Power Sharing: Developing Inter-Provincial Electricity Trade

Abstract

Canada needs a “Made-in-Canada” approach to electricity transmission that better exploits the benefits of east-west power trading. In this study, the author explains how to overcome the impediments to electricity trading that currently exist at provincial borders. To ensure continued access to US markets, most Canadian provinces have complied with US electricity trading rules. But when transplanted in Canada these rules limit provinces with competitive electricity markets, where electricity customers may choose among suppliers (Alberta and Ontario), in sharing the benefits of trade with their neighbouring monopoly utilities (such as in British Columbia, Manitoba, or Quebec). Some provinces rely mostly on hydroelectric generation, while others rely more on fossil or nuclear-fuelled generation. Carr says Canada would benefit from more electricity trading on an east-west axis because the sharing of different forms of electricity generation – and time-zone diversity – would allow better use of each province’s generation capacity. Carr makes several specific recommendations for provincial action. He also recommends the federal government support provincial initiatives in the event of NAFTA challenges.