Low-income households still vulnerable to rising energy costs: report

March 20, 2006

HALIFAX: Low income households are still vulnerable to increased energy costs according to a report released today by the Canadian Centre for Policy Alternatives (CCPA). "Our winters of discontent: Addressing the problem of rising home heating costs”, examines the Nova Scotia government's “Keep the Heat” program, and the proposal to remove the HST from home heating fuel. The report, prepared by Larry Hughes, a Professor in the Department of Electrical and Computer Engineering at Dalhousie University, presents an alternative mechanism to support low income families and a long-term strategy for energy security.

Nova Scotians appear to have been spared the costly combination of a cold winter and a spike in home heating fuel costs. But, according to Hughes, “low income households in Nova Scotia are still more vulnerable than most Canadians to steep increases in home heating fuel costs. Sixty percent (60%) of households in Nova Scotia use fuel oil to heat their homes whereas the Canadian average is only 12.5%. Over the past decade the cost of home heating fuel has increased by more than 120% while the cost of living (inflation) increased by only 22%.”

“Low income households are not getting the protection they need when fuel prices increase,” says Hughes. “The province"s “Keep the Heat” program is not responsive to actual increases in fuel costs. Nova Scotians with low incomes will still have to pay more if this year’s fuel costs increase by more than the current rebate of $250 over last year’s fuel costs. For example, had the price of heating oil increased by more than $0.10/litre during the 2005-06 heating season, the fuel rebate would have been insufficient to support low-income households consuming the average 2,500 litres.”

Hughes notes that “removing the HST from home heating fuel will not ensure protection either. If the fuel prices increase beyond the 8% HST component of the total fuel prices, low income consumers would have to make up the difference. Removing the HST could also provide an unnecessary windfall to owners of large homes with high energy costs who are not significantly impacted by high energy prices. Greenhouse gas emissions would also increase if the reduction in fuel tax encouraged increased consumption.”

The paper proposes another approach that guarantees a set price for heating fuel for low income households. The difference between the amount paid by the consumer and the guaranteed price would be covered by a rebate. Such an approach, according to Hughes, “could cost less than the other programs being discussed and may be the only way of insuring that those in need remain warm through the winter in times of rapidly rising energy prices.”

But according to Hughes these measures are short term solutions: “government assistance programs will need to become larger and more costly to offset increases in the cost of fuel and to support a growing number of citizens unable to meet their heating requirements.” The report presents a long-term strategy that decreases Canada’s dependence on fossil fuels through the use of solar energy, the reduction of residential energy demand, and the promotion of district heating.


For more information or to arrange an interview, please contact John Jacobs at 477-1252 (cell 430-7461). “Our winters of discontent: Addressing the problem of rising home heating costs” is available at www.policyalternatives.ca.