HRAI Gains Traction at OEB on Enbridge Sustain Concerns
Background
Most members in Ontario are aware of the recent (re-)entry by Enbridge into the HVACR contracting business via a new business unit called Enbridge Sustain. Initially the company targeted residential and commercial new construction projects, promoting geothermal heat pump systems, but Enbridge Sustain has more recently entered into the residential retrofit space, securing partnership agreements with close o a dozen HVAC contracting businesses, almost all of them HRAI members.
At the urging of members, and under the guidance of its Utility Action Committee, HRAI has been seeking ways to address concerns about possible cross-subsidies from the regulated utility gas business in support of this new business. It was a cross-subsidy of this sort that in the 1980s and ‘90s allowed the utility to grow a substantial equipment rental and service business doing hundreds of millions of dollars in business annually at the expense of natural gas ratepayers – and to the detriment of the HVAC contracting sector.
Taking it to the OEB
Earlier this year, HRAI applied to the Ontario Energy Board (OEB) for intervenor status in the upcoming Enbridge Rate Proceeding (Phase 2), EB-2024-0111 (click HERE to see the intervention request letter). The goal for HRAI in this quest is to have the OEB review the question of whether Enbridge Sustain is being supported inappropriately by the utility -- through the rate review process that allows for the submission of, and review of, evidence. Members believe that the utility’s decision to run this business inside the regulated utility business must surely be to take advantage of the kinds of competitive advantages this would bring, in terms of access to utility resources.
To date, the OEB has had no scrutiny of how this new business is being managed by the utility, and in fact the board was not even aware of the existence of Enbridge Sustain, because Enbridge had not shared any information on the matter with the board. When HRAI asked to have this issue scrutinized in the upcoming hearing, and for permission to participate in the hearing, Enbridge objected strenuously. By contrast, other intervenors, representing ratepayers of different types, as well as environmental groups and others, generally expressed support for having this matter reviewed, and for having HRAI at the table.
On May 30, at long last, the OEB ruled that:
a) HRAI will be granted intervenor status, (including eligibility for cost recovery); and
b) the matter of subsidies to Enbridge Sustain will be included in the issues list during this proceeding.
Click HERE for a link to the OEB ruling.
The OEB’s decision is to constrain the discussion to one narrow question: Has Enbridge Gas demonstrated that Enbridge Sustain’s activities are not funded through rates? This decision is already an important win for the industry, as it will allow stakeholders to get a more thorough understanding of how this business is being operated within the utility and whether or not it is indeed benefitting from inappropriate supports from the utility.
At this stage, Enbridge has filed some evidence, and HRAI, along with other intervenors, have filed “interrogatories” to dig deeper in this evidence (click HERE to review). Upon review of Enbridge’s full filing of evidence, including responses to HRAI’s and others’ interrogatories, HRAI may decide to file evidence of its own.
Enbridge to Convert Sustain into an Affiliate?
While the OEB was still deliberating on the question of whether or not to allow a discussion of Enbridge Sustain in the rate proceeding, Enbridge Gas made a quiet “announcement” about what might be a very important development in the matter. On May 27th, Enbridge Gas submitted a brief letter to the OEB stating that the utility “has completed its assessment of logistics required to move the Enbridge Sustain line of business into an affiliate entity of Enbridge Gas and has decided to move ahead with this transition, with completion targeted for the end of 2024.” Click HERE to see the letter.
If the utility does indeed follow through with this transition, it will be a positive step forward for the industry, in that the non-regulated business would be separated from the regulated utility business and subject to the Affiliate Relationships Code of Conduct (ARC). It is worth noting that the application of the ARC in the past has been questionable in its effectiveness. But this is nonetheless an encouraging step, and perhaps a sign that HRAI’s pressure is having some effect.
Industry Support Needed
The decision to permit HRAI’s involvement in the upcoming proceeding means that there is still some significant work ahead, as the Utility Action Committee, HRAI’s staff and legal counsel probe the evidence provided to determine whether subsidies are occurring.
Members who believe these efforts are important and necessary to ensure a level playing field for the industry are encouraged to contribute financially to the Utility Action Fund.
Please click HERE to find out how you can help.
For more information, contact Martin Luymes at 1-800-267-2231 ext. 235, or email mluymes@hrai.ca.
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