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How Canada can end energy poverty and winter cut-offs

Ontario Premier Kathleen Wynne unveiled her government’s plan to cut electricity bills in March 2017 amid a public uproar about skyrocketing fees driving ratepayers into energy poverty. (THE CANADIAN PRESS/Frank Gunn)

How Canada can end energy poverty and winter cut-offs

Energy poverty is a surprisingly common problem in Canada, with vulnerable communities most harshly affected by cut-offs when they fall behind on bill payments.

Despite this being a longstanding issue, Canada’s public discourse on energy poverty is just beginning.

Energy poverty isn’t just a different facet of living with low incomes. My work shows that while 35 per cent of people in energy poverty have low incomes, the majority don’t. Conversely, 58 per cent of people who have low incomes are not in energy poverty.

This means that many lower middle-class people who own their homes experience energy poverty in Canada. That’s because housing quality and energy prices — and therefore housing and energy policy — are important factors.

Both the Fraser Institute and the Canadian Centre for Policy Alternatives — think tanks on opposite sides of the political spectrum — use the same definition of energy poverty despite ideological differences.

But they borrowed it from an old U.K. definition. My research at the Institute for Resources, Environment and Sustainability suggests a more appropriate definition of energy poverty in the Canadian context.

Energy poverty occurs when a household has a hard time meeting energy needs. “A hard time” can be translated into a quantitative definition if we think of energy poverty and affordability the same way we think about housing affordability.

Cost of energy a burden

In Canada, households that spend more than 30 per cent of their income on securing shelter are said to lack affordable housing, according to the Canadian Mortgage and Housing Corp. The cost of household energy is included, but will be shown as its own measure here.

That 30 per cent threshold is based on what most Canadians spend on housing. A disproportionate amount spent on housing means less money for food, transportation or education relative to other households.

We may define a household energy affordability threshold similarly. Most Canadians spend three per cent or less of their income on energy. The median value for percentage of household expenditure on energy was 2.9 per cent, according Statistics Canada’s 2011 Survey of Household Spending.

So we can say households that spend more than twice this value face disproportionate energy burdens, which puts the energy affordability threshold at about six per cent of household income.

That offers a working figure of 21 per cent, or about 2.8 million Canadian households in energy poverty.

Energy poverty as a relative problem

While six per cent may seem like a small portion of a household’s income, two factors belie that assumption: Poverty is fundamentally a relative problem and energy poverty has severe consequences.

If everyone in Canada was constantly cold, we would think of it as a low standard of thermal comfort — a technical problem — and find a technical solution such as inventing a new kind of insulation for our homes.

Being cold would become a form of poverty only when some people could get insulation to improve their thermal comfort and others couldn’t — a social problem.

That is what the six per cent figure represents: Some people can get warm relatively easily and others have to spend a large part of their income to warm up.

Severe consequences to energy poverty

The consequences of being in energy poverty are also not small: Households that find paying for energy difficult may keep their homes at lower temperatures, which has health implications, especially for children and the elderly.

Studies have documented higher rates of respiratory health problems for children, as well as lower weight gain and more susceptibility to illness for infants as a consequence of being in energy poverty.

For adults, the best-documented effect is on self-reported mental health: People in energy poverty are constantly under stress.

Excess winter mortality — the number of deaths in winter compared to the summer, in which colder indoor temperatures are a factor — is well-documented and particularly worrisome for older people.

In addition to these serious health and wellness implications, living with higher energy burdens is inconvenient, particularly when service disconnections occur. And convenience matters: When most people have access to conveniences and others don’t, we start calling them essential services.

Being disconnected from utility service means loss of access to heat and other amenities. For many, having no heat means no hot water. For those with electric heating, disconnection also means no refrigeration and lighting.

These interruptions to hot water or refrigeration service are important primary manifestations of energy poverty because most disconnections happen in spring, when heat is less of a concern. Once disconnected, many households face high reconnection fees and lose access to equalized bill payment, which deepens their energy poverty.

Bob Peever, of B.C. Hydro, gives a site tour last April of the Site C Dam location that runs along the Peace River in Fort St. John, B.C. The project is now under review. (THE CANADIAN PRESS/Jonathan Hayward)

What causes energy poverty

My work focuses on the ways in which energy policy decisions and energy planning processes create energy poverty for Canadians.

Since energy policy is primarily set by provinces, these processes differ across the country. In British Columbia, for example, the government has courted the liquefied natural gas (LNG) industry for a decade, creating a discourse of “energy plenty” — meaning the province has copious supplies of natural gas ready for exploitation and export, as well as cheap, abundant electricity for the LNG sector.

That electricity was to be made available by constructing a $9 billion dam without public review to power an industry that would likely not materialize in British Columbia due to the global supply glut of natural gas. With a change in government, this dam is now under review.

The cost of this manufactured energy abundance was passed on to public utility customers who have seen a 20 per cent increase in their electricity costs over the past three years. Had the new government not frozen rates, utility customers were to see a 45 per cent increase in electricity rates over a decade.

These price increases have been devastating for customers who were already struggling to meet their energy needs and pushed new households into energy poverty.

How to reduce energy poverty

I have five broad suggestions to reduce energy poverty and its impact on people’s lives:

  1. Increase welfare rates and the minimum wage to help improve the lives of the 36 per cent of people in energy poverty who also have low incomes.

  2. Create programs that make energy retrofits available to people in energy poverty (many of whom are not low-income). This should be a key part of federal and provincial energy policies. Deep retrofits, which include changes to heating systems, insulation and air-sealing, are shown to reduce energy expenditure or improve thermal comfort.

  3. Mandate winter disconnection moratoriums to prevent some of the worst consequences of energy poverty. Complement these moratoriums with winter fuel subsidies, access to lifeline energy regardless of season, easier reconnection procedures and lower fees.

  4. Focus on people in energy poverty when designing policies that raise energy prices, including carbon taxes. For example, taxes can be designed to compensate the most affected households. Energy price increases can be paired with implementing Recommendations 2 and 3 to reduce the taxes’ negative impact on people.

  5. Make energy policy and planning more open and deliberative by strengthening utility review commissions and creating processes that gather a broader range of perspectives and include those in energy poverty when setting rates, building mechanisms to address the problem, or developing new energy projects.