Electricity affordability under the Clean Electricity Regulations

Electrification and clean power saves Canadians money

Globally, the electrification of heat and transportation is helping families and businesses to save money, and clean electricity is increasingly a lower-cost option for grid-operators and ratepayers.

For Canada’s electricity generators, building new renewable electricity, including wind and solar, is increasingly cost-effective. Electricity systems will also need to invest in other technologies to complement the variability of renewable electricity, such as battery and pump storage, nuclear power, smart inverters, and transmission and distribution technologies.

A number of recent analyses have looked at how Canadians' overall energy costs may change as they use more electricity and fewer fossil fuels, through a concept called the household “energy wallet”:

• Earlier this year, the Canada Electricity Advisory Council report found that in an electrified future, 7 in 10 Canadian households would see net-savings. The same modelling showed that Canadians could expect to save $15 billion in total energy-related costs by 2050.
• An October 2024 report from Clean Energy Canada quantifies the monthly energy savings for households from switching to heat pumps and electric vehicle. The report found that in the vast majority of provinces, households save money from electrification, ranging from $149 per month for condo owners in Saskatchewan up to $921 per month for single detached homeowners in Prince Edward Island.
• A November 2024 report from the Transition Accelerator's Electrifying Canada project reached similar conclusions, finding that most households in Canada would experience energy wallet savings by transitioning to electricity. Depending on the electricity rate scenario modelled, a median household in 2050 could save over $1,000 a year. The report notes that households in the Atlantic provinces, where energy poverty rates are among the highest in Canada, see some of the largest savings from electrification. For example, the median household in Nova Scotia is expected to save $2,400 a year in 2050 from electrification.

“Energy wallet” savings and the Clean Electricity Regulations

To assess total energy spending for Canadian households under the Regulations, ECCC commissioned the University of Regina economist Dr. Brett Dolter.

To take a conservative approach, Dr. Dolter's analysis did not account for current federal support for these actions, which include rebates of up to $5,000 for the purchase of an electric vehicle, grants of up to $10,000–$15,000 for low-income households that heat with oil to install heat pumps, and interest-free loans of up to $40,000 to support household efficiency improvements, including the installation of heat pumps. Dr. Dolter's analysis also did not account for provincial supports.

Dr. Dolter found that the Clean Electricity Regulations will help ensure that at least 84 per cent of Canadian households save money due to electrification by 2035. These savings are made up of the financial savings from reduced fossil fuel use. Overall, these findings are generally consistent with the other independent studies by the Canada Electricity Advisory Council, Clean Energy Canada, the Transition Accelerator, and Canadian Climate Institute by showing that most Canadians are set to save with a cleaner grid, and by going electric.

Enabling provinces and territories to keep electricity rates low

The Government of Canada has taken two significant steps to drive investment and protect Canadians from costs as Canada builds up clean electricity systems:

1. Federal investment. Recent federal budgets have made historic investments in the transition to clean electricity. Those investments total over $60 billion in support through to 2034-35. Federal support for clean electricity is intended to reduce the costs that utilities or electricity markets pass through to consumers in the form of increased rates. ECCC's analysis of the impacts of the Regulations take federal support into account. Federal modelling finds that the ITCs will save electricity system operators over $60 billion . This is a mechanism through which the federal government is protecting Canadian ratepayers, while enabling cost savings for families through electrification.
2. The design of the Regulations. In response to feedback received through extensive rounds of consultation and engagement, the final Regulations provide considerable flexibility to enable electricity operators to deliver reliable and affordable power while reducing emissions. For more information about the design of the final Regulations, please see this overview.

Impacts of Canada's Clean Electricity Regulations

Electricity rates are a matter of provincial or territorial responsibility. They are determined by government bodies working with utilities’ rates proposals or by the electricity market, depending on the electricity system in question. Canada’s Clean Electricity Regulations are technology-neutral, meaning they do not prescribe how compliance must be achieved. Thus, although various compliance choices may influence rate trajectories, the Regulations do not determine electricity rates. Electricity operators have the freedom to choose the lowest-cost compliance option depending on their individual circumstances.

Understanding the impacts of Canada's Clean Electricity Regulations and electricity rates

Environment and Climate Change Canada (ECCC) used economic modelling to estimate the cost, rate, and emission impacts of the Regulations, as well as savings in health spending and avoided negative environmental outcomes due to improved air quality and reduced GHG emissions.  

The modelling found that Canada’s Clean Electricity Regulations will save Canadians money on their energy bills, savings complemented by a cleaner grid and electrification.

At the provincial and territorial level, ECCC’s modelling found a maximum 1 per cent (the equivalent of $3-5/year) electricity rate increase in Saskatchewan from 2035 onwards. We show results for the five provinces that currently rely most on fossil fuels for electricity generation, as well as for the rest of Canada, below in Table 1.

Results present undiscounted cents per kilowatt hour (c/kWh), under a scenario of 48 per cent growth in electricity demand to 2050. Results in brackets show the percentage change relative to a scenario with the Regulations. (Negative percentages mean electricity prices are lower under Canada's Clean Electricity Regulations than under a scenario without the Regulations).

Table 1: Results from the Energy, Emissions and Economy Model for Canada (E3MC) for the weighted average incremental real residential price of electricity

Region	2025-2034	2035-2039	2040-2044	2045-2049	2050
Alberta	-0.2 (-1%)	0.0 (0%)	-0.4 (-1%)	-0.1 (0%)	-0.4 (-1%)
Saskatchewan	0.1 (0%)	0.2 (1%)	0.2 (1%)	0.2 (1%)	0.2 (1%)
Ontario	0.0 (0%)	-0.1 (0%)	-0.4 (-2%)	-0.9 (-5%)	-1.2 (-6%)
New Brunswick	0.0 (0%)	0.1 (0%)	-0.1 (0%)	-0.3 (-2%)	-0.3 (-2%)
Nova Scotia	-0.8 (-4%)	-2.7 (-11%)	-3.0 (-12%)	-2.7 (-11%)	-3.0 (-12%)
Rest of Canada	0.0 (0%)	-0.2 (-2%)	-0.2 (-2%)	-0.4 (-4%)	-0.5 (-5%)
National	-0.1 (0%)	-0.3 (-2%)	-0.4 (-2%)	-0.6 (-4%)	-0.7 (-5%)

ECCC's modelling assumes that electricity demand in Canada grows by almost 50 per cent by 2050 under a scenario without Canada's Clean Electricity Regulations, which includes all other policies and measures in effect today.^{Footnote 1} That growth in electricity demand comes from a shift from fossil fuels to low-carbon sources primarily including electricity in transportation, buildings and industrial processes; demand from data centres; and population and economic growth. Modelling of a higher load growth (98 % increase or roughly doubling) shows similar trends in rates. As electricity systems will invest to build a large amount of capacity to meet growing demand with or without the Regulations, the percentage change in rates is roughly similar between the scenario in Table 1 and high growth scenarios. In the higher growth scenario, overall cost benefits and emissions avoided are also higher.

As the table above indicates, in some cases, rates could be lower with Canada's Clean Electricity Regulations in effect than without them.