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[La version française suit le texte anglais.]
HIGH INCOME AND RURAL HOUSEHOLDS RECEIVED THE LARGEST ELECTRICITY SUBSIDIES IN 2019
TORONTO, October 19, 2021 - Today, the Financial Accountability Office of Ontario (FAO) released a report that examines how home energy spending differs across household income levels and regions in Ontario. The report also reviews how the benefits from provincial programs that subsidize the cost of electricity are distributed to Ontario households by income level and region.
In 2019, the average Ontario household spent $2,128 on home energy to heat and cool their homes and power their appliances. Home energy spending varied significantly by income level, and, on average, households with higher incomes spent more on home energy. Households in the highest income quintile (earning more than $151,063) spent an average of $3,070 on home energy, while households in the lowest income quintile (earning less than $36,070) spent an average of $1,050.
Home energy spending across household income groups is significantly affected by provincial programs that subsidize the cost of electricity. In 2019, the Province spent $3.5 billion through five programs to reduce electricity bills for Ontario households, which lowered annual household electricity bills by an average of $609.
Households in the highest income quintile received the highest average electricity subsidy at $706 per household, while households in the second lowest income quintile (earning between $36,071 and $68,884) received the lowest average subsidy at $537 per household. In general, as a household’s average income decreased, the average electricity subsidy provided by the Province decreased, largely due to the design of the Ontario Electricity Rebate, which provides benefits to all households that scale with the amount of their electricity bill.
Home energy spending also varies by region, reflecting differences in household income, the sources of energy used, and the cost of distributing energy to different areas of the province. On average, households in the more rural Eastern ($2,338), Northern ($2,245), and Western ($2,192) regions of the province had the highest home energy costs in 2019. Households in rural areas of Ontario spend more on home energy due to less access to natural gas, which is the most cost-effective energy source for home heating, and the higher cost of distributing energy to rural areas. Households in the more urban Greater Toronto Area ($2,010) and Hamilton-Niagara ($2,118) regions spent the least on home energy in 2019.
Provincial electricity subsidies significantly mitigate differences in home energy spending across regions, especially subsidies targeted to households in rural areas. The FAO estimates that households in the Northern region received the highest average provincial subsidies in 2019, at $995 per household, while households in the Greater Toronto Area (GTA) region received the lowest average benefits, at $467 per household.
To learn more, read the full report here.
- The FAO estimates that the Province subsidized 34 per cent of total home electricity costs in 2019. Households in the lowest income quintile had the largest proportion of their electricity costs subsidized at 48 per cent, while the highest income households had the lowest share of their electricity costs subsidized at 29 per cent.
- The FAO estimates households in rural areas of Ontario (with populations of 1,000 or less) spend 60 per cent more on home energy on average than households in large urban centres (with populations of 250,000 or more).
- After accounting for provincial electricity subsidies, households in the Northern region on average spent 12 per cent more on home energy than households in the GTA region in 2019. Without provincial electricity subsidies, households in the Northern region would have spent 31 per cent more on home energy than households in the GTA
About the FAO
Established by the Financial Accountability Officer Act, 2013, the Financial Accountability Office (FAO) provides independent analysis on the state of the Province’s finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario. Visit our website at http://www.fao-on.org/en/ and follow us on Twitter at https://twitter.com/InfoFAO.