The Senate’s handling of legislation overhauling Canada’s energy efficiency laws has thrown a wrench in the government’s plans for consumer rebates, iPolitics has learned.

Bill S-4 is a sweeping update of the Energy Efficiency Act, which, when passed in the early 1990s, enabled Natural Resources Canada to set and enforce efficiency standards, while also creating the EnerGuide labelling.

The new bill aims to streamline how new household appliances enter the Canadian market by giving the minister greater flexibility to update standards and grant temporary exemptions for innovative products through regulatory sandboxes and enforcement.

But it hasn’t progressed past committee study in the Senate despite being introduced last fall.

A government source told iPolitics that S-4 was first tabled in the Senate last November because the Upper Chamber wasn’t handling anything else as the Liberals were facing pushback from the opposition in the House on key pieces of legislation.

The source, who asked not to be identified because they’re not authorized to publicly speak on the matter, said the government hoped that, with the Senate’s legislative calendar relatively empty, the bill would be passed by February,

When S-4 was tabled, there were only two pieces of government legislation before the Senate. One bill — known as S-2 — amended the Indian Act and had just completed committee review. The other was the budget implementation bill, which hadn’t passed in the House yet but was moved to the Senate finance committee for a pre-study.

As it has progressed through committee, the legislation received 12 amendments and has adopted three during committee review, bill sponsor Senator Duncan Wilson told iPolitics.

One of the adopted amendments focused on adding “renewable” to the title of Part II of the Act, recognizing that technologies like solar wind are now established energy sources rather than emerging ones.

While S-4 introduces some significant changes to Canada’s energy efficiency rules, the source expressed frustration that the Senate environment committee has already held eight meetings on the bill, and that debate over whether to hold a new vote on a single amendment prevented members from wrapping up clause-by-clause review before the start of the current two-week break in sittings.

This is creating a cascading effect that’s making it more challenging for the government to introduce new rebates promised by Prime Minister Mark Carney, the source said.

“The PM has actually talked a lot about programming that we want to introduce on energy efficiency and consumer-oriented rebates for different things, but that’s all tied to the authorities under the Act.”

Carney promised a number of incentive measures during his Liberal leadership campaign last year, including re-funding the government’s Greener Homes Grant program for lower-income households and exploring discounts for low- and medium-income homeowners who make energy-efficient retrofits.

He said in April he was still committed to introducing the incentives, and part of the work happening now is to transfer responsibility for programs like the Greener Homes Grant to Environment and Climate Change Canada from Natural Resources Canada.

But S-4’s slow movement through Parliament is complicating matters, according to the source.

While the government doesn’t need legislation to transfer those programs from Natural Resources to Environment and Climate Change Canada, the source cautioned there are “practical challenges with having a piece of legislation already in motion,” including shifting responsibilities between ministers. In this case, Hodgson would have to remain the sponsor of the bill, even if incentives tied to authorities under the act moved to ECCC.

There’s also some practical implications for businesses and consumers.

Energy efficiency advocates say one of the most consequential changes in S-4 is expanding Ottawa’s ability to regulate appliance interoperability, which allows smart technologies like thermostats and water heaters to communicate directly with utilities during peak demand events.

“Demand response programs that include equipment like thermostats and water heaters that can be controlled directly by utilities can shed use during peak demand events,” Sarah Riddell, senior policy research associate at Energy Efficiency Canada, said in an interview with iPolitics. 

The delays come as Canada continues to lag behind other G20 nations in terms of annual energy intensity between 2010 to 2022, according to the International Energy Agency Canada, Riddell said.

“Canada was the only nation that failed to improve energy efficiency by at least three per cent in any of the years analyzed,” Riddell said.

“Natural Resources Canada has a really important opportunity to strengthen standards for all categories of major home appliances,” she added.

Wilson said part of a larger discussion happening in committee review avoiding “unintended consequences” and to preserve “flexibility.”

“We’re trying to maintain flexibility in the legislation so that the government has the freedom to move and adopt through regulation rather than having to come back and amend the act every time,” he said.

The House and Senate resume sitting on Monday, and it’s expected S-4 will clear clause-by-clause at the next meeting of the environment committee on Tuesday.

But the government source said it may not be enough to get S-4 past the finish line before Parliament rises for the summer in mid-June.

That’s because while the House will likely not embark on as exhaustive of a review of the bill as the Senate, it’s unclear when it will move to the report stage and third reading, where it could face further amendments.

Third reading debate in the Senate looks different than in the House, where the only changes that can be proposed are removing clauses. The government’s affordability and border bills went through multiple days of third reading debate because of amendments proposed by senators, many of which were rejected.

But even if were to quickly pass in the Upper Chamber, it will still need to go through all the stages in the House in a three-week window, where it will compete with another priority pieces of legislation.

“I’m worried that on the track it’s on right now, even if it gets past third reading on on Thursday, it’s on the line as to whether it’s theoretically possible to get it through the House by the end of June,” the source said.

The internal battle

According to the source, disorganization in the Conservative Senate caucus is playing a role in delaying progress, pointing to requests to delay a meeting with Minister Tim Hodgson on the bill and the caucus’ inability to prepare amendments for clause-by-clause review at committee.

At the last meeting, committee members had a lengthy debate on whether to hold a new vote on an amendment that ended in a tie. This is because the Conservatives claimed the amendment wouldn’t have passed if they had all their members present, and the caucus failed to send an ex-officio member to the meeting, which all groups have the right to do.

The stalemate finally ended with a new vote being called, and the amendment still passing after Senator Rosa Galvez changed her position from abstaining to voting in favour of it.

Under the Senate rules, some party leaders and deputies serve as ex-officio members on most committees, which allows them the right to vote (though this is restricted to the government or official opposition leaders and deputies.)

The government source said it’s understandable that senators would need some time to go into the finer details of the largely technical bill and seek out the input of stakeholders and department staff.

One point of contention has been the creation of administrative monetary penalties or AMPs, whereas currently the law only allows for the government to send stop work notices for companies not complying. The source said AMPs would act as a middle ground that could comply compliance without shutting down work, and are fairly common regulatory tools.

The Conservatives and some independent senators have expressed concern about the liability these would create for regulated entities in the bill, though the source said this was largely addressed through conversations with the department.

“They’re all [these] little things that do confuse senators, so there’s like there’s some justification for them wanting to understand how that works. But at the end of the day, they spent 45 minutes debating over whether or not the Conservatives were notified that a vote was taking place, and that they could bring their ex-officio, because we were sending ours,”  the source argued.

“We should have finished the bill during the last sitting week at committee, and [it] should have gone to third reading, but instead… here we are.”

However, the Senate conservative source punted the argument back to the government, saying they should have set Bill S-4 as a priority on the agenda. The source pointed that S-4 stood adjourned until March 10 after its second reading back in December.

Before going into the clause-by-clause review, the Upper Chamber convened five different times on the bill.

“If the government feels that was too many meetings, they should take it up with the Liberal appointed chair of the committee and non-conservative majority on that committee,” the source told iPolitics.

The senate conservative source added that the government holds the majority in the Senate, both in the chamber and in committees, which gives the opposition “no control” over any aspect of timing in S-4.

“It’s laughable that the government is trying to blame the opposition for their own mismanagement of their agenda.”

with files from The Canadian Press