Ontario worried about ‘substantial’ costs to Enbridge Gas in deciding to overrule energy board: docs

When Ontario Energy Minister Todd Smith publicly decried an independent regulator’s decision to force a fossil fuel giant to pay for new household gas connections, he argued it would drive up the cost of new homes and delay construction. But internally, senior officials in Premier Doug Ford’s office noted the decision would create a “magnitude” of costs for Enbridge Gas and developers, internal emails reveal.

Officials made the observations in late December, hours before the government announced an unprecedented decision to overrule the Ontario Energy Board. The intervention came soon after the independent energy regulator ordered Enbridge Gas on Dec. 21 to stop passing down the costs of new natural gas connections to homeowners on their monthly bills. 

In a 147-page decision, the board told the fossil fuel giant that, starting in January 2025, it would have to ask developers to pay these costs in full and upfront or risk paying it themselves. The board considered how climate change is forcing an energy transition that will likely make natural gas useless and financially unviable, or “a stranded asset.” Despite its name, natural gas is a significant contributor to the climate crisis, as it is made up mostly of methane, a heat-trapping chemical compound and powerful greenhouse gas. 

The board found that homeowners would pay more if natural gas is not weaned off now, first to help cover the costs of natural gas connections and then for retrofits when the fossil fuel is no longer used.

But internal records released through freedom of information legislation to Environmental Defence, an advocacy group, and shared with The Narwhal, reveal how high-ranking staff in Ford and Smith’s offices, as well as the Ministry of Municipal Affairs and Housing, discussed a public relations strategy around overriding the regulator’s decision with legislation that would ultimately put homeowners on the hook for the costs.

The emails also reveal staff in Ford’s office were expecting government lawyers to object to their intervention, but said they wanted to proceed despite the risks. The same staff made extensive edits to the energy minister’s response to link it more closely to housing costs, interest rates and inflationary pressures — three of Premier Ford’s focuses in his public messaging over the last several months. Per the emails, high-ranking staff in the energy minister’s office also communicated with Enbridge before and after the decision was released. 

“The most glaring thing in these documents is that Enbridge clearly has very good access to the highest levels of this government,” Keith Brooks, programs director with Environmental Defence, told The Narwhal. “We see staffers working after hours to issue this press release and essentially do Enbridge a favour.” 

No one from the premier or energy minister’s office cited in these documents responded to The Narwhal’s request for comment. 

A timeline of Ontario’s response to the energy board decision

At 6 p.m. on Dec. 21, the board — an independent regulatory body — released a 147-page decision that would prevent Enbridge Gas from passing the costs of connecting new homes to natural gas onto homeowners. 

After reviewing Enbridge Gas’ plans for the next five years, the board argued the company’s proposal would lead to “an overbuilt, underutilized gas system” as the world moves away from fossil fuels toward renewable energy. Homeowners have historically paid connection charges off incrementally on their bills over 40 years, but starting January 2025, the board said Enbridge Gas would have to charge developers for the full costs upfront instead — or cover it themselves. The board said the requirement could push developers to consider more eco-friendly, economical alternatives such as heat pumps to cool and heat buildings. 

Some 15 hours later, on Dec. 22, at 9:30 a.m., Energy Minister Todd Smith responded in a statement, vowing to introduce legislation to reverse the decision that he said would add “tens of thousands of dollars” to the cost of building new homes. That legislation — the so-called Keeping Energy Costs Down Act — was announced on Feb. 22, and debated at government committee hearings earlier this month.

The internal correspondence appears to show how the premier’s office was significantly involved in crafting the energy minister’s statement. 

At 11:47 a.m. on Dec. 21, David Donovan, Smith’s chief of staff, set up a Microsoft Teams meeting marked of “high” importance. Titled “Urgent Touch Point: New Homes/Natural Gas,” he invited 15 people across the premier’s office and Energy and Housing ministries. This included Patrick Sackville, Ford’s chief of staff, and Travis Kann, Ford’s deputy chief of staff for strategic communications. 

“Hi folks, I hate to send this invite today, but the Ontario Energy Board will release their Enbridge rate decision late today, regarding natural gas rates and new natural gas connections,” Donovan wrote in the meeting invite. “My experience in this sector has me significantly concerned that I think we need to raise to this level. If incorrect, we will cancel or down-grade this meeting before 5 p.m.” (Donovan served as a senior government affairs strategist for Enbridge between September 2013 and August 2018.)

By 5:55 p.m. — minutes before the Ontario Energy Board’s decision was released publicly —  officials in the Energy Ministry were circulating a draft official response. Staff dismissed any possible legal concern in favour of strong messaging on the board’s decision before government lawyers had a chance to review the statement. “Legal will inevitably flag risks with pausing a decision and signalling legislation. We need to tell them that we understand those risks and are proceeding,” Kann wrote. 

Staff dismissed the legal risks again after they were submitted by lawyers, but the risks are redacted from the documents.

“We’ve had this risk flagged to us countless times before and each time it isn’t in any way a material factor. We need to proceed with saying we will introduce legislation otherwise the message is weak,” Kann wrote. “Please get the statement live.” 

Staff consulted Enbridge Gas before energy minister’s statement was released

The documents also show that high-ranking officials from the energy minister’s office communicated with Enbridge Gas for input on the statement. 

Before the government released its statement on Dec. 22, Sackville, Ford’s chief of staff, asked for an additional change to ensure the minister commented on potential impacts on the costs of building houses. 

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“Also would be great to add something about the magnitude of these costs — I expect it to be tens of thousands of dollars in additional costs,” he wrote in an email. “Additionally, the consequence of this decision would be slowing/halting thousands of new units of housing (including affordable housing) across the province. Need to keep costs down and improve certainty to keep building in face of all other headwinds.” 

Both of those thoughts are in the final version of the statement, in some cases, word for word.

Donovan responded to Sackville’s email by suggesting they avoid specific cost amounts because they don’t know the financial implications of the decision yet.

“Enbridge will get us more tomorrow morning,” Donovan wrote. In a briefing note shared with the minister after this email conversation, government officials noted that “the upfront costs incurred by Enbridge to connect new customers are substantial.” (The impact of transferring these costs to developers have since been found to be minimal.)

The same day the government released its statement, an Enbridge official expressed the company’s gratitude in an email sent to Donovan, Sackville and others. “We appreciate the Ontario government’s ongoing efforts to support our common priorities to deliver reliable, affordable and sustainable natural gas to Ontario homes and businesses across the province,” the official said. 

The internal documents also show that in January, the company reached out to the premier’s office for a meeting between Sackville and a senior Enbridge executive based in Calgary. 

In a lengthy email response to The Narwhal, Enbridge Gas spokesperson Leanne McNaughton said the company held “informational briefings” with the Ontario government on its application to the board.

“As a responsible gas supplier, Enbridge Gas maintains transparent communication with all levels of government in the regions where we operate,” she wrote. “This helps us ensure that our residential, commercial and industrial customers continue to have access to a resilient energy source of their choice, especially when disinformation can damage energy and housing affordability.” 

“Enbridge Gas has been transparent and consistent in its communications with all stakeholders about the [Ontario Energy Board’s] decision,” she said. 

McNaughton said this transparency included “debunking and avoiding untrue claims” like the fact that the government’s legislation to overrule the board will pass the costs of natural gas hookups to Ontarians or increase their monthly energy bills. “This is simply not true,” McNaughton said. She argued that the board has yet to approve the new rates for natural gas beyond 2024, so any increase has yet to be confirmed. 

McNaughton said the board’s decision “would increase the cost of building a new home or opening a small business at a time when Ontario faces a housing and affordability crisis.” 

“Sharing such misleading and inaccurate information to serve certain agendas could have damaging ramifications on affordability,” she added.

Independent experts have said the board’s decision would decrease costs for homeowners, while the government’s legislation that overruled the board will have “virtually no effect on affordable housing in the province.”