Electricity Canada comments on the 2024 Federal Budget

On April 16^th, the 2024 Federal Budget, Fairness for every generation was released. There were important announcements for the electricity sector, including the Indigenous Loan Guarantee program, Investment Tax Credits and improving the process for getting approvals. Current Affairs sits down with Manager of Government Relations Will Greene to discuss what this means for our clean energy future.

Hi Will, thanks for joining us. What were the big wins in budget 2024 for the electricity sector?

There were a couple notable inclusions for the sector in Budget 2024. First of all, we saw the announcement of $5 billion towards an Indigenous Loan Guarantee for energy and natural resource projects. This will be instrumental in the development of Indigenous-built and Indigenous-owned electricity infrastructure and will ensure that Indigenous Communities are an equity partner in the transition to a net zero economy.

Second, we saw a suite of measures to help clarify and reduce timelines for major projects, in particular establishing a new Federal Permitting Coordinator, which Electricity Canada identified as a critical element of its Build Things Faster report. The Budget included timelines and targets to ensure the federal government is being transparent and accountable when it comes to major projects that will be crucial to achieve net zero.

Third, we got further details regarding the Investment Tax Credits, with the most notable being an update on the conditionality for the Clean Electricity ITC. None of the ITCs have begun to benefit projects yet, so it’ll be important for the government to be surgical in their creation and consultation. The primary goal of each ITC should be to get money out to projects that need it now to realize the affordability and clean energy benefits.

How does this year's budget compare to last year?

Although this budget wasn’t as big for us as a sector as last year, there were some important developments for the electricity sector. Budget 2023 was a foundational step for the federal government’s electricity agenda. We saw $1 out of every $8 dollars earmarked to clean energy. While we continue to wait for much of that funding to make its way through legislation, regulation and eventually deployment, we continue to push hard for clarity, conditionality, and speed that favours building major projects.

That’s not to discount Budget 2024, as every federal budget can’t always mean tens of billions for the sector- although I certainly wish it would! Instead, this year’s focus was more geared towards regulatory streamlining for within government departments and fine-tuning details on many of the things that have been previously announced.

What announcement could make the biggest impact to the electricity sector?

I think both the Indigenous Loan Guarantee and streamlining measures both have the potential to be game changers. It will come down to how quickly these things can be implemented to make sure that projects are providing benefits as soon as possible. We have a lot of timelines to meet.

What are you most concerned about when looking at this year's Federal Budget?

One of the major concerns we have is the absence of an exemption for regulated utilities when it comes to Interest Deductibility Limits. To put a very complicated tax measure in simple terms, without an exemption for regulated utilities (in Bill C-59), tens of millions of extra dollars will be passed on to electricity customers depending on where you live – without any direct benefit to those customers or their electricity services. Budget 2024 did grant an exemption on the same public benefit rationale the electricity sector has been promoting… but it was given for the development of purpose-built rental housing.

We think that the decision not to exempt regulated utilities is at odds with the goals of this government. Instead of addressing affordability challenges and making it easier to build good projects, these measures will add costs to Canadians and make building clean electricity infrastructure even harder.

Overall, does this this budget get us further along when it comes to getting to net zero?

I’m going to give the cop-out answer here and say that we’ll have to wait and see. Does Budget 2024 say the right things in terms of economic reconciliation, advancing ITCs and making it easier to build things faster? Yes. However, we won’t know if they will advance net zero until they are implemented, and we see shovels in the ground.

At the same time, measures like the Interest Deductibility Limits for regulated utilities almost certainly will make net zero harder, as it will lead to less money in the pockets of Canadians and less money at the disposal of utilities to build major projects.

For more information, please contact Will Greene (greene@electricity.ca).