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Energy Costs & Canadian Households

Energy is the basis of our modern lives. It fuels our economy, generating the economic production that underpins the high living standards Canadian households have achieved (McKitrick and Aliakbari, 2014; Epstein, 2014). Energy consumption also allows us to be connected across Canada’s vast land mass and heat our homes during the cold Canadian winters. These extensive energy needs require a level of affordability if we are to experience the full benefits of our modern lifestyles.

Energy costs have been rising steadily since the end of the twentieth century. Canadian energy prices included in the consumer price index (CPI) more than doubled over the two decades between 1994 and 2013 (Statistics Canada, 2015b). This increase exceeds growth in disposable income and the rate at which residential energy intensity is declining (Natural Resources Canada, 2015a; Statistics Canada, 2015d). Certain governments within Canada have also been pursuing policies—Ontario’s Green Energy Act is an example—that have been contributing to increases in prices for consumers (McKitrick and Adams, 2014). [1] Price increases force households to spend more on the energy they require, perhaps making them energy poor—a situation where a household spends more than 10% of its income on energy (Boardman, 2010; Lesser, 2015; Phimister, Vera-Toscano, and Roberts, 2015).

This publication (by Fraser Institute) seeks to determine how the energy expenditures of Canadian households have changed in recent years, and how they compare with total spending. We also calculate how many Canadian households are experiencing relatively high energy costs—how many are “energy poor”—and how energy poverty differs across income groups. The estimates in this paper are intended to be a starting point for broader research focusing on the impact of energy costs upon Canadians and policies that might increase those costs. It is first necessary, however, to examine how important energy is as a proportion of spending by Canadian households.