What Historical Cost Trends Reveal About Meeting Growing Electricity Demand

June 4, 2026 – As Canada’s electricity systems confront growing demand, changing generation mixes, aging infrastructure, and significant investment requirements, historical cost trends provide a valuable lens for evaluating past performance and informing the choices needed to meet future demand pressures, according to a new report from the C.D. Howe Institute.

In “Powering Ahead: Comparing Electricity Prices Across Canada,” authors Charles De Land and Cole Diepold examine electricity prices and system costs across Canadian provinces between 2018 and 2023, finding that provinces are entering the future from very different starting points. While hydro-rich provinces have generally benefited from lower electricity costs, others are already facing pressures from fuel price volatility, shifting generation sources, infrastructure renewal needs, and evolving market structures – challenges that are likely to become increasingly relevant across Canada as electricity demand enters a period of structural growth.

The report finds that most provinces experienced stable and declining electricity system costs in real terms between 2018 and 2023. However, Alberta and Newfoundland and Labrador were notable exceptions, highlighting how shifts in electricity system mix, fuel costs, market design, and large-scale infrastructure investments can significantly influence electricity prices. Meanwhile, Ontario experienced a meaningful reduction in electricity system costs in part due to changes in how those costs are financed, including the reallocation of costs from electricity ratepayers to taxpayers.

"In 2023, Alberta's electricity system costs reached approximately $230 per megawatt-hour, compared to just $78 in Quebec,” says De Land, Vice President, Research at the Canada West Foundation. “The period from 2018 to 2023 was marked by exceptional change. As provinces navigate electricity system transformation, policymakers need to recognize that volatility is likely to remain a defining feature of electricity markets for years to come."

As electricity demand rises from electrification, population growth, industrial expansion, and emerging technologies such as artificial intelligence, the report warns that provinces will face mounting pressure to expand generation, transmission, distribution, and storage capacity. At the same time, jurisdictions vary in their approaches to electricity markets, ranging from vertically integrated public utilities to competitive market-based systems.

Rather than identifying a single "best" market model, the authors highlight the trade-offs facing policymakers. Market-based systems can provide stronger price signals to encourage investment when needed but may expose consumers to greater short-term price volatility. More regulated systems may offer greater price stability but face their own constraints as infrastructure investment requirements grow.

"The choices provinces make today regarding market design, infrastructure investment, and system planning will have lasting consequences for affordability, reliability, and competitiveness,” says Diepold, Analyst, Execution and Advisory at the Canada Development Investment Corporation. “Understanding the drivers of electricity costs has never been more important."

For more information, contact: Charles De Land, Vice President, Research, Canada West Foundation; Cole Diepold, Analyst, Execution and Advisory, Canada Development Investment Corporation; and Raquel Schneider, Communications Officer, 647-805-3918, rschneider@cdhowe.org.  

Read the Full Report

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada’s most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. 

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