Toronto folks in dense, cheap-to-serve spots quietly chip in extra to cover the longer pipes and higher expenses for farther-out areas like Ottawa.

By Energy Probe

Despite years of regulatory wrangling over how to fairly charge for natural gas delivery across Ontario, customers in dense urban areas like downtown Toronto continue to subsidize higher-cost regions such as Ottawa, according to the latest rate structure approved by the Ontario Energy Board (OEB).

Enbridge Gas, the province’s largest natural gas distributor, maintains a “postage stamp” pricing system within its EGD rate zone—a flat delivery charge that applies equally to all customers in the zone, regardless of how expensive it is to pipe gas to their homes. This means Toronto-area residents in low-cost, high-density neighborhoods help cover the extra infrastructure and maintenance expenses for serving farther-flung or less dense areas like Ottawa, where gas must travel longer distances from supply sources.

The setup stems from the 2017 merger of Enbridge Gas Distribution (which covered the GTA, Ottawa Valley, and Niagara with uniform rates) and Union Gas (which used separate zones with more location-based pricing). When the OEB approved the merger, it directed the newly combined company to propose harmonizing rates within five years to address these differences.

Enbridge initially pushed for a single, province-wide flat rate—essentially extending the “everyone pays the same” model across all of Ontario. That plan faced pushback, including from intervenors like Energy Probe, who argued for more cost-reflective pricing (“user pay”) to reduce hidden cross-subsidies and encourage efficient energy decisions. A compromise emerged through OEB proceedings: instead of one zone or a strict cost-based split into four, Enbridge now operates with three main rate zones — EGD (still bundling GTA and Ottawa together), Union South, and Union North (with some subdivisions).

Within the large EGD zone, the flat-rate subsidization persists: Toronto customers effectively chip in for Ottawa’s higher delivery costs.

The main difference between the cost of serving customers in Toronto and Ottawa is the distance from sources of gas supply. Toronto is closer to the gas production areas in Ohio, Pennsylvania, and Western Canada than Ottawa, which means gas is transported over a shorter distance. Customer density is another factor and a primary one in setting electricity delivery rates; however, Enbridge claimed it was not a significant consideration. Energy Probe disagreed. Hydro One uses a density factor in its rate setting for electricity distribution, and Energy Probe wanted Enbridge to do the same.

Regulatory settlements have begun phasing in gradual reductions to this intra-zone subsidy over roughly four years, aiming for more cost alignment without sudden bill shocks. However, as of January 1, 2026—when the OEB approved the latest rate adjustments—the “quiet help” from Toronto to Ottawa remains in place, though potentially scaled back compared to pre-harmonization levels.

The changes effective this year focus mainly on overall rate increases rather than zone restructuring. For a typical residential customer in the EGD zone, annual bills are rising by amounts ranging from about $67 to $98 (roughly 5.8% to 11.3%, depending on usage and other factors), with delivery charges staying uniform across the zone. Bill impacts vary more noticeably between the three main zones than within them.

Enbridge Gas and the OEB emphasize that the structure promotes simplicity, predictability, and system-wide reliability while transitions continue. Intervenors like Energy Probe, however, maintain that full cost causation—where customers pay closer to the actual expense of serving their location—would be fairer in the long run.

Customers are encouraged to check the rate pages of Enbridge Gas or the OEB’s consumer resources, as commodity prices (separate from delivery) can fluctuate quarterly. The ongoing harmonization process may bring further tweaks in coming years as phases wrap up.

Energy Probe serves as the voice of the average Ontario household at the province’s big energy rate hearings. Energy Probe is an independent, non-profit group that shows up to OEB proceedings (the government body that approves, for example, natural gas delivery charges) to represent consumer interests—focusing on keeping costs fair, avoiding unnecessary subsidies or waste, and making sure decisions are based on real economics rather than politics or special interests.

In the Enbridge Gas rate debates, for example, Energy Probe argues for ‘user pay’ principles: people should pay closer to the actual cost of delivering gas to their home (so dense urban areas like Toronto don’t quietly subsidize farther-out spots without relief). Energy Probe reviews mountains of evidence from the utility, asks tough questions, files detailed submissions, and pushes for outcomes that promote efficiency, lower long-term bills where possible, and protection for customers from overcharges or inefficient spending.