Gas Bills and Other ills-carbon tax

As cold weather sets in throughout Ontario in the late fall months, natural gas bills start to climb for 3.474 million (67.2%) provincial households using it as their heating source.  The climb in those bills in 2020 and subsequent years will reflect the increasing “carbon tax” at it moves from the $20 per tonne of carbon dioxide emissions in 2019 to $50/tonne in 2022. The tax was imposed by the Federal Government on provinces with newly elected governments who rescinded “cap and trade” or other programs reputedly designed to reduce emissions required to meet Canada’s Paris Accord targets.

If one examines their monthly Ontario gas bill it is interesting to look at the cost per cubic meter marked on the bill.  The bill found in my mail box indicated the cost per cubic meter was 14 cents.  Looking below on the bill noted the “Federal carbon charge” was 3.91 cents per cubic meter.  A quick calculation shows the “carbon tax” to be 28% of the actual commodity (gas) cost to heat Ontario households.  The 3.91 cents per cubic meter reflects the current tax at $20 per tonne meaning it will rise on an annual basis by 1.95 cents each year bringing it to 5.86 cents in 2020, 7.81 cents in 2021 and 9.76 cents in 2022 when it reaches $50 per tonne.   At that point should the commodity price remain at 14 cents a cubic meter the tax will be 70% of the commodity price.

In Ontario, the average household uses 90 GJ (gigajoules) of natural gas per year, equivalent to 2375 cubic metres bringing the “carbon tax” per household cost in the current year to $92.86 and $231.85 in 2022.  Ontario households will be sending about $805 million in additional taxes to Ottawa in 2022.

A recent announcement by Ontario’s Ford led government is aimed at expanding natural gas delivery to more communities.  Ironically its expansion could result in additional carbon taxes levied on Ontario households with those taxes destined for Ottawa—unless they are confident the Supreme Court will rule in favor of the appeal to rescind the carbon tax.

Rising gas bills-the unknown

However, if the current Federal Government win the appeal, and decide to increase the “carbon tax” to the $210 per tonne recommended by the Ecofiscal Commission it would mean a cost per average household of $972.80 annually by 2030, and payment of $3.379 billion to Ottawa tax coffers by Ontario residences who heat with natural gas.

Should the foregoing happen we should all expect to see and hear more about “energy poverty” as previously brought to Ontario by the McGuinty/Wynne led Liberal governments.

Author: parkergallantenergyperspectivesblog

Retired international banker.

One thought on “Gas Bills and Other ills-carbon tax”

  1. One of my contacts reminded me I didn’t mention the HST (13%) that was on my bill and was charged on the “Federal carbon charge” so essentially it becomes a “tax on tax”! He said: “Don’t forget about the HST that will add another $105 million to the $805 million for the CT in 2022 as HST gets added to total bill.”

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