Canadian electricity interests look to US export markets

BC Hydro’s revenues from exports to the US Northwest and Alberta increased to $2 billion last year, nearly four times 1999’s, even though actual exports were down slightly, the National Energy Board said in a new assessment of the Canadian power market.

Rising electricity demand notwithstanding, most Canadian provincial electricity markets will be able to serve their own needs in the next few years, the NEB said, with plenty left over for exports to the US. Canadian electricity generation is predominantly hydro-based and, as such, is cost competitive with many North American jurisdictions. Hydopower rich regions such as British Columbia, Manitoba, and Quebec expect to capitalize on exports to the electricity hungry US market.

To boost ties with the US, electricity transmission interests in several provinces also are considering membership in regional transmission organizations (RTOs). The move would expand Canadian exporters access to US markets, especially the Midwest, Northwest, and Northeast.

Further integration of the US and Canadian markets would increase Canadian export revenue, but could also lead to upward pressure on power prices in some provinces, the NEB said.

With limited opportunity for additional large-scale hydro projects in British Columbia, the province is expected to turn to natural gas to fuel future power projects. About 500 Mw of new capacity is expected to come on line between now and 2003 in British Columbia, the NEB said.

In addition, the Canadian energy oversight organization said British Columbian power developers are continuing to examine small run-of-the-river projects of less than 10 Mw.

Demand outstripped supply in Alberta during the 1990s, eliciting more interest in building new power projects. Sponsors have announced additions totaling 2,300 Mw that is scheduled to become available between 2001-2003, boosting total capacity to about 10,500 Mw.

Export goals
Total additions proposed during 2001-2005 are about 4,500 Mw. This includes three new coal-fired plants, a number of gas-fired cogeneration plants, and wind projects.

While Alberta has transmission links to British Columbia and Saskatchewan, it presently has no direct access to the US transmission system. Exports to the US occur mainly by wheeling power over BC Hydro’s system, which has interconnections with US utilities in the Pacific Northwest and California. To improve its access to the US, Albertan transmission owners are considering joining an RTO, including RTO West.

Likewise, Manitoba Hydro, already a member of the Midcontinent Area Power Pool (MAPP), is considering its options with respect to joining an RTO. In the fiscal year ended March 2000, the NEB said the crown utility earned 31% of its revenues from exports, mostly to the US Midwest.

As a low cost producer, the NEB said Manitoba Hydro is able to capture significant profits by selling electricity to the US Midwest. To bolster its surplus, Manitoba Hydro is building a 225 Mw gas-fired plant and is evaluating three potential sites for future hydro facilities.

The utility also recently signed an agreement in principle with the Tataskweyak Cree Nation to develop the Gull Rapids generating station and is working on a agreement for the Wuskwatim and Gull generating stations. Power from these new hydroelectric stations is not expected to come on line before 2008, the NEB said.

Interprovincial transmission connections allow Ontario to import lower priced electricity from hydro producers in Manitoba and Quebec and export surplus power to higher-priced US markets, the NEB said. Some 3,000 Mw of new generating capacity has been announced for the province. Sithe Energies Inc. has proposed two 800 Mw gas-fired combined cycle plants with a proposed start-up date of 2002, and TransAlta Corp. has proposed a 440 Mw project with a fall 2002 start-up date.

Additional connections to Michigan will give hydro rich Quebec, Canada’s largest power market, more flexibility for power exchanges and trade, said NEB. In 2000, Hydro-Quebec’s exports to the US totaled a record 20 Tw-hr.

With a 7,393 Mw interconnection, Hydro-Quebec’s largest export markets are New England and New York state. Most of Hydro-Quebec’s long-term contracts expired in April, the NEB said, and the utility is relying on short-term transactions to maintain its export market share.

“Provided unconstrained and economical access to the US transmission system, Hydro-Quebec appears to be positioned to expand its trading activities,” the NEB said.

Electricity exports from New Brunswick to the US have increased since 1994, totaling about 4.4 Tw-hr. In 1999, exports to the US Northeast accounted for about 18% of NB Power’s total revenue.

With an adequate reserve margin, a direct interconnection to Hydro-Quebec, and proximity to competitive New England electricity markets, the NEB said, it appears New Brunswick is positioned to play an increasing role in the export market.

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