trade-offs

Hilary Krauss, a 28-year-old who lives with her partner Mitch in Vancouver, told us that their apartment setting is now fixed at an “affordable” temperature, and they are now bundling up and adding layers of clothing to compensate for lower house temperatures.

Even those who can currently afford their heating bill are considering investing in technology such as solar panels to lower home heating costs over time.

“I want energy security and care about the environment,” said Angela Chung, a Calgary woman who told us she pays $400 per month for her utility bill. “The heating costs for my modest home are exorbitant. If I invest in solar panels, it will have an upfront cost. But I may break even in a decade, saving money in the long run.”

With costs ballooning, and concerns rising about affordability, that drove us to ask what exactly we are paying for in our energy bills.

Taxes are driving up energy costs

The three main components of your heating bill are energy charges, delivery and administration (what you pay utility companies), and various government taxes, including the federal carbon tax.

  • Used energy (GJ or KWH)
    The gigajoules or kilowatt hours of energy you used in the billing period. (This number can be an estimate or exact number.)
  • Delivery charges
    Delivery charges include fixed and variable costs based on the length of your billing period and natural gas consumption. Both charges are often summed on your heating bill under “Delivery Total.”
  • Rate riders
    Provincial utility commissions approve temporary charges/credits. Rate riders adjust for under/over collection of approved costs.
  • Transmission charge
    A fee for accessing high-voltage wires and towers to transmit power from generation plants to distribution systems.
  • Federal carbon tax
    A federal government tax on natural gas consumption.

These numbers vary across Canada based on different energy and home heating sources, so we collected bills from people in Alberta (Calgary and Sylvan Lake), Ontario (Barrie and Whitby) and British Columbia (Vancouver and Victoria) to compare.

Here’s what we found.

(1) Energy cost varies by province, and are rising every year

Just over half of Canadian households that reported having a primary heating system use a forced air furnace (51%) and one quarter (25%) use electric baseboard heaters, so we focused on these two sources.

Of the bills we looked at, people are paying an average of $135 per month to heat their home. With natural gas, the average winter month costs $160, compared to $110 with electricity.

Canadians are facing increased costs year-over-year for both natural gas (up 23.7% in 2023 over the year before), and electricity (up 1.6% in 2023).

The cost of electricity varies across Canada and can be a challenge to compare because there is a wide variation in market and rate structures.

Some provinces use tiered rates that increase or decrease based on usage, some provinces use flat-rate billing, and Ontario uses time-of-use rates where peak hours are billed at a higher rate than off-peak hours.

According to Statista, the average cost per kilowatt hour (kWh) for electricity in Canada is 19.2 cents, with the Northwest Territories paying the most, and Quebec paying the least per kWh.

unpacking the growing cost of home heating bills 2

(2) The carbon tax is nearly doubling home heating costs

The bills we examined show that the carbon tax accounts for 30% of heating costs for those who heat their homes with forced air furnaces that use natural gas.

In Alberta, for example, it costs about $1.80 per gigajoule (GJ) of natural gas, and an additional $3.33 per GJ in carbon tax. This means the tax is greater than the actual energy cost, nearly doubling the cost of a monthly bill.

For every $1 an Ontarian spends on natural gas, they pay an extra $1.66 on the carbon tax, according to the bills we examined. Again, the cost of the carbon tax is greater than the cost of energy used.

unpacking the growing cost of home heating bills 3

In Eastern Canada where home heating oil is the most used heating source, the carbon tax has been exempted (a fairness issue we’ve already explored in depth) so we have excluded it from this analysis.

Carbon tax increases will raise cost further

The federal carbon tax is set to increase by 23% on April 1, 2024, and it will rise every year until it nearly triples by 2030 over today’s rate.

The federal carbon tax was intended to incentivize people to consume less oil and gas, but we know from our national research that more than half of engaged women (52%) feel it isn’t working because it isn’t changing behaviour. It’s also putting undue pressure on remote and rural communities where alternative energy sources are not available.

Home heating is a necessity, not a luxury, and many Canadians do not have options on how they heat their home. With 46% of engaged women across Canada telling us they are concerned about energy affordability, it begs the question: Do you think what you pay for home heating is fair?

Let us know what you think about rising heating costs and these findings, and reach out to tell us how you’re managing the rising cost of living.

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Energy

What does a Trump presidency means for Canadian energy?

Published on

From Resource Works

Heather-Exner Pirot of the Business Council of Canada and the Macdonald-Laurier Institute spoke with Resource Works about the transition to Donald Trump’s energy policy, hopes for Keystone XL’s revival, EVs, and more. 

Do you think it is accurate to say that Trump’s energy policy will be the complete opposite of Joe Biden’s? Or will it be more nuanced than that?

It’s more nuanced than that. US oil and gas production did grow under Biden, as it did under Obama. It’s actually at record levels right now. The US is producing the most oil and gas per day that any nation has ever produced in the history of the world.

That said, the federal government in the US has imposed relatively little control over production. In the absence of restrictive emissions and climate policies that we have in Canada, most of the oil production decisions have been made based on market forces. With prices where they’re at currently, there’s not a lot of shareholder appetite to grow that significantly.

The few areas you can expect change: leasing more federal lands and off shore areas for oil and gas development; rescinding the pause in LNG export permits; eliminating the new methane fee; and removing Biden’s ambitious vehicle fuel efficiency standards, which would subsequently maintain gas demand.

I would say on nuclear energy, there won’t be a reversal, as that file has earned bipartisan support. If anything, a Trump Admin would push regulators to approve SMRs models and projects faster. They want more of all kinds of energy.

Is Keystone XL a dead letter, or is there enough planning and infrastructure still in-place to restart that project?

I haven’t heard any appetite in the private sector to restart that in the short term. I know Alberta is pushing it. I do think it makes sense for North American energy security – energy dominance, as the Trump Admin calls – and I believe there is a market for more Canadian oil in the USA; it makes economic sense. But it’s still looked at as too politically risky for investors.

To have it move forward I think you would need some government support to derisk it. A TMX model, even. And clear evidence of social license and bipartisan support so it can survive the next election on both sides of the border.

Frankly, Northern Gateway is the better project for Canada to restart, under a Conservative government.

Keystone XL was cancelled by Biden prior to the invasion of Ukraine in 2022. Do you think that the reshoring/friendshoring of the energy supply is a far bigger priority now?

It absolutely is a bigger priority. But it’s also a smaller threat. You need to appreciate that North America has become much more energy independent and secure than it has ever been. Both US and Canada are producing at record levels. Combined, we now produce more than the Middle East (41 million boe/d vs 38 million boe/d). And Canada has taken a growing share of US imports (now 60%) even as their import levels have declined.

But there are two risks on the horizon: the first is that oil is a non renewable resource and the US is expected to reach a peak in shale oil production in the next few years. No one wants to go back to the days when OPEC + had dominant market power. I think there will be a lot of demand for Canadian oil to fill the gap left by any decline in US oil production. And Norway’s production is expected to peak imminently as well.

The second is the need from our allies for LNG. Europe is still dependent on Russia for natural gas, energy demand is growing in Asia, and high industrial energy costs are weighing on both. More and cheaper LNG from North America is highly important for the energy security of our allies, and thus the western alliance as it faces a challenge from Russia, China and Iran.

Canada has little choice but to follow the US lead on many issues such as EVs and tariffs on China. Regarding energy policy, does Canada’s relative strength in the oil and gas sector give it a stronger hand when it comes to having an independent energy policy?

I don’t think we want an independent energy policy. I would argue we both benefit from alignment and interdependence. And we’ve built up that interdependence on the infrastructure side over decades: pipelines, refineries, transmission, everything.

That interdependence gives us a stronger hand in other areas of the economy. Any tariffs on Canadian energy would absolutely not be in American’s interests in terms of their energy dominance agenda. Trump wants to drop energy costs, not hike them.

I think we can leverage tariff exemptions in energy to other sectors, such as manufacturing, which is more vulnerable. But you have to make the case for why that makes sense for US, not just Canada. And that’s because we need as much industrial capacity in the west as we can muster to counter China and Russia. America First is fine, but this is not the time for America Alone.

Do you see provinces like Alberta and Saskatchewan being more on-side with the US than the federal government when it comes to energy?

Of course. The North American capital that is threatening their economic interests is not Washington DC; it’s Ottawa.

I think you are seeing some recognition – much belated and fast on the heels of an emissions cap that could shut in over 2 million boe of production! – that what makes Canada important to the United States and in the world is our oil and gas and uranium and critical minerals and agricultural products.

We’ve spent almost a decade constraining those sectors. There is no doubt a Trump Admin will be complicated, but at the very least it’s clarified how important those sectors are to our soft and hard power.

It’s not too late for Canada to flex its muscles on the world stage and use its resources to advance our national interests, and our allies’ interests. In fact, it’s absolutely critical that we do so.

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Energy

What Will Be the Future of the Keystone XL Pipeline Under President Trump?

Published on

From EnergyNow.ca

By Terry Winnitoy, EnergyNow

The Keystone XL Pipeline, proposed in 2008, was designed to transport Canadian crude oil from Alberta to refineries in the United States, specifically to Steele City, Nebraska, and onward to refineries in Illinois and Texas, as well as to an oil pipeline distribution center in Cushing, Oklahoma.

Spanning approximately 1,179 miles and designed to transport up to 830,000 barrels of oil per day, the pipeline promised significant economic and energy security benefits. However, it became a focal point of political and environmental controversy, leading to its eventual cancellation by Presidents Obama and Biden.

Here’s a brief look at its history, the reasons it should have been built, the political dynamics that led to its cancellation and will President-elect Trump revive it?

Why the Keystone XL Pipeline Should Have Been Built

Economic and Job Creation

The pipeline was projected to create thousands of construction jobs and several hundred permanent jobs, providing a significant boost to the economy. It was also expected to stimulate economic activity through the development of related infrastructure and services.

Energy Security

By facilitating the efficient transport of a large volume of oil from a stable and friendly neighboring country, the pipeline would have reduced American dependence on oil imports from more volatile regions, enhancing national energy security.

Environmental Safety

Pipelines are generally safer and more environmentally friendly for transporting oil compared to rail or truck, with lower risks of spills and accidents. The Keystone XL was designed with the latest technology to minimize leaks and environmental impact.

Regulatory Oversight

The project underwent extensive environmental reviews and was subject to strict regulatory standards to ensure it adhered to environmental protection and safety measures.

Political Reasons for Cancellation

Environmental Activism

The pipeline became a symbol for environmentalists who opposed further development of fossil fuel infrastructure. They argued it would contribute to climate change by enabling the extraction and consumption of oil sands, which are more carbon-intensive than other oil sources.

Obama’s Cancellation

President Obama rejected the pipeline in 2015, citing environmental concerns and its potential impact on global climate change. He argued that approving the pipeline would have undercut America’s leadership on climate change.

Trump’s Reversal and Biden’s Final Cancellation

President Trump revived the project in 2017, citing economic benefits and energy security. However, President Biden canceled it again on his first day in office in 2021, fulfilling a campaign promise to prioritize climate change issues and transition towards renewable energy.

Political Symbolism

For both Obama and Biden, the decision to cancel the Keystone XL Pipeline was also a symbolic gesture, demonstrating a commitment to environmental sustainability and a shift away from fossil fuel dependence in line with their administrations’ climate policies.

Will President-Elect Trump Reinstate It?

Currently, there is no definitive answer on whether President-elect Trump will reinstate the Keystone XL Pipeline. His previous administration showed support for the project, citing its potential economic and energy security benefits. However, reinstating the pipeline would require navigating significant political, legal, and environmental challenges that have developed over the years.

It would also depend on the current geopolitical, economic, and environmental priorities at the time of his taking office. The Keystone XL Pipeline’s history is a complex tapestry of economic aspirations, environmental concerns, and political maneuvers.

Its cancellation has been a contentious issue, reflecting the broader national and global debates over energy policy and climate change strategy. Whether it will be reinstated remains a significant question, contingent on a multitude of factors including political will, environmental policies, and market dynamics.

That all said, re-instating its approval might be the perfect “in your face” moment for Trump to Obama and Biden as he begins his second term of presidency. We’ll have to wait and see.

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