Natural Resources Committee on May 26th, 2026

[Blake Shaffer]

That's an excellent question. The different market structures, broadly speaking, would be something like a vertically integrated, regulated market, which is most of the Canadian provinces. Then you have competitive markets in which you have private actors, which is what Alberta looks like—and to some degree Ontario, although it's a mixed bag.

The answer to your second part is very difficult because, in some ways, these vertically integrated—especially Crown—corporations can enact the will of the province quite quickly if they so choose. A government can decide that it wants to do X on electric vehicles and enable them, and it can make that happen relatively quickly, whereas in Alberta, we have to align incentives to make that happen. In some ways, you can steer that ship centrally.

Such things as renewables are a very good example. Before Alberta's moratorium, Alberta was the capital of renewable investment in Canada because of that open market and some of the things Pierre-Olivier talked about. The market was open for investments. I believe that 93% of data centre applications are in Alberta for that same reason: It's a place where, if you want to do something, you can apply to do it.

The openness to private entry can be a bit more challenging in the vertically integrated markets.

[Jennifer McKelvie, Liberal, Ajax, ON]

As a quick follow-up on the distribution systems—the utilities on the ground—a lot of times they're municipally owned and rate-based. Do you have any recommendations on how we can get over those structural constraints they have to ensure that they can make the capital investments needed?

Because they have only a certain amount of debt they can get and, of course, the regulatory process for rate applications is very long, how can we improve on that final delivery of electricity to homes and really ramp up electrification for the green transition?

[Blake Shaffer]

Thank you very much for that question. The distribution network, in my view, does not get enough attention from the big three sectors. We tend to focus on generation. Today, we've been talking a lot about high-voltage transmission.

The challenge with distribution networks is that they're necessarily regulated because they have a franchise monopoly—you don't want dual competing grids—and that can distort incentives. Getting incentives right to do the cost-minimizing thing is always a challenge.

There are some concrete things we can look at. There's performance-based regulation, in which you're incentivizing non-wires alternatives—this might be cheaper than expanding the system. There is such a thing as total expenditure rate basing, rather than capital expenditure rate basing. We tend to allow only capital expenditures in rate base, which distorts decisions away from, say, operating expense, which can sometimes be cheaper. A totex rate basing is something that other jurisdictions have done.

There's one very niche thing. I brought over folks from the U.K. recently to Alberta—the regulator and companies—to learn from them on the distribution network. We can use telemetry technology in places where we don't have a full rollout of smart meters: meters that are capable of recording consumption at an hourly level, which is essential for demand flexibility measurement. You can meter off somebody's phone connection to your electric vehicle. These are things that are allowed in the U.K. It's almost skipping past the landline.

I'm not suggesting that we do full utility metering off telemetry, but for some of these flexibility programs, this would be an area for Measurement Canada to look at for potential relaxation. I think we could get a lot of gains if we were a bit more flexible there.

[The Chair, Liberal, Terry Duguid]

Thank you, colleagues.

Thanks to our witnesses.

This brings the meeting to an end.

Colleagues, I think you'll agree that those were two great panels that have helped us to kick off our study on Canada's electrification, energy self-sufficiency and domestic energy security. We've had three national-level experts before us. It was great testimony, and there were great questions from colleagues.

We really appreciate your being with us today. I'll say, as we always do, that we welcome briefs. We welcome additional information. Please send them along if the spirit moves you.

With that, colleagues, we are adjourned.