The Canadian Electricity Association (CEA), appearing before the House of Commons Standing Committee on Finance yesterday, called on the federal government to make adjustments to existing tax provisions in order to improve the investment climate for electricity.

CEA president Hans Konow noted that "changes are essential so that we may be able to attract the investment needed to ensure system reliability and meet future demand."

On the heels of the most severe blackout in decades on Aug. 14, Konow painted a sobering picture of future requirements and the current investment climate.

Future investment will be required in the order of $150 billion over the next 20 years to add or replace aging capacity and infrastructure. Much of this future investment will come from private capital markets.

The trend in the last 10 years shows investment levels must significantly improve and, given the time it takes to bring on capacity, this additional investment needs to begin now.

Konow recommended that improvements to Capital Cost Allowance (CCA) rates be adjusted to reflect the economic life of assets.

"Without appropriate CCA rates, it will be difficult to attract sufficient new investors into the market, build the necessary supply and transmission infrastructure, provide reliable power at affordable prices, and meet environmental performance expectations such as the Federal Government's climate change commitments" according to Konow.

CEA is requesting improvements to CCA Rates from 8% to as much as 20% on new generation assets, and from 4% up to 12% on transmission and distribution assets. The association is also calling for enhancing rates for used assets and adopting a broader application of Class 43.1 to allow a wider range of emerging renewable technologies to qualify for the 30% incentive rate.