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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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2025 Federal Election

MORE OF THE SAME: Mark Carney Admits He Will Not Repeal the Liberal’s Bill C-69 – The ‘No Pipelines’ Bill

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From EnergyNow.Ca

Mark Carney on Tuesday explicitly stated the Liberals will not repeal their controversial Bill C-69, legislation that prevents new pipelines being built.

Carney has been campaigning on boosting the economy and the “need to act forcefully” against President Donald Trump and his tariffs by harvesting Canada’s wealth of natural resources — until it all fell flat around him when he admitted he actually had no intention to build pipelines at all.

When a reporter asked Carney how he plans to maintain Bill C-69 while simultaneously building infrastructure in Canada, Carney replied, “we do not plan to repeal Bill C-69.”

“What we have said, formally at a First Ministers meeting, is that we will move for projects of national interest, to remove duplication in terms of environmental assessments and other approvals, and we will follow the principle of ‘one project, one approval,’ to move forward from that.”

“What’s essential is to work at this time of crisis, to come together as a nation, all levels of government, to focus on those projects that are going to make material differences to our country, to Canadian workers, to our future.”

“The federal government is looking to lead with that, by saying we will accept provincial environmental assessments, for example clean energy projects or conventional energy projects, there’s many others that could be there.”

“We will always ensure these projects move forward in partnership with First Nations.”

Tory leader Pierre Poilievre was quick to respond to Carney’s admission that he has no intention to build new pipelines. “This Liberal law blocked BILLIONS of dollars of investment in oil & gas projects, pipelines, LNG plants, mines, and so much more — all of which would create powerful paychecks for our people,” wrote Poilievre on X.

“A fourth Liberal term will block even more and keep us reliant on the US,” he wrote, urging people to vote Conservative.

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Alberta

Energy sector will fuel Alberta economy and Canada’s exports for many years to come

Published on

From the Fraser Institute

By Jock Finlayson

By any measure, Alberta is an energy powerhouse—within Canada, but also on a global scale. In 2023, it produced 85 per cent of Canada’s oil and three-fifths of the country’s natural gas. Most of Canada’s oil reserves are in Alberta, along with a majority of natural gas reserves. Alberta is the beating heart of the Canadian energy economy. And energy, in turn, accounts for one-quarter of Canada’s international exports.

Consider some key facts about the province’s energy landscape, as noted in the Alberta Energy Regulator’s (AER) 2023 annual report. Oil and natural gas production continued to rise (on a volume basis) in 2023, on the heels of steady increases over the preceding half decade. However, the dollar value of Alberta’s oil and gas production fell in 2023, as the surging prices recorded in 2022 following Russia’s invasion of Ukraine retreated. Capital spending in the province’s energy sector reached $30 billion in 2023, making it the leading driver of private-sector investment. And completion of the Trans Mountain pipeline expansion project has opened new offshore export avenues for Canada’s oil industry and should boost Alberta’s energy production and exports going forward.

In a world striving to address climate change, Alberta’s hydrocarbon-heavy energy sector faces challenges. At some point, the world may start to consume less oil and, later, less natural gas (in absolute terms). But such “peak” consumption hasn’t arrived yet, nor does it appear imminent. While the demand for certain refined petroleum products is trending down in some advanced economies, particularly in Europe, we should take a broader global perspective when assessing energy demand and supply trends.

Looking at the worldwide picture, Goldman Sachs’ 2024 global energy forecast predicts that “oil usage will increase through 2034” thanks to strong demand in emerging markets and growing production of petrochemicals that depend on oil as the principal feedstock. Global demand for natural gas (including LNG) will also continue to increase, particularly since natural gas is the least carbon-intensive fossil fuel and more of it is being traded in the form of liquefied natural gas (LNG).

Against this backdrop, there are reasons to be optimistic about the prospects for Alberta’s energy sector, particularly if the federal government dials back some of the economically destructive energy and climate policies adopted by the last government. According to the AER’s “base case” forecast, overall energy output will expand over the next 10 years. Oilsands output is projected to grow modestly; natural gas production will also rise, in part due to greater demand for Alberta’s upstream gas from LNG operators in British Columbia.

The AER’s forecast also points to a positive trajectory for capital spending across the province’s energy sector. The agency sees annual investment rising from almost $30 billion to $40 billion by 2033. Most of this takes place in the oil and gas industry, but “emerging” energy resources and projects aimed at climate mitigation are expected to represent a bigger slice of energy-related capital spending going forward.

Like many other oil and gas producing jurisdictions, Alberta must navigate the bumpy journey to a lower-carbon future. But the world is set to remain dependent on fossil fuels for decades to come. This suggests the energy sector will continue to underpin not only the Alberta economy but also Canada’s export portfolio for the foreseeable future.

Jock Finlayson

Senior Fellow, Fraser Institute
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