Ontario municipalities now empowered to offer PAPER, PACE programs to boost energy, water conservationMonday, November 12th, 2012
Two weeks before resigning her cabinet post and announcing her intentions to run for leadership of the Ontario Liberal Party, the MPP for Don Valley West signed amendments to two pieces of legislation that could potentially fill a gaping hole in the province’s troubled energy policy.
Exercising her authority as minister of municipal affairs and housing, Wynne approved changes to the Municipal Act and City of Toronto Act that empower all municipalities in Ontario to take the lead on energy and water conservation programs.
Specifically, municipalities such as Toronto can now use a financing tool called a local improvement charge (LIC) to help property owners finance changes to their homes that are aimed at reducing energy or water consumption.
This is important, as the McGuinty government has neglected to follow through on the conservation promises of its own Green Energy Act, despite the fact that improving energy efficiency is the lowest cost and fastest way to save energy and reduce the environmental impacts of electricity generation.
Previously, local improvement charges could only be used to finance neighbourhood infrastructure projects. If a town or city replaced a sewer pipe or repaved a road, it could spread part of the cost among those property owners that stand to benefit. This would be visible as a special charge added to property tax bills.
The amendments, first proposed back in May, now make it possible for municipalities to apply the LIC model to energy or water efficiency projects taken on by individual property owners.
So what’s the big deal? As I wrote back in June, the amendments mean that municipalities can leverage their ability to raise cheap capital through bond issues.
They can then turn around and offer low-interest financing to property owners looking to insulate their homes, add energy-efficient windows, install smart thermostats, and upgrade to high-efficiency furnaces, air conditioners and water heaters.
Property owners could then pay back the loan over 10 or more years through their property taxes, with the idea being that annual payments would be less than annual energy or water savings. Another bonus is that existing municipal billing systems can be leveraged.
There are many names for this kind of program. When focused on energy conservation, programs are often called Property Assessed Payments for Energy Retrofits, or PAPER. When designed to encourage installation of renewable energy, such as rooftop solar, it’s called Property Assessed Clean Energy, or PACE. The legislative changes in Ontario allow for both types of programs to be created.
“I would say that over 50 municipalities are so far interested in this model,” said Sonja Persram, president of Toronto-based Sustainable Alternatives Consulting Inc., who has been a major champion of the proposed legislative changes. “Of those, a fairly large number — both large and small — are keen to move forward.”
Ontario is now the third jurisdiction in Canada — behind Yukon and Nova Scotia — to embrace LICs as a method for stimulating efficiency investments by easing the upfront capital burden that often make such investments unpalatable for property owners.
Brian Kelly, manager of sustainability for the Region of Durham, said what amounts to a minor regulatory change on Wynne’s part opens the door for municipalities to stimulate major residential retrofit activity, create local jobs, and at the same time help consumers do what they need to do to lower energy and water costs.
There’s little, if any, political or financial risk to the province. But the impact is potentially huge, in terms of lowering emissions, reducing pressure on utility infrastructure, and spurring economic activity.
Toronto councillor Mike Layton, who is pushing the city to launch a pilot project as soon as possible, called the approved amendments an “exciting” development. “Staff will be bringing a pilot project in coming months and I hope we can find money to fund it,” said Layton. “It would be great if we can start getting some real pickup on this.”
The Toronto Real Estate Board, the Toronto Board of Trade, as well as several labour organizations, NGOs and business leaders, have so far backed Layton’s efforts.
As far as seeing the model expanded country-wide, Natural Resources Canada considers the approach a complement or alternative to incentive-based programs that overcomes two barriers: Upfront access to capital and a practical way to pay back loans — i.e. through municipal or local utility billing infrastructure.
“These mechanisms are key to market transformation, helping homeowners move away from reliance on government subsidies to a more market-based arrangement,” according to the ministry.
The federal EcoEnergy home retrofit program, underpinned by nearly $200 million in subsidies, only tapped into 6 per cent of Canada’s housing stock.
“This is potentially a huge spur for the Ontario economy,” said Persram, who expects to see plenty of municipal collaboration on program development. “This allows municipalities to take control of their own destiny.”
If the approach is successful, the Liberal government — perhaps one day Wynne — can take credit for the heavy lifting it has essentially offloaded.
All it took was a signature.
Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies.