Electricity Canada’s statement on the 2024 Federal Budget
Ottawa (April 16) This year’s federal budget has important announcements regarding the Indigenous Loan Guarantee program, Investment Tax Credits and improving the process for getting approvals, but there is a lot of work that still has to happen for Canada to achieve its goals for a clean economy.
Electricity Canada would like to highlight in particular:
- The announcement of $5 billion towards an Indigenous Loan Guarantee program for natural resource and energy projects is an essential component for building clean electricity projects. It will allow Indigenous community-owned businesses much-needed capital, so they can invest in projects that will benefit their communities. The fact that this new program will be “sector agnostic” when it comes to energy projects allows for even greater self-determination.
- The suite of announced measures to help clarify and reduce timelines for major projects, particularly launching work to establish a new Federal Permitting Coordinator, which Electricity Canada identified as a critical element of its Build Things Faster report. Additionally, the changes to allow for a three-year target for nuclear project reviews, and the streamlining of the impact assessment and permitting processes are important and necessary.
- The affirmation that the government will be moving forward with the major Investment Tax Credits (ITCs), including the Clean Electricity ITC, before the end of 2024 as well as clarification on the Clean Electricity ITC conditionality for Provincial and Territorial Crown Corporations.
We continue to be concerned about the threat to affordability posed by the Excessive Interest and Financing Expenses Limitation (EIFEL), which limits the amount of interest expense that can be deducted from taxable income for existing and new borrowings. Without changes, the EIFEL provisions will add tens of millions of dollars of costs to utility bills to Canadians. To mitigate this, Electricity Canada has proposed an exemption for regulated utilities. Unfortunately, while the budget has established sectoral exemptions for rental housing on this matter, the electricity sector remains exposed. The logic that applies to exempting the housing sector also applies to regulated utilities.
It will be important for the measures announced in the budget to be deployed expeditiously. As we indicated in our 2024 State of the Canadian Electricity Industry report, important work investing in, and building, an expanded and decarbonized electricity grid continues to be slowed down while it waits for the government to implement its “one project, one review” regime. We hope that this changes that.
QUOTE
“Budget 2024, like budget 2023 before it, promises a great deal. The electricity sector is eager to get building to fulfil those promises. We applaud the federal government’s implementation of the Indigenous Loan Guarantee Program, which is an important element in the road forward. However, the Excessive Interest and Financing Expenses Limitation (EIFEL) poses a serious risk as tens of millions of dollars in added costs will be passed on to electricity ratepayers across the country. If the housing sector can get an exemption, the same should apply to the electricity sector.”
- Francis Bradley, President and CEO, Electricity Canada