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On December 11, 2025, Alberta enacted a coordinated set of legislative measures to respond to the rapid growth of large-scale data centres and their impact on the provincial electricity system. The Financial Statutes Amendment Act (No. 2), 2025 ("Bill 12") and the Utilities Statutes Amendment Act, 2025 ("Bill 8") received Royal Assent on the same day and together establish a framework that both assigns cost responsibility for data centre electricity demand and reshapes how that demand is supplied.
Bill 12 introduces a new levy, effective December 31, 2026, applicable to data centres with electricity capacity of 75 megawatts ("MW") or more, with the objective of ensuring that highly power-intensive facilities, particularly those drawing electricity from the grid, bear some of the costs associated with their demand rather than shifting those costs to residential and business ratepayers only.
Bill 8 addresses the supply side by encouraging large data centres to bring new generation through direct arrangements with generators, prioritizing those projects in the connection process, and allocating the costs of required grid upgrades to data centre proponents.
Together, Bill 8 and Bill 12 underpin the Alberta government's objective of supporting the growth of AI and other data-driven industries while maintaining grid reliability and applying cost-causation principles within Alberta's electricity market. Whether this approach achieves the intended balance between investment attraction, system reliability, and cost allocation will become clearer as the framework is implemented.
The new data centre levy
Bill 12 introduces Part 9.1 (Data Centre Levy) into the Alberta Corporate Tax Act, establishing a levy regime applicable to large-scale data centres and co-location facilities that draw material amounts of electricity from the province's electrical grid. The levy is imposed on operators of "computing equipment" defined to include servers, racks, routers, cooling systems, and ancillary hardware used to process, store or transmit digital information.
The levy applies to a stand-alone data centre or a data centre located in a co-location facility that has an electricity capacity of at least 75 MW in a calendar year, whether on a standalone basis or when aggregated with related facilities in the province. Bill 12 contains exceptions to the levy with respect to certain computing equipment owned by Indigenous persons situated on reserve lands and other specified lands therein.
The legislation introduces a data centre levy tax credit that permits taxpayers to offset the levy amounts paid against Alberta corporate income tax payable for the respective year or carried-forward. As such, once a facility becomes operational, the levy is meant not to increase the operator's overall provincial tax burden.
The levy applies on a calendar-year basis and will apply to computing equipment that is "available for use" on or after December 31, 2026, such that the levy is payable for the 2026 calendar year. "Available for use" means the earliest point at which computing equipment is considered in use for levy purposes, that is, when it first earns income, at the beginning of the year after it is leased, or when it is delivered and capable of being used. As explained below, however, the value of this credit to developers may be limited.
Calculation of the data centre levy
The levy is calculated annually by considering the age‑weighted cost of computing equipment, multiplied by a rate that varies according to the proportion of electricity drawn from the provincial grid as compared to self-generated electricity. Section 92.3(7) specifies the following formula to calculate the levy:
Levy payable = (E + F) x R
- E = 45% of the cost of computing equipment that is less than 4 years old at year end;
- F = 15% of the cost of computing equipment that is 4 years or older at year end; and
- R = the levy rate (1% ≤ R ≤ 2%, depending on the amount of electricity the respective facility draws from the grid).
The following is an example calculation for a $10,000 piece of new equipment acquired and made available for use in 2026, with the standard 2% levy applied:
|
Year |
Age at year end |
Levy base calculation |
Levy base ($) |
Levy payable (2%) |
|---|---|---|---|---|
|
2026 |
< 4 yrs |
0.45 × $10,000 |
$4,500 |
$90 |
|
2027 |
< 4 yrs |
0.45 × $10,000 |
$4,500 |
$90 |
|
2028 |
< 4 yrs |
0.45 × $10,000 |
$4,500 |
$90 |
|
2029 |
= 4 years |
0.15 × $10,000 |
$1,500 |
$30 |
|
2030 |
≥ 5 yrs |
0.15 × $10,000 |
$1,500 |
$30 |
Application of the data centre levy
i. Data centre levy to credit against Alberta's corporate income tax
The data centre levy is creditable against Alberta's corporate income tax and may be carried forward for seven years. In practice, however, data centre operators often remain in prolonged net operating loss ("NOL") positions due to the accelerated tax depreciation available under Canada's Accelerated Investment Incentive, which must be claimed in the first year that the computing equipment is available for use. As Bill 12 does not provide for refunds of the levy and it cannot be applied against other provincial taxes, any resulting credit from the payment of the levy will, in many cases, carry forward and may expire unused after the carry-forward period, effectively rendering the levy a final tax if the operator continues to be in an NOL position.
ii. Co-location facilities
Under section 92.3(4), a data centre operator is deemed to meet the 75 MW threshold for the data centre levy if the total electrical capacity of the co-location facility in which its equipment is located meets or exceeds 75 MW, regardless of the operator's individual electrical load.
As such, if an operator uses 10 MW of load in a co-location facility with 100 MW total capacity, the operator's computing equipment located at that facility would be subject to the data centre levy, even though its own allocated load is well below 75 MW. Additionally, in respect to the other computing equipment at the data centre's own facilities, the relevant electricity capacity for purposes of determining if the levy applies is the total electricity capacity of the data centre, as otherwise computed on its own locations, and the part of the co-location facilities in which the data centre is also located. The provision explicitly allocates the facility capacity rather than individual operator usage of the co-location facility, effectively making it more likely that the data centre's other locations could also be subject to the levy.
iii. Available for use cessation definition
Under section 92.3(7), the concept of "available for use" is tied to the definition of that term under the ITA, which is a one-time determination marking when computing equipment first becomes subject to the levy. Bill 12 does not expressly address when equipment ceases to be available for use, such that cessation of availability, and thus the application of the levy, must be inferred from whether the operator retains lawful possession of the equipment and whether the equipment remains capable of being used.
Data centres encouraged to bring their own power
In September 2025, the Alberta Electric System Operator ("AESO") released its latest Update on Data Centres, which quantified the scale of data centre demand seeking to connect to Alberta's electricity system. As of that update, the AESO reported more than 20,000 MW of data centre load requests, compared to Alberta's current peak demand of approximately 12,000 MW. The AESO also confirmed that, in the near term, the grid can reliably accommodate only about 1,200 MW of large new load without additional generation or system upgrades.
These constraints sit alongside the broader policy direction set out in the memorandum of understanding between Alberta and Canada, which commits both governments to increasing electrical generation for consumer and industrial use on Alberta's electricity grid, including meeting the needs of AI data centres, while simultaneously achieving net-zero greenhouse gas emissions for the electricity sector by 2050.
Broadly, Bill 8 seeks to shift large data centres toward self-supplied power by promoting direct contracting with electricity generators, giving priority to those projects in the grid connection process, while assigning the cost of necessary transmission upgrades to data centre proponents rather than only Alberta ratepayers. Bill 8 is designed to operate in tandem with Bill 12, such that as large-scale data centres shift toward self-generation of electricity, their reliance on the grid decreases and the applicable levy under Bill 12 is correspondingly reduced.
Under the amendments to the Electric Utilities Act introduced by Bill 8, section 29(1) now clarifies that the ISO's obligation to provide system access service is expressly subject to maintaining the reliability and adequacy of the interconnected electric system, making clear that access to the grid is not unconditional where large new loads are concerned. Considering the AESO's September 2025 report showing more than 20,000 MW of data centre load requests, data centre projects that bring their own generation or contract for new supply are better positioned to reduce pressure on the system and obtain access under the revised framework.
New Section 29(1)
29(1) The Independent System Operator must provide system access service on the transmission system in a manner that
- subject to clause (b), gives all electricity market participants wishing to exchange electric energy and ancillary services a reasonable opportunity to do so, and
- maintains the reliability and adequacy of the interconnected electric system.
At the same time, the amendment to section 30(4) narrows cost recovery to ancillary services, allowing reliability-related costs to be recovered in a more discrete and transparent manner through the ISO tariff or ISO fees. Effectively, the changes to 29(1) and 30(4) link grid access and cost recovery more directly to system reliability, strengthening incentives for data centres to manage their load and bring forward new generation rather than relying on the existing grid.
New Section 30(4)
30 (4) The Independent System Operator may recover the costs of procuring ancillary services from electricity market participants by
- including the costs in the tariff, in addition to the amounts and costs described in subsection (2), in which case the Commission must include in the tariff the additional costs it considers to be prudent,
- establishing and charging ISO fees for the costs, or,
- using a combination of the ISO tariff and ISO fees for the costs, provided that the Independent System Operator delineates the portion of costs recovered under each payment type and ensures that the combined recovery does not exceed the costs incurred.
To support this approach, Bill 8 confers broad regulation-making authority on the Minister under the Electric Utilities Act with respect to data centres under Section 41.01. The amendments authorize regulations that define and classify data centres, govern their access to system access service, and address operational matters such as load management, load shedding, and electricity consumption. They also permit the Minister to regulate the development, approval, and oversight of ISO rules specific to data centres, including complaints to the Alberta Utilities Commission, and to prescribe the powers and responsibilities of the Independent System Operator in this area. In addition, the Minister may specify which provisions of the Electric Utilities Act and its regulations do not apply to data centres, allowing for differentiated regulatory treatment and preserving ministerial discretion as policy and system conditions change.
Conclusion
Alberta's recent legislative changes reflect a clear policy choice to treat large data centres as system-level electricity users. Bills 8 and 12 are intended to push data centres toward self-supplied power, limit unconditional access to the grid, and ensure that the costs of reliability and infrastructure are borne by data centre proponents rather than Alberta ratepayers. How this approach functions in practice will depend on the regulations, ISO rules, and commercial arrangements that follow, but the direction of travel is clear.
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