HRAI Acts on Member Concerns about Enbridge Sustain

​More and more members in Ontario are expressing concern about the emergence of a new utility-based player in the HVACR market: Enbridge Sustain.  Launched a year ago, the company has slowly been building up its presence in the market, clearly relying on its connection to the regulated natural gas utility.  Offering solar, ground-source heat pump systems and hybrid (ASHP/gas) systems on an “energy-as-a-service” basis (where the company owns the equipment while the end user pays for the energy services provided), Enbridge Sustain has set its sights on the residential new construction, the commercial market and the residential retrofit market. 

The company offers two key benefits to end users:

  • “Enbridge Sustain manages end-to-end delivery including design, installation, maintenance, and energy reporting, at no upfront cost to customers;” and
  • “Customers will enjoy peace of mind and pay a convenient and affordable monthly fee over a contracted period.”

The energy-as-a-service business model is still relatively new to the Ontario market, though there have been some successful offerings in the commercial sphere.  What is new is the connection to a regulated monopoly utility, and notably one that the industry knows has made forays beyond the meter into the equipment business before, with significant impacts on the viability of industry competitors.

While the industry ordinarily welcomes new entrants to the sector – provided there is a level playing field -- this new Enbridge initiative has raised a number of red flags for contractors.

The first concern is that the business has been set up as an unregulated business within the regulated gas utility, which naturally creates suspicion about the potential for self-dealing by the utility, in terms of customer information sharing, financial subsidies coming from captive ratepayers, and in terms of leveraging the utility’s brand recognition and customer relationships to grow the new business.  While none of these practices has been proven at this time, the industry knows that the utility successfully utilized all of these tactics in the past to build up a substantial business in HVAC equipment sales, rentals, financing and servicing.

The industry has seen the utility’s tendency to monopolize the ancillary businesses that it enters – in a matter of a few decades in the 1970s to 1990s, for example, the utility gained close to 100% market share in gas-fired water heaters in the province.  As in the past, Enbridge has stated that it wants to work in collaboration with contractors and suppliers, but the company has also declared that it wants to own the customer relationship. Most contractors who have reached out to HRAI have indicated that they have no desire to return to the days when the utility was the dominant player in the marketplace, and they were merely labour brokers and service providers in a seriously imbalanced relationship.

HRAI members have called for action, and HRAI is prepared to lead the way.

HRAI’s Reaction

Late last year, coincidentally, the leadership of the HVAC Coalition Inc. – which was the HRAI-affiliated body that took on the utilities for 25 years at the Ontario Energy Board – decided to dissolve that not-for-profit corporation, as it appeared that there were no longer any major utility battles to fight.  Fortunately, the Coalition Board had the foresight to pass the torch to the HRAI Contractors Division Board – and the contractors board willingly accepted the mandate to maintain vigilance with utilities across the country, and to act when necessary.  The board immediately formed a “Utility Action Committee” in the summer and this committee has been meeting monthly to formulate a plan of action that will address member concerns about Enbridge Sustain.

Actions to Date

Based on past experience, the obvious initial direction for HRAI was to take the matter to the Ontario Energy Board. As it happens, early this year Enbridge was entering the final stages of Phase 1 in its five-year rate proceeding.  When news of Enbridge Sustain broke, it was too late for HRAI to register as an intervenor, so instead HRAI filed a legal letter with the OEB requesting that it investigate how the workings of this new unregulated business could or should be handled inside the regulated utility.  It was notable to discover that when HRAI approached the OEB, it was the first word that they had heard about the existence of this new company (several months after launch) as there was no mention of it in any of the utility’s pre-filed evidence for the rate hearing.  Acting on this letter, the OEB is undertaking a compliance investigation to determine what, if any rules might have been violated in the establishment of this new business.  This investigation is ongoing.

HRAI is now preparing to request status as an intervenor in Phase 2 of the Enbridge rate case, a request that is by no means certain to be accepted, given that this issue has not, to date, even been registered as a concern by the panel overseeing the case.

As a second measure, HRAI notified the federal Competition Bureau about member concerns that a regulated monopoly might be leveraging its market power to aid its ability to gain quick traction in another (related but unregulated) market area that is currently being served by many competitors.  The Competition Bureau is now investigating whether or not there has been (or might potentially be) a case for anti-competitive behaviour, and this investigation is ongoing.

HRAI has also engaged provincial politicians to raise awareness about industry concerns. To date, HRAI staff have met several times with Minister of Energy Todd Smith, Associate Minister of Small Business Nina Tangri, and Minister of Public and Business Delivery Todd McCarthy, as well as the Energy and Electricity Transition Panel under David Collie.  All have registered concern about not sacrificing the principles of fair competition in favour of what might appear to be a desirable model for effecting decarbonization at scale. 

Still more political awareness might be needed.  HRAI has also been contemplating a grass-roots political initiative that would enable members across the province to meet with local Members of Provincial Parliament to express their concerns directly.  If this approach is deemed necessary by the committee, it will be rolled out in the new year.  In the meantime, HRAI is reaching out to members via Chapters and regional groups who have expressed an interest in the matter.

Fundraising

In November, the Utility Action Committee decided that the matter of Enbridge’s re-entry into the HVAC sector in Ontario (and potentially beyond) will require the industry to muster its resources and stand up once again to assert the principles of fair competition and a proper separation between regulated monopolies and related businesses operating in a competitive environment.  The committee has asked HRAI to undertake a fundraising campaign to raise a minimum of $100,000 to help support legal fees.

The fundraising effort will begin in January 2024.

For more information, contact Martin Luymes at 1-800-267-2231 ext. 235, or email mluymes@hrai.ca.

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