Crux Energy's Comments on the National Electricity Strategy

Crux Energy Consulting was pleased to submit comments on Powering Canada Strong: A National Strategy for an Electrified Canadian Economy (the “National Electricity Strategy”) to the federal government.

Our comments address four sections where we believe additional precision and rigour will strengthen the final strategy.

1. Financing the Build

2. Increasing Regional Integration

3. Improving Regulatory Certainty and Speed

4. Building Capacity Across the Value Chain

We appreciate the opportunity to contribute to this important national conversation.

Financing the Build

Energy Wallet

The National Electricity Strategy’s energy wallet framing warrants greater precision.

The headline that 7 in 10 Canadian households will benefit from electrification is sourced from The Transition Accelerator’s analysis on behalf of The Canada Electricity Advisory Council. This work rightfully acknowledges that the result represents an average that “can hide unevenly distributed costs and benefits. For some Canadians – particularly in fossil-fuel-reliant provinces and territories, in lower-income households, and in Indigenous and remote communities – the challenge will be greater.” Additionally, the 7 in 10 figure breaks down under higher electricity rate scenarios, where close to half of households could see increased costs.

Two structural omissions in the underlying modelling are particularly consequential and should be disclosed alongside the headline figure:

1. The model does not account for the cost of stranded gas infrastructure. As natural gas networks are wound down, the residual rate base of utilities will need to be recovered, either through accelerated depreciation charged to ratepayers or through taxpayer funding. For provinces with large gas utility rate bases, such as Alberta and Ontario, these costs would be material.

   
   

2. The model assumes near complete electrification of personal transportation by 2050. Households that do not or cannot switch to electric vehicles, due to income, geography, or infrastructure gaps, will not realize these proposed savings.

Affordability is not a uniform national challenge: it is acutely concentrated in Atlantic Canada and the North, where household energy costs as a share of income are already high. Presenting averaged figures without regional disaggregation risks (both at the geography and demographic level) is mischaracterizing the challenge and producing policy that serves neither the most burdened households nor the investors and regulators who will rely on this document for guidance.

The Role of Natural Gas

We welcome the nuanced view that the National Electricity Strategy takes towards natural gas, acknowledging that gas-fired generation plays an important role in providing baseload power and system flexibility, particularly in Western Canada.

In addition to our general view that existing energy infrastructure should be optimized and that a premature transition off gas can put an enormous strain on the electric grid, we note that electrification of home heating is not economically advantageous for all Canadians. Natural gas users in Alberta and parts of Ontario, for example, are unlikely to see a reduced energy wallet through fuel switching given the relative cost of gas versus electricity in those markets and the stranded asset exposure described above.

The strategy should reconcile its natural gas generation position with its household affordability projections. We encourage explicitly identifying which segments of the population will benefit, which will not, and who will bear the cost of system build-out, whether through rates, taxes, or carbon pricing revenues. Investors and utilities making capital decisions need regional specificity, not national averages for their planning assumptions.

Increasing Regional Integration

We support the National Electricity Strategy’s emphasis on regional integration. Crux Energy was recently engaged to lead a stakeholder-driven study of regional collaboration in Atlantic Canada, the results of which are enclosed with this submission. That process demonstrated both the value and the complexity of aligning four provincial jurisdictions.

Each region will face its own distinct challenges, driven by resource mix, load profile, utility structure, political expediency, and regulatory environment. We recommend that NRCan support analogous multi-stakeholder processes in other regions before advancing a national integration framework. We note that the federal government’s recently committed equity support for the Nova Scotia-New Brunswick Wasoqonatl Reliability Intertie is a constructive example of the kind of targeted and project-specific federal participation that enables regional progress.

Effective regional integration should be built from the bottom up, with federal coordination serving to align incentives and remove barriers rather than impose uniform architecture. The federal government could also play a useful role in supporting information infrastructure.

Improving Regulatory Certainty and Speed

Clean Electricity Regulations

We recommend that the Clean Electricity Regulations be retracted. We acknowledge that the National Electricity Strategy has already signalled intent to amend the Regulations to allow greater use of carbon offsets and increased flexibility for existing assets. However, amendments fall short of what is required, as they are constraining the generation mix, and are not fit for the purpose described in the National Electricity Strategy.

Growing the grid at the scale and pace contemplated will require access to all available generation resources. Constraining that build-out through regulation before provinces have had the opportunity to exhaust lower-cost pathways introduces unnecessary risk and cost. Provincial decision-making processes, informed by public input, resource economics, industrial carbon taxes, and energy security considerations, are the appropriate mechanisms for determining the generation mix.

Permitting

We agree that federal and provincial permitting processes should be significantly streamlined. Project timelines in Canada are not competitive with peer jurisdictions, and this is increasingly a barrier to capital deployment. We support the Major Projects Office’s role and encourage continued investment in the institutional capacity needed to make accelerated review durable instead of episodic.

Regulation

On utility regulation, we see a meaningful opportunity for the Canada Energy Regulator to contribute to a national conversation on regulatory modernization. Both cost-of-service and performance-based frameworks have accumulated complexity that now burdens ratepayers and delays investment. The challenges of large load interconnection, rapid demand growth, and tariff design will compound this burden as electrification accelerates.

A federal forum for sharing best practices and harmonizing approaches, without displacing provincial jurisdiction, would be a constructive step.

Building Capacity Across the Value Chain

Indigenous Equity and Capacity

The National Electricity Strategy gives less emphasis to Indigenous ownership than the scale of the build-out warrants. Indigenous equity participation in energy infrastructure has emerged as both a political and practical prerequisite for project advancement. This has been demonstrated repeatedly in project approvals, financing and community engagement processes over the past decade. The federal government is well positioned to play a structuring role here, given its responsibilities for consultation and control over the Indigenous Loan Guarantee Program.

The Major Projects Office model demonstrates what enhanced federal support can look like but stops short of committing to expand the function explicitly to Indigenous ownership pathways for electricity infrastructure. Expanding that capacity-building function explicitly to Indigenous ownership pathways for electricity infrastructure would strengthen the strategy's deliverability.