The following essay is part of a collaboration between MBP Intelligence and New Economy Canada, examining Canada's electricity strategy and the future of electrification. In the next few weeks, both Tyler Meredith and Ben Woodfinden will be publishing two-part essays on this question (the following is Part I). This follows a recent special edition of the MBP Intelligence Briefing with Merran Smith, Andrew Leach, Michael Powell.
Financing a forty-year grid build across the generations who will use it is defensible; committing to a trillion-dollar build while publishing no total, no split, no schedule and no independent check is the strategy's real affordability risk.
Key Takeaways
- The case against Powering Canada Strong's financing has little to do with the spreading of costs to taxpayers and future ratepayers. Financing a forty-year asset across the generations that use it is ordinary and defensible. The problem is that the strategy commits to the spreading while publishing none of the things that make spreading honest: the total cost and the federal share, the split between ratepayers and taxpayers, the schedule, or an independent check on the numbers.
- Affordability is decided in that split. Whether a household feels this build on its hydro bill, its tax bill, or its children's bills is the affordability question, and the strategy's answer, on the public record so far, is that it declines to say. The Associated Press noted at launch that the document does not say how much money the government is willing to spend.
- The energy-wallet pitch, seven in ten households better off by 2050, is a counterfactual sale: it asks Canadians to credit savings against a future that will never be observed. The carbon tax just demonstrated, at fatal cost, that counterfactual selling fails in Canadian energy politics.
- The demand that follows is specific: publish the expected total and the federal share, publish the recovery split and its distributional effects, publish the schedule, and put the numbers in front of the PBO and the regulators rather than routing around them.
On June 30th, in the second of his direct-to-camera "forward guidance" videos, Prime Minister Carney told Canadians the country faces an energy crisis "on three levels," and of the three, affordability came first, ahead of security and climate. Then the key sentence: "the path to affordability is electrification." How the electrification gets paid for he had set out two months earlier, at the May launch, where doubling generation in the next few decades was going to require massive investment and the spreading of costs across time using Canada’s AAA balance sheet, in his words, "so that some ratepayers today don't pay all the costs of investments that will benefit all Canadians and our planet over decades." The launch also carried a warning that deserves to be taken as seriously as anything else the government has said about this build: "If we get it wrong, Canadians will pay higher utility bills."
He’s right, and this aspect of the strategy is what this essay focuses on. Part II will turn to the question of building, and abundance. Those two above statements on spreading costs over time and warning about higher bills are, side by side, the strategy's affordability promise and its financing plan turning out to be the same thing but at reverse ends. That is not, in itself, an indictment. The indictment lies in what comes after those sentences, which is nothing.
No total. No federal share. No split. No schedule. The question a conservative should put to Powering Canada Strong is not whether Canada needs more electricity generation and infrastructure, because we plainly do, and it is not whether costs may legitimately be spread across time and across instruments, because they may. The question is why a government that has decided who will pay, in broad strokes, will not tell the public what they will pay, or when, or subject to whose scrutiny.
The stakes here are the government's own chosen ground. Affordability is arguably the defining pressure in Canadian politics and on Canadian households. Statistics Canada's census-based measure put 822,000 households, 5.6 per cent of the country, in energy poverty in 2021, meaning they spent a tenth or more of after-tax income keeping the lights and heat on. Count transport fuel, as the Fraser Institute does, and on its broader measure of total household spending the national figure was 11 per cent, with 24.6 per cent of Atlantic households over the line. For these families the incidence of a trillion dollars is not an accounting abstraction. A dollar recovered on a flat per-kilowatt-hour rate takes a far larger bite from a Cape Breton pensioner than from a comfortable one; a dollar recovered through the progressive tax system does not. Where the cost lands is what affordability means.
This is the terrain Pierre Poilievre has occupied since he built his leadership on the cost of living, down to rebranding his shadow cabinet the "Conservative Affordability Team" this month. His response to the strategy's launch was, unsurprisingly, focused on affordability. The Liberals, he said, had spent the last decade jacking up the cost of power bills by 35 per cent. What has changed is that the government has now walked onto that terrain and planted its own flag and seems willing and eager to have this battle.
What the government is selling, and how
The affordability case, at its strongest, deserves a fair hearing before it is tested. Electric machines are more efficient than the ones they replace, by a factor of two to four, so a household that trades a furnace for a heat pump and a sedan for its electric equivalent uses less total energy even as the electricity share of its spending rises. The slice grows; the pie shrinks. From that arithmetic the government derives its headline: with the right investments, seven in ten Canadian households pay less for their total energy by 2050, and fifteen billion dollars in total energy savings by then. The number comes from modelling done for the Canada Electricity Advisory Council, and a November 2024 report from the Transition Accelerator reached similar conclusions, finding a median household could save over a thousand dollars a year by 2050 depending on the electricity-rate scenario, with some of the largest savings in the Atlantic provinces, exactly where energy poverty concentrates. A separate analysis Environment and Climate Change Canada commissioned from the University of Regina's Brett Dolter pointed the same direction, and deliberately left out the federal rebates to keep the estimate conservative.
But it is a particular kind of claim. The savings are conditional on electricity-rate scenarios holding while the country spends more than a trillion dollars rebuilding the system that sets the rates, and conditional on households finding the capital for heat pumps and EVs, the very purchases the energy-poor are least able to make. Above all it is a claim about a counterfactual. Your bill in 2050 will be lower than it would otherwise have been. Nobody will ever live in the otherwise. Nobody will get a statement in the mail from the world where they kept the furnace.
That matters because Canadian politics has just finished running a controlled experiment on exactly this kind of sale, and the strategy is written by the people who lost it.
The autopsy of the carbon tax
The consumer carbon tax was, whatever else one thought of it, an honest instrument. It priced carbon and showed the price, on a line a voter could point to. Its defence was a counterfactual: most households get back more in rebates than they pay. The Parliamentary Budget Officer's distributional analysis largely bore out the fiscal version of that claim, finding the average household in the backstop provinces received more from the rebate than it paid in the charge and related GST, though its broader economic modelling found the average household in most of those provinces facing a net cost once wage and investment effects were included, and the duelling readings of the same report became their own political war. Which is rather the point. The defence required the voter to net two flows in their head and adjudicate a fight between economists. The cost required only that they look at the pump. The rebate arrived quarterly, unlabelled, into an account that connected it to nothing; the charge arrived weekly, at eye level, in large illuminated numerals. Andrew Leach's observation on our own podcast is the general law here, and it is the graveyard of Canadian energy policy: Canadians are not prepared to do counterfactuals. They do not thank a government for a cost that would have been higher in a scenario that did not happen. They read the bill in front of them. And it is a far too simplistic economic model to assume Canadians will see this and simply go out and buy heat pumps and EVs and put solar panels on their roofs.
So as the price kept rising and the pressure kept mounting, the tax died the moment it had an opponent disciplined enough to keep pointing at the line. The sequence of what followed is the political education of the current government. The consumer fuel charge was set to zero effective 1 April 2025, by a directive Mark Carney signed in his first hours in office. Poilievre's response was not to declare victory. It was to accuse the Liberals of hiding the tax, telling reporters that "this law is still in place, even though Mr. Carney has signed a fake executive order to hide the tax for 35 or 40 days leading up to the election," and calling the industrial price that survived a "shadow carbon tax" and a "trick." Strip the campaign heat off those words and a real observation remains: the visible instrument was killed, and the invisible one was kept. The industrial price lives on, embedded in the cost of goods where no consumer sees it, and the Alberta agreement that accompanied this very strategy sets it on a path to an effective $130 a tonne by 2040, a full decade behind the $170-by-2030 schedule it replaced, and lower at the destination.
Now comes a trillion-dollar build whose financing plan, in the Prime Minister's own words, spreads the costs so that today's ratepayers do not carry them, and whose affordability case is once again a counterfactual, once again a model, once again a promise about a 2050 nobody will be able to check. A political system that executes governments for visible costs and acquits them for invisible ones will, over time, produce governments that make costs invisible.
The legitimate version, stated fairly
The strategy, in my view, gets certain things right, and the deepest of them is less a policy question than a philosophical one. A transmission line or a nuclear unit will serve ratepayers for forty or sixty years, and recovering its full cost from the households of the 2020s, who will be retired or dead before it depreciates, would be neither fair nor efficient. Matching recovery to an asset's life is how a mortgage works, and nobody calls a mortgage a deception. Edmund Burke's famous line about society as a “partnership between the living, the dead and the yet to be born” is usually quoted against loading debts onto the future, but it cuts both ways: the unborn will use these wires, and it is no injustice that they help pay for them.
Nor is recovering more of the cost from taxpayers than from ratepayers a vice. It may well be the more decent choice. Rate recovery is flat and regressive; it lands hardest on the 822,000 households this essay opened with. Tax recovery runs through a progressive system. A government that deliberately tilted the split toward the tax base to shield low-income ratepayers would be making a defensible, even admirable, distributional decision. Nothing in what follows argues for shoving the cost back onto the monthly bill.
And the instruments themselves are lawful, ordinary, and mostly on some public record somewhere. The Clean Electricity Investment Tax Credit, a refundable credit worth up to fifteen per cent of eligible capital cost, legislated in March through the first budget implementation bill, will be costed each year in the Department of Finance's Report on Federal Tax Expenditures. Deferral, taxpayer financing, the instruments themselves: all of it survives scrutiny. Clear away those straw men and the real objection stands alone, where it is easier to see.
What honest spreading requires, and what the strategy withholds
A government may spread a great cost across pockets and decades honestly. The practice has requirements, none of them exotic, the same four things any board would demand before approving a fraction of this commitment.
First, the magnitude: what the build is expected to cost in total, and what share the federal government expects to carry. Second, the incidence: the intended split between ratepayers, taxpayers and future cohorts, with a distributional analysis of who bears what, so the progressive tilt, if there is one, is a published choice rather than an accident. Third, the schedule: over what period the recovery runs, so a household can know whether it is being asked to pay for ten years or forty. Fourth, the check: an independent body, a regulator, the Parliamentary Budget Officer, the Auditor General, that reviews the numbers on the way in and reports on them as they move, because every large build in Canadian history has moved.
The strategy, held against that list, comes up empty four times. The headline cost, more than a trillion dollars by 2050, is a figure for the whole system, most of it ordinary utility investment that would be recovered through regulated rates in any scenario; the strategy does not separate the federal increment from the base and, as the Associated Press reported at launch, does not say how much money the government is willing to spend. On incidence, the document gestures at balancing ratepayers and taxpayers and commits to no split and no distributional analysis. On schedule, "over time" is the entire specification. And on the check, the direction of travel is the reverse of review: no new dedicated transmission funding was announced, with the government pointing instead to expanding the tax credit, routing interties through the Major Projects Office, and potentially fast-tracking them under the Building Canada Act, the statute under which, once cabinet designates a project in the national interest, "every determination and finding that has to be made and every opinion that has to be formed" for its authorizations "is deemed to be made or formed... in favour of permitting the project." Lawyers advising on the Act describe its effect precisely: the regulatory question becomes how to approve, not whether. The tax credit's eligible recipients, meanwhile, include the Canada Infrastructure Bank, the Canada Growth Fund, provincial and territorial Crown corporations, and corporations owned by municipalities or Indigenous communities, entities whose borrowing sits on their own books rather than in the budget's headline balance. Each instrument is individually defensible. Assembled, and paired with four blank spaces where the disclosures should be, they describe a financing architecture in which no single document, and no single officer of Parliament, will ever total what this build costs and who paid for it.
The strategy does not say "we will hide the cost." It says nothing, which is the point. A commitment to spread costs, minus a number, minus a split, minus a schedule, minus a check, amounts to a request for trust rather than a financing plan, made by a government whose formative political experience, the carbon tax, taught it exactly what happens to governments that let Canadians see what they are paying. Perhaps the omissions are innocent, the details to come through the consultations now under way with provinces, utilities and Indigenous partners. The consultations are the opportunity to prove it. The disclosures listed above are what proof would look like.
And the reason to insist on proof rather than trust is not fastidiousness. It is that a household is a ratepayer and a taxpayer and a borrower against the federal balance sheet all in the same body, and when a cost is moved from the bill it reads to ledgers it does not, the household has not been spared the cost. It has been spared the sight of it. What the sight enables is consent: the ability of the people paying for a quarter-century project to know its terms at the start, object to them, and hold someone to them. Remove the sight and you have not made power affordable. You have made the question of its affordability impossible to ask.
Ontario ran the experiment
If this seems theoretical, Ontario has the receipts, and the receipts arrived on the hydro bill.
Ontario Hydro spent the 1970s and 1980s building nuclear, with Darlington's units coming online through the early 1990s after years of delay and billions in overruns; by 1992 nuclear supplied 53 per cent of the utility's output and its debt amounted to more than a third of the province's total indebtedness. Reckonings did eventually come, a $3.6 billion write-down in 1993 and a $6.6 billion write-down in 1997, the two largest in Canadian corporate history. But they came once Darlington was finished and the money was spent, and through all the years of accumulation nothing forced the magnitude into public view while there was still time to change course. When the utility was finally broken up in 1999 it held $38.1 billion in debt and liabilities, $20.9 billion of it unsupported by the assets passed to its successors, and $7.8 billion of that unable to be paid down from projected revenues at all. So it went to ratepayers, as a Debt Retirement Charge of seven-tenths of a cent per kilowatt-hour on every electricity bill in the province from 2002, and it stayed there for as long as sixteen years, collecting more than $11.5 billion by 2014 and over $13 billion by 2016, before being removed in stages that ended only in April 2018.
Two details make the story an exhibit for this essay rather than a general lament. In 2004 the government reset the residual debt upward to $11.9 billion, an addition of roughly four billion dollars, and the reset did not become public until after the 2011 provincial election had passed. And when analysts tried to establish when the charge would actually end, they could not, because the underlying financial plans were never published; the energy analyst Tom Adams told the CBC there was "a huge transparency problem here," with no way to confirm or refute the government's statements. This is the key, a revision made in the dark, a schedule nobody outside government could verify, and a bill that landed anyway, on every household, for a generation.
One further discomfort belongs on the record, because the reader will notice it anyway. The debt at the bottom of Ontario's story was nuclear debt, and the second pillar of the government's current agenda, taken up in Part II of this series, is the largest nuclear build-out in a generation. Reactors should still be built. But of all the assets in this strategy, nuclear is the one whose costs most reliably outrun their estimates, and therefore the one where the four disclosures matter most. A conservative who wants the reactors built, and I do, should be the loudest voice demanding the honest ledger, because the alternative, demonstrated at province scale, is that the overrun surfaces twenty years later as a charge on the bills of people who never consented to it, and buries the case for ever building again.
The pattern has a contemporary echo, and this one comes with a counter-example. Site C was, in John Horgan's own later words, "recklessly pushed past the point of no return" by a government that had exempted it from utilities-commission review, Christy Clark having been open about her goal of carrying construction beyond the point where a successor could cancel it; its budget roughly doubled on the way to $16 billion. But when Horgan's government faced the go-or-stop decision in December 2017, it did something close to the standard this essay is demanding: it referred the project to the commission at last and then published the arithmetic of every option, down to the finding that cancellation meant an unavoidable four-billion-dollar bill recoverable either through a one-time 12.1 per cent rate increase lasting a decade or through the taxpayer-supported debt. British Columbians could disagree with the decision. They could not say they were denied the numbers. Disclosure of exactly that kind is not utopian; a provincial government produced it in a matter of months, for a project it had promised to put before the regulator.
The demand
The ask from me here is simple. Publish the expected total cost of the build and the federal share of it, separated from the base investment utilities would make regardless. Publish the intended recovery split between ratepayers, taxpayers and future cohorts, with a distributional analysis showing who bears what, so that if the government has chosen to shield low-income ratepayers through the tax system, a choice this essay would applaud, the choice is visible and bankable rather than implied. Publish the schedule. And put the whole of it in front of the Parliamentary Budget Officer and the energy regulators as a matter of course, with annual public reporting as the numbers move, instead of routing the projects through machinery designed to deem the questions answered.
None of this requires the government to abandon a single instrument or slow a single project. It requires arithmetic the government must already possess, or else the affordability promises are guesses. A government confident that seven in ten households come out ahead should be eager to show the working, because the working is the only version of that promise a voter can hold in her hand in 2032 when the bill arrives. Refusal would tell its own story.
The carbon tax's true lesson is clear, but I’m not sure Ottawa learned the right lesson from it still. The tax did not die because Canadians are innumerate or because honesty is politically impossible. It died because it asked people to believe a counterfactual while staring at a visible cost, the worst of both arrangements. The proof that an alternative exists is the man the Prime Minister keeps invoking. Sir Adam Beck built what the historian H.V. Nelles calls the public-ownership exception to the whole North American pattern, and he built it on a three-word promise, power at cost, and the promise worked because it was checkable: the municipalities that signed on could see the price, compare it to the private alternative, and verify year by year that the deal held. He did not sell Ontario a model of 2050. He sold it a number it could read. A government that wants, in its own phrase, to build clean energy on a scale that would astound even Sir Adam Beck could start by matching the disclosure that made his build believable, and durable, for decades.
What that older tradition understood about building itself, and what it takes to build in abundance now, is the subject of Part II.