Subsidizing Natural Gas is Retrograde Measure

Worth A Look, Energy, Frontier Centre

PREMIER Gary Doer worries about “the senior citizen in West Kildonan (who) will not be able to turn around on a dime and invest in a geothermal heating system” (Province defends plan to subsidize natural gas, Free Press, Nov. 19).

To help her, he is willing to subsidize the gas consumption of a Tuxedo mansion at the expense of a poor northern resident in an electrically heated home. Or he would increase the debt load on the next generation, who will also inherit a more energy- and carbon-constrained future.

Reporter Mia Rabson is mistaken in saying that the Public Utilities Board “advised the government to look at doing just that.”

First, PUB’s advice was directed to Manitoba Hydro and Centra, not government. And what they did advise is spending on conservation (demand side management) measures to reduce gas consumption and “smoothing” the rate increase by carrying part of the natural gas expense forward in hopes that prices would subside later.

Subsidizing the gas commodity itself increases the flow of Manitoba’s dollars to Alberta and our greenhouse gases to the atmosphere. Subsidizing conservation reduces both of these and pays a double dividend to Manitobans by investing in jobs and businesses in the efficiency sector and lowering home and business energy costs for the long run, not just during the period of subsidization. For a government that prides itself on leading the Kyoto charge and stimulating the new sustainable economy, subsidizing general gas consumption is a retrograde measure and a bad solution to the energy burden of the poor.

There are better alternatives well-known in other jurisdictions that have addressed their own energy crises. Some we have already through Power Smart but there are additional measures to pursue.

  • Target programs to meet energy needs of low-income households. The U.S. low-income home energy assistance program provides emergency assistance, bill assistance, energy efficiency and consumer protection and education. A rate subsidy spread over all gas customers is much less effective for meeting basic energy needs than special programs targeted at poorer households and removes some of the incentive for customers to control costs through conservation.
  • Upgrade building standards. Only a minority of homes are built to Power Smart standards. Moreover, because of builder resistance, gas-heated Power Smart homes still lack the added insulation cladding of electric Power Smart homes. Upgrading building standards will put an end to this legacy of sub-optimal homes.
  • Invert gas and electricity rates. Customers would get a base amount of energy at a lower rate and pay a higher rate for additional amounts consumed. This helps customers meet their basic energy needs without removing the economic incentives to avoid wastage and invest in conservation.
  • Peter Miller, senior scholar at the University of Winnipeg, is a PUB intervenor for Resource Conservation Manitoba and Time to Respect Earth’s Ecosystems.