What Is The Deal With Premier Wynne’s Plan To Cut Natural Gas Output?

The leaked plan of the Ontario Liberals to eliminate natural gas in favor of electric for home heating and other major uses has been met with much criticism. The Liberals Climate Change Action Plan calls for the removing of natural gas as a way to heat homes, run water heaters in an effort to reduce the climate impacts that natural gas has on the environment.

While certainly no one can fault the motivations of the Wynne government the plan has caused some to be concerned about the impact of the transition and the cost that it will take to make the move.   More than 3.5 million homes in Ontario currently use natural gas to heat water and their homes, which represents over 80% of the homes in the province.

Trying to move those homes and the business that also use natural gas to electricity will cost an enormous amount of money not just in the infrastructure costs but also in the increase in amount of money home owners will have to spend to simply heat their homes. At current costs the amount added to the normal household to transition to electric would represent an increase of over $3000 per year in heating costs alone.   This number would be very hard for homeowners to account for especially in this stagnating economy.   Also, if the home owner has appliances such as barbeques and dryers, stoves and the like in natural gas they will be out of luck and need to purchase new appliance resulting in even more costs to be incurred.

The costs represented are not just on the backs of the homeowners either, the amount of energy costs that transitioning to electricity would incur on businesses is of no small concern either.   The higher costs of heating and running their factories and businesses would result in the loss of competitiveness and the ability to both hire more workers and pay the ones that they already employ. This could result in firms deciding to leave the province for other more business friendly provinces.  Another even bigger concern is the undue pressure that removing natural gas will have on the electricity grid overall.  The ability to rely on the natural gas grid should anything untoward happen to the electricity grid gives us great comfort and resilience.

Removing one of those options will put a huge amount of pressure on the other and could have catastrophic results if there was ever a situation like the one in the early 2000’s where the electricity grid went down for several days.   While we all worry about the environment the decisions made have to be both sensible and pragmatic and take into account all of the potential and real pitfalls.  The idea to remove an option without fully understanding the implications will lead to needless harm and undue costs.

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Sam Seidman, CPA, CA, LPA
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