Why are the provinces of Alberta and Saskatchewan, along with parts of the power sector, so concerned about Ottawa’s proposed Clean Electricity Regulations?
A letter sent last month by Electricity Canada, a national organization representing the country’s electricity sector, to federal Environment Minister Steven Guilbeault offers some pretty good clues — and some blunt language — about the problems the proposed rules will create.
The letter, obtained by The Herald, states the organization has profound concerns over the government’s engagement process with industry about the proposed regulations.
The letter is intended to “inform you about the failure of this process,” states the three-page document signed by Electricity Canada CEO Francis Bradley.
The group noted it signed a non-disclosure agreement earlier this year to allow Environment and Climate Change Canada (ECCC) to freely share federal modelling and its assumptions underpinning the proposed regulations with the national organization.
However, the department “has repeatedly delayed sharing the information” and the assumptions contained material factual errors, making it impossible for the industry to provide meaningful feedback, according to the letter.
“We remain deeply concerned that what has been shared with us during this engagement still reveals what is, in our expert opinion, an unequivocally flawed regulatory design that risks significant impairments to the reliability of the electricity system and severe affordability impacts in many parts of the country,” Bradley wrote.
“This is especially true in provinces that are currently most reliant on fossil-fuelled power plants, which is precisely where a realistic path to compliance is most essential.”
However, the department has informed the organization the formal consultation period will end within the next few weeks, as the federal government strives to finalize its regulations before the end of this year, reads the letter from Electricity Canada.
The missive from the organization, which represents companies across the country that generate, transmit and distribute electricity, gives an unvarnished assessment of what the industry group thinks about the Clean Electricity Regulations (CER).
Ottawa is pushing for a net-zero electricity sector across Canada by 2035 — or close to it — despite staunch opposition from Alberta and Saskatchewan, as the country strives to reduce greenhouse gas emissions from the sector.
The two provinces rely on fossil fuels for much of their power generation, unlike British Columbia, Manitoba or Quebec, which have access to hydroelectricity.
The Alberta government has consistently warned that implementing the CER, instead of meeting a 2050 net-zero target, could eventually lead to blackouts and excessive electricity costs.
Some Alberta power generators have said the 2035 approach doesn’t recognize regional differences in Canada’s electricity system.
In February, Guilbeault unveiled proposed modifications to the draft regulations, such as provisions allowing the use of emissions offsets and that deal with emergency periods, to make the rules more flexible.
Some industry experts called it a step in the right direction, although the province dismissed the changes as insufficient.
Alberta Environment Minister Rebecca Schulz said the letter highlights the electricity industry’s concerns with the Trudeau government’s plan.
“This is the strongest language that we’ve seen from industry thus far and it shows that it’s not just a political misunderstanding,” Schulz said.
“When you have industry calling the entire process a failure, and essentially raising grave risks to electricity reliability, affordability and the Canadian economy, what they should do is get rid of it — it is time to walk away.”
Electricity Canada includes members of the province’s deregulated power industry, including TransAlta, Capital Power, ATCO, Enmax, AltaLink and TC Energy. Other electricity companies in the country are also members, including Crown corporations such as B.C. Hydro and Ontario Power Generation.
A meeting between the federal department and Electricity Canada representatives will be held later this week and internal government modelling will be shared with the sector, an official in Guilbeault’s office said Tuesday.
Consultations will continue through the summer and the regulations will be announced in the fall.
“We all want to get the regulations right, so that they work for all regions of the country,” said a statement from the federal environment minister’s office, noting the department has held more than a dozen meetings with Electricity Canada.
“We have responded to Electricity Canada to reassure them we remain committed to sharing the latest sets of internal modelling before any decisions are made.”
Officials with Electricity Canada declined to talk about the specifics of the letter due to the confidentiality agreement.
“Our focus right now, generally, is just making sure that we’re continuing to advocate for a system that works — for regulation that works — in all jurisdictions and that is sufficiently flexible,” said Michael Powell, a vice-president with Electricity Canada.
“We are still working with them.”
The group’s letter states that to maintain electricity affordability and system reliability — keeping the lights on — regulations must be flexible so companies can meet the federal standards using technology that’s deployable and commercially available today.
Alberta has discussed adopting small modular reactors, but the technology is still under development in Canada. Companies have also examined using carbon capture and storage to sequester emissions from gas-fired facilities in Alberta, but Capital Power stopped working on such a project in May.
Electricity Canada’s letter says there is now insufficient time to analyze and give feedback that would meaningfully change the design of the CER.
“Given mischaracterizations of the sector’s endorsement of CER’s engagement processes in the past, we are taking every step to make our position on this failure clear,” the letter states.
“The (regulation) design articulated by ECCC is both overly optimistic and inflexible, to the extent that our members believe it will put the reliability of electricity service in jeopardy in many parts of the country.”
The group asserts the new rules should include a periodic regulatory review to ensure they’re feasible, and be validated by power system operators in each province and territory.
“Should ECCC be unwilling or unable to work with the electricity sector to find a solution that addresses the affordability and reliability concerns we have repeatedly raised, Electricity Canada will not be able to support the regulations,” it adds.
“This regulation is critical to get right, just as it could be catastrophic to get wrong.”
Chris Varcoe is a Calgary Herald columnist.