Call For Regional Power Cooperation

The Maritime region should increase regional co-operation on electricity trade, says the author of a new study from the C.D. Howe Institute.

Jan Carr, the former CEO of the Ontario Power Authority, argues that Canada should take an approach to electricity transmission that better exploits the benefits of east-west power trading between the provinces, rather than accommodating north-south trade with the United States. And he says the three Maritime provinces could adopt a unified approach to this.

"The timing is right to look at a regional initiative. And the fact that the utilities (in the Maritimes) are small - both geographically and electrically - it makes a lot of sense. It's a prime candidate," Carr says.

"Frankly," says Carr, "I think (the Maritimes) should look very closely at outright amalgamation of the three provincial systems."

A step down from corporate amalgamation of the utilities would be regional planning, he says.

"In other words you retain three separate utilities, but there's a single regional plan that they're all working toward."

Carr writes in his study that the U.S. is served by a grid of transmission lines interconnecting various areas of the country in all directions. In contrast, Canada's transmission system is oriented north-south.

What's more, says Carr, trade in electricity between Canada and the United States is considerably larger than interprovincial trade. And most Canadian provinces have adopted U.S. transmission policies to ensure continued access to the American market.

In the 1990s, the United States implemented "reciprocity" provisions and an open-access transmission tariff. This means that a party can use the open-access provisions of a transmission system only if the jurisdiction they are supplying from or delivering to has comparable open-access transmission provisions, says Carr.

As a result, most Canadian provinces, including New Brunswick, adopted the U.S. rules which create access rights to the transmission system. Many provincial utilities were also restructured to split up generation from transmission and distribution. But with the exception of Alberta and to some extent Ontario, says Carr, none of the provinces moved to a truly competitive model for the sale of electricity.

"If there's not competition, then the whole concept of open transmission systems is questionable," Carr says.

The current system allows for some parties to gain market dominance and engage in anti-competitive behaviour by acquiring large amounts of transmission rights, he says. For example, a unit of Hydro-Québec was allowed to purchase 100 per cent of the export capacity for the next 20 years from New Brunswick to Maine at the 300 megawatt intertie from Point Lepreau that opened in 2007.

Carr says that selling the rights to Quebec was an advantage as it essentially paid for the construction of the transmission line.

But he adds, "As soon as Quebec - or anybody - has a higher degree of control over transmission access, it eliminates options for other parties.

"I think the Maritimes in general would benefit to take a regional approach to electricity and co-ordinating that better with Quebec would also be beneficial," Carr says, adding, "We seem to have forgotten that trading with each other makes a lot of sense."

But he does not propose that increased interprovincial trade of electricity - or even a regional approach as he suggests for the Maritimes - be pursued at the expense of trade with the United States.

"Trading with each other is a way of better developing the electricity resources of the country. It could even enhance or increase the opportunity to export to the U.S."

Increased interprovincial transmission of electricity is something the Maritime provinces are already considering. Nova Scotia and New Brunswick said earlier this month they're looking to build new, shared transmission lines. If successful, the plan would add a 500-megawatt connection between the two provinces, adding to the existing 300-megawatt connection.

And New Brunswick Energy Minister Jack Keir said at a conference in Saint John in May the Department of Energy would be looking to co-operate with Nova Scotia, P.E.I. and Maine on balancing power to bring online more renewable energy.

The Saint John Telegraph Journal

August 4, 2010