Where does fuel poverty exist?

Canada's First Nations: a chronic case of fuel poverty

Vast distances and extremes of climate. These two things define the province of Ontario, Canada, a landscape that accommodates long stretches of coastline to four of North America's Great Lakes. Traversing from east to west is a journey of 2 035 km – at least a two-day drive. On the perpendicular, the distance from Walpole Island at the very south to Fort Albani is 1 073 km. In total, Ontario’s land mass exceeds that of France and Spain combined.

From November until March, much of the province hunkers down for winter, with average temperatures ranging between -10°C and -30°C.  In the north, add in arctic jet streams and wind chills,  and 'cold snaps' can easily feel like -50°C.  

Ontario is also home to 133 of Canada's 634 First Nations communities. Within the province, about one-quarter of the villages are fly-in only.  

 

Power struggles in First Nations communities

In relation to the key factors in fuel poverty – income level, housing quality and energy prices – many First Nation communities are triply disadvantaged, all year round.

Canada census data from 2006 shows the median income for Aboriginal peoples as CDN 18 962, a full 30% lower than the overall median of CDN 27 097. Narrow the statistics to those living 'on-reserve' and the gap widens to almost 50%, with median income being CDN 14 500. In part, this reflects a lack of economic opportunity and high rates of unemployment.  

A large majority of First Nations people live in small modest homes, many of which were built before effective building codes were in place. The older houses are often poorly built,  and have air leaks and woefully inadequate levels of insulation by today's standards. On very cold days in winter, these households also need energy to keep their water lines from freezing or to power up block heaters to keep car engines warm enough to start up.

Typical houses at Northwest Angle #33 on a spring day. 

Typical houses at Northwest Angle #33 on a spring day. 

Most on-reserve households rely primarily on electricity for heating; in the north, many use woodstoves as a backup. A smaller number of households have switched to propane or home heating oil. But distance drives up the delivery charges. In remote communities, the up-front delivery cost of CDN 1 000 for a 900-litre tank of oil - roughly enough for six weeks' worth of heat – is a clear disincentive to switching.  (In the south, the same tank would cost only CDN 710).  Natural gas, the least-costly of heating fuels in the province, is available to only about a dozen First Nation communities in the south.

Twenty-five of the most remote communities rely on diesel-powered systems. Like the houses they service, the systems are often old and inefficient. Almost all are running at full capacity, or again failing to keep up with demand as populations expand. In November 2012, the Pikangikum First Nation in the Northwest corner of the province declared a state of emergency after experiencing a prolonged power failure.

A 2011 report by Energy Canada (EnerCan) for the Department of Aboriginal Affairs found that people in communities relying on diesel generation paid an average price of CDN 0.17 per kilowatt hour (/kWh) for electricity, not including service charges. For many, this means monthly electricity bills ranging from CDN 500 to CDN 1 100.

While much of the cost is subsidized through the federal government and Ontario electricity rates, it is still a huge financial burden for the communities and their members. Even newer systems are money pits, at costs that are 3 to 10 times higher than provincial averages. The Independent Electricity System Operator (IESO) estimates it costs CDN 90 million a year to service these 25 communities. 

A complicating factor is that housing construction has failed to keep pace with population growth. As a result, overcrowding is increasingly evident; it is not uncommon, especially in the north, to have 12 or more people sharing a 2- or 3-bedroom home. This obviously drives up energy consumption, but can also aggravate ventilation and moisture problems, which have substantial impacts on the physical health of inhabitants. It goes without saying that access to medical services is limited and already stretched household budgets can ill-afford the cost of even basic medicines.  

Circumstances push some to the extreme    

Steve Fobister Sr. and his wife Kathy Land live in a four-bedroom house in Grassy Narrows, which is also close to Northwest Angle #33 and the larger town of Kenora (pop. 15 000). They rely primarily on electric heating, using their wood cook stove for back-up. They are careful about electricity use, says Ms. Land, often keeping only one or two lamps on at any given time.

Yet in 2015, Mr. Fobister Sr. found himself facing an impossible electricity bill. Understanding how this happened is like peeling the layers of a strong onion; a story that brings tears to one's eyes. 

Steve Fobister, Sr., of Grassy Narrows, Ontario. 

Steve Fobister, Sr., of Grassy Narrows, Ontario. 

For starters, Mr. Fobister Sr. has amyotrophic lateral sclerosis (ALS or Lou Gehrig’s Disease), which is slowly restricting his physical capacity and hence his ability to work. “Many of the devices I rely on for daily life require electricity," he says. "And I have to always decide – buying food or paying electricity has become a debate and frustration in my life."

The ALS makes him eligible for the Ontario Disability Support Program (ODSP), from which he used to receive CDN 650 per month (/mo).

Like others from his community, Mr. Fobister Sr. also received a disability insurance payment of CDN 250/mo resulting from an out-of-court settlement with the provincial and federal governments and two pulp mill companies. Between 1962 and 1970, the mills located near Grassy Narrows released 10 tonnes of mercury-laced chemicals into the river, affecting the health of everyone downstream.

Because of a billing issue with his utility company, Hydro One, the agency handling Mr. Fobister Sr.’s disability payments took on the role of paying his electricity bill. 

In 2008, Mr. Fobister Sr. was among the winners in another battle between First Nations communities and the federal government of Canada. The government officially recognised the devastating effects of its program to assimilate First Nations children by removing them from their homes and culture. Over several decades, some 150 000 children were placed in boarding schools, many of whom suffered neglect and/or outright abuse. But the 'win' came at a cost.

“Because I received money from residential school settlements, I was cut off from disability benefits," he says, which meant he had to take back the Hydro One payment. "I tried to appeal through MPs (Members of Parliament), directly to the Minister, and through legal clinics – all to no avail. After several months, I tried to approach Hydro One asking 'where is my hydro bill?' They kept saying they were working on it."

This dialogue went round in circles for two years. With no income aside from the CDN 250/mo mercury disability compensation, Mr. Fobister Sr. had to rely on the residential school settlement to cover daily living expenses, while his electricity bill remained a mystery.

In 2015, when a letter from Hydro One finally arrive, the bill inside was for the shocking amount of CDN 12 645.81.

Over several years, Mr. Fobister Sr.'s Hydro One bill skyrocketed out of control

Over several years, Mr. Fobister Sr.'s Hydro One bill skyrocketed out of control

Mr. Fobister Sr.'s story is extreme, but not completely unique. Several people in other communities recount how a series of unrelated events beyond their control snowballed into unmanageable electricity bills, and long battles to find workable solutions. According to the ODSP’s income exemptions, residential school compensation payments should not alter disability benefits. But so far Mr. Fobister Sr.'s case remains unchanged.

"It seems that people don't fight poverty anymore but they will fight the poor people,” he says.

In Ontario, Time + Distance = Fuel Poverty

Since 2006, the cost of electricity has roughly doubled according to the Ontario Energy Board (OEB), which regulates costs.

One measure the OEB introduced to help residential customers cope is 'time-of-use' (TOU) pricing, which means the price per kilowatt hour (kWh) fluctuates at different times of day. When demand from all customers on the electricity system is high, so are prices; when demand drops, prices follow. This allows residential customers to 'self-manage' to a degree how much they pay. They can save on electricity bills by running household appliances, such as washing machines and clothes dryers, during 'off-peak' hours. 

TOU is not completely altruistic on the part of the OEB; it is a way of managing spikes in consumption (known as 'peak load'). For the utility company, such an opportunity to manage when electricity demand occurs (known as 'demand-side management’) slows down the need to invest in new generation. Still, it is true that deferring or avoiding big investments in infrastructure helps maintain electricity prices for consumers in the near term.  At present, Ontario is the only province offering TOU pricing, but it applies to nine out of 10 households.

But there's a catch that, again, negatively affects First Nations communities. Feasibility studies carried out by the electricity companies showed that the province’s vast and mountainous geography made it impossible to transmit the data needed to operate TOU Smart Meters in rural and northern communities. As a result, they remain on a 'tiered pricing' system in which they pay a lower rate up to a certain level of consumption, then higher rates for every additional kWh consumed.

OEB statistics show the average Ontario household consumes 750 kWh of electricity per month, with most having non-electric heating (typically natural gas or oil). Across Europe and North America, space and water heating typically account for 50% to 60% of all household energy use.

Not surprising, then, that many First Nations households, which DO rely on electricity for heating, find it difficult to stay within the first (and lower) pricing tier – set at 1 000 kWh in winter and 600 kWh in summer. If the option existed, they would certainly switch to TOU pricing.

And then there's the cost of…

Distance also influences the final price of electricity for Ontario's remote communities as it drives up delivery and regulatory charges, as well as associated taxes.

The OEB sets both electricity and delivery charge prices, and approves any rate increase requests from utility companies. Delivery charges reflect population density – i.e. how many people are connected along a given 100-km stretch of line with the 300 000-km network – and are divided into three categories: urban high, medium and low density.

As shown by the pie chart and table from Hydro One Networks (the utility that services most First Nation communities in Ontario), these charges can effectively double the amount owing at the bottom of an electricity bill.  

The distribution service charge (first line in table) – which is a fixed amount regardless of how much or little electricity is consumed – is highest for customers in low-density areas. At CDN 43.32, it is almost double that of high-density urban customers. Granted, it is subsidized at CDN 31.50 through the provincial Rural and Remote Protection Credit. The distribution volume charge (second line) is also much higher for low density customers, without any subsidy.

Adapted from Hydro One. 

Adapted from Hydro One. 

In January 2016, electricity bills across Ontario went up when a 10% universal credit, known as the Clean Energy Benefit, came to an end. On 1 May, the OEB again raised rates by 2.5% to recover a revenue shortfall experienced by the power sector because a particularly mild winter had the effect that Ontarians consumed less electricity than expected.   

The Ontario 2013 Long-Term Energy Plan, released by the IESO, forecasts that residential bills will rise an average of 5.1% per year in the short term (2015-19) and 2.2% per year in the long term (2015-32). 

For those already struggling with high energy bills, the future looks bleak. And perhaps colder still.

Beyond saving money, a connection to the environment

A striking feature of Ontario electricity consumers (and indeed across Canada) is how often they refer to their 'hydro' bill – assuming their electricity is generated by one of 45+ large and small dams dotted along the province's many river systems. In fact, hydro accounts for the third-largest share (24%) of generation, after nuclear (36%) and natural gas (28%).

In the course of delivering energy efficiency workshops and home retrofits in First Nations communities, Carla Robinson of the Aboriginal Conversation Program (ACP) reported that participants often wanted to know what sources were generating at given times in their communities.

“They made it clear that they cared about saving energy and money, but they also wanted to know how to help the environment," says Ms. Robinson. "And they were willing to adjust when they did their laundry to avoid using nuclear (and thus contributing to nuclear waste) or natural gas (creating greenhouse gas emissions). In the second year of the program, I shifted the focus to ‘how can our Indigenous knowledge guide us in our energy use?’, which really resonated with people.”

By then, information sessions were drawing crowds of 60 to 150 people, even in small communities.  At a presentation at a local college, with students from all backgrounds attending, the Indigenous approach was as warmly welcomed as in First Nations meetings.

“I also realised everyone dreams of being energy safe and independent," says Ms. Robinson. "Whether that means they can comfortably afford their bills or can invest in solar, everyone had hopes, desires and even fears about energy.”

For those in fuel poverty, a key goal should be empowering them to get beyond their daily struggle and achieve their energy dreams. A desire evident in quotes from people Ms. Robinson met in a workshop or while making plans for housing retrofits carried out by ACP.  

“I have electric heat and it soars each year. When can I retire and keep warm at the same time?” Doreen Jacobs, Delaware Nation

"This program will benefit our community today as well as future generations. We must take care of our energy use today so it won’t affect the next generation.”  Diane Curwin, Hiawatha First Nation

 “Really enjoyed the Walkabout. It was a real eye opener as to how much energy is used. So much so, I wanted to make changes right away” - Carey Marsden, Alderville First Nation

What an important program to inform and inspire First Nation people to conserve energy and protect Mother Earth” – Lauri Hoeg, Chippewas of Georgina Island

 

EnAct is grateful to Carla Robinson, Aboriginal Conservation Program, for her assistance in preparing this text.