Alberta Court Case Will Drive Off Investment, Add Uncertainty to Power Market, Pembina Institute Warns

Canada Standard

06-05-2025

The Alberta government is adding more uncertainty to the province's electricity market and driving away investment in a modernized system by launching a constitutional challenge to Ottawa's Clean Electricity Regulations, the Pembina Institute warned in a statement last week.
When the former Trudeau government published the final regulations late last year, the revised version postponed the deadline to fully decarbonize Canada's power grids from 2035 to 2050, scaled back the power sector's mid-century emissions reduction target from 342 to 181 million tonnes, offered provinces greater flexibility to run back-up gas plants, and earmarked more than C$60 billion in financial support to expand the clean electricity system.
But at a news conference last Thursday announcing the court action, Premier Danielle Smith still maintained the regulations will harm the affordability and reliability of Alberta's electricity grid, which is currently powered largely by natural gas.
Smith, who invoked her controversial Sovereignty Act for the first time in 2023 against an earlier draft of the regulations, said Ottawa's goals are too far-fetched and a breach of provincial jurisdiction, The Canadian Press reports.
"This is about protecting the lives and livelihoods of Albertans," Smith said, saying the regulations would increase electricity costs by more than 30%.
"We will not accept the reckless and dangerous policies-policies that will harm our economy, stifle our energy industry, jeopardize the reliability of our electricity grid, and raise electricity prices for Albertans."
But in a statement Thursday, the Pembina Institute's senior electricity analyst Jason Wang said Smith's objections "are based on unpublished analysis from the Alberta Electric System Operator and are unchanged from the concerns that Alberta repeatedly raised in 2023 and 2024 during engagement with the Government of Canada." Although the final version of the Clean Electricity Regulations addressed the province's specific issues with the draft rules, "Alberta continues to cite these same concerns, as if no such collaboration between it and the federal government ever took place."
View our latest digests
Wang added that the court action puts Alberta out of step with an accelerating shift away from fossil-fuelled electricity.
"At a time when other governments across this country and across the world are attracting investment in low-cost, secure, clean power, and modernizing their electricity grids to be fit for the needs of the next century, Alberta is introducing yet more uncertainty to its electricity market," he said. "This will further undermine investment confidence at the worst possible time."
On Thursday, Smith maintained the deep concessions in the final regulations mean little, CP writes, because Ottawa is still overstepping. "It violates the Constitution, and we're going to argue that vigorously in court," she said.
Abandoning the regulations was one of the nine demands Smith laid out for the next federal government in advance of last Monday's election. Speaking just three days after the vote, Smith said she'd received no indication that the new government led by Prime Minister Mark Carney will take action on the file.
"It depends very much on whether we have pragmatic Bank of Canada governor Mark Carney as our prime minister, or whether we have environmental extremist, keep it in the ground, phase out fossil fuels... Mark Carney as prime minister," she said.
"I don't know the answer to that yet."
Carney's office did not respond to a request for comment.
Alberta NDP Leader Naheed Nenshi told reporters that Smith seems more concerned about fighting with Ottawa than striking a deal beneficial for both levels of government.
"Three days in with no minister in place, no one to fight against, she launches this lawsuit," Nenshi said, referring to how Carney has yet to appoint a new cabinet.
"If she sat down with the prime minister and made a deal, we would have proper regulations that would bring certainty for investment to Alberta within the next month. Instead, she's going to take years."
Nenshi agreed the federal regulations would be punishing for Alberta, but said Smith's insistence on taking Ottawa to court rather than negotiating will only make that punishment worse.
"We heard (Carney) talk about Canada as a clean and conventional energy superpower," Nenshi said. "So rather than insulting him and saying, 'You're lying,' why not give him an opportunity to prove that he wasn't lying?"
On Monday, Smith said she would convene and chair a "sovereignty panel" to consider "how the province can protect itself from perceived economic incursions from the federal Liberal government," CBC reports. The most popular proposals will be put to a referendum in 2026.
"The world looks at us like we've lost our minds," she said. "We have the most abundant and accessible natural resources of any country on earth, and yet we landlock them, sell what we do produce to a single customer to the south of us, while enabling polluting dictatorships to eat our lunch."
While Smith blamed that state of affairs on "unbearable" attacks by the federal government, the historical record tells a rather different story.
In a report issued in March, the Pembina Institute's Jason Wang said Alberta is right to focus on the affordability and reliability of its power grid, but is "swimming against the tide by focusing on gas to run its grid long into the future."
That strategy "erodes its attractiveness as an investment destination-given that we know demand for low-cost, clean power is going to keep growing as new power-hungry industries, like data centres, look for places to set up business."
In his statement Thursday, Wang said the Alberta government has spent the last two years stifling the province's renewable energy sector "under repeated layers of regulatory and policy uncertainty," while failing to fully draw on "the range of tools at its disposal to build a grid fit for the future-such as renewables, interties, transmission, and demand-side measures; exactly the technologies that the CER guides investment towards."
Rather than presenting "any alternate plan for its future electricity system," he added, "the province is claiming that a continuation of the status quo gas-fired power is the only solution to reliability and affordability. In the meantime, Alberta's communities are missing out on billions of dollars of investment and tax revenues that clean electricity projects would bring."
This report by The Canadian Press was first published May 1, 2025.
Source: The Energy Mix