Ontario Claims Federal Clean Electricity Rules Could Cost Province $35 Billion

December 2, 2024 TruthUSA

Ontario is urging Ottawa to reconsider its proposed electricity regulations following an evaluation by the provincial grid operator that found the rules would result in an extra $35 billion in costs for the province by 2050.

A study conducted by the Independent Electricity System Operator (IESO) regarding the Liberal government’s upcoming Clean Electricity Regulations (CER) revealed that Ontario would need to double its new generation capacity. Ontario Energy Minister Stephen Lecce stated that the plan is not viable within the specified timeframe.

Lecce outlined the expenses to Ontario in a recent letter sent to Environment Minister Steven Guilbeault and Energy Minister Jonathan Wilkinson. He characterized the regulations in a social media post on Dec. 2 as a “second, much more costly carbon tax, with an implied cost of $850/tonne.”

The IESO report indicated that even if the province successfully developed enough electricity generation to compensate for natural gas restrictions, it would face an additional $35 billion in costs by 2050, according to Lecce.

This would raise the average residential bill by $132 to $168 annually starting in 2033, with smaller increases of $45 to $50 before 2030, he further mentioned in a subsequent post. Costs for businesses and the manufacturing sector would also rise between 13 and 17 percent.

“Ontario cannot endorse any regulatory approach that imposes thousands of dollars in new costs on consumers while jeopardizing system reliability,” wrote Lecce in the letter.

“While on track to meet emission targets, Ontario continues to attract significant investments in sectors like automotive, electric vehicle supply chain, life sciences, and advanced manufacturing. Therefore, it is crucial for regulatory frameworks to support—not hinder—our economic competitiveness,”

Guilbeault and Wilkinson issued a joint statement emphasizing affordability as a critical factor while finalizing the rules.

“Considering the $15 billion Ontario is projected to receive from the federal government through Canada’s Clean Electricity Investment Tax Credit by 2050, we are ensuring no impact on Ontario ratepayers, all while developing a reliable, clean grid that will generate numerous sustainable, middle-class jobs for the future,” they stated in the release.

The new draft requirements form part of Ottawa’s climate change initiatives, which have introduced fresh regulations for the energy sector and other industries nationwide. The government asserts that the CER not only addresses emissions but also promotes job creation and attracts new businesses to Canada.

Ontario has been expanding its natural gas generation within the electricity framework, essential to guaranteeing grid reliability during nuclear plant refurbishments to meet a demand growing faster than new nuclear and battery storage facilities can be constructed.

However, this growth has led to an increase in emissions from the electricity sector. The electricity system was 94 percent emissions-free in 2021, but has now dropped to 87 percent. The province argues that natural gas generation will help reduce emissions in Ontario overall by supporting broader electrification.

The IESO report anticipates Ontario achieving a net-zero grid by 2050 without the federal regulations, with new nuclear and renewable resources expected to be operational in the 2040s.

Other Provinces

Ontario is not alone in challenging the federal government’s CER. Alberta and Saskatchewan have also expressed concerns about the regulations’ impact on electricity costs.

This action followed a September 2023 report from the Alberta Electric System Operator (AESO), which highlighted that the federal net-zero-electricity-by-2035 requirement could result in blackouts and high costs for rate-payers.

Alberta’s motion calls for using “all legal means necessary” to oppose the implementation and enforcement of the CER in Alberta.

“The Federal Initiative (CER) is already having an extreme chilling effect on investment in Alberta’s electricity generation industry, and further, is slowing investments in emissions reducing technology and projects,” stated the motion.

The motion outlines that the government plans to collaborate with entities like the AESO, the Alberta Utilities Commission, and consumers to eventually reach the provincial 2050 net-zero goal “by incentivizing the advancement of emission reducing technologies and legitimate carbon offsets.”

In Saskatchewan, following the release of the Saskatchewan Economic Impact Assessment Tribunal’s report on the CER in June, the province announced its refusal to comply with the regulations upon implementation.

According to the report, Saskatchewan’s economic growth would be at least $7.1 billion lower, leading to a loss of at least 4,200 jobs under the CER, in addition to an $8.1 billion negative impact on Saskatchewan’s export sector.

The Canadian Press and Isaac Teo contributed to this report.

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