NEB: Canada Electricity Markets Adequate

Canada's National Energy Board (NEB) said in a report released last week that Canadian provincial electricity markets are adequately supplied. In Alberta, where supply has been relatively tight, the NEB noted that new generation capacity is being built.

The board's latest energy market assessment report titled Canadian Electricity Trends and Issues examined electricity demand and generation and provided a province-by-province analysis of trade, regulatory developments and electricity prices.

Most Canadians, except for Albertans, have experienced stable electricity prices during the last few years. Canadian electricity generation is predominantly hydro-based and, as such, is cost-competitive with many North American jurisdictions. In fact, most hydro-rich provinces have surplus energy available for domestic and international trade, the organization said.

While the natural gas' share in Canadian electricity production is a relatively small 4%, most new generation projects in Canada are expected to be gas-fired. The NEB said many of these projects were planned before the sharp increase in gas prices, and the prospect of continued high gas prices has renewed some investor interest in constructing coal-fired power plants. Moreover, a high energy price environment could support increased investments in newer, more environmentally-benign generation technologies.

The electricity transmission interests in several provinces are considering membership in regional transmission organizations (RTOs), which are expected to facilitate access by Canadian exporters to U.S. markets and access by Canadians to U.S. supplies, the report said. To the extent that Canadian competitiveness can be maintained, higher export revenue would result. Market integration could also result in upward price pressure in some provinces, the report stated.

The NEB noted unbundling of generation, transmission and distribution services is occurring at an uneven pace across the country. Alberta introduced full retail choice on the January 1, 2001. Ontario plans to implement full retail access in May 2002 (initially scheduled for November 1, 2000).

However, low provincial power prices and the recent experience with price volatility in California, have caused most provinces to move cautiously toward developing comprehensive restructuring plans, the report stated. To view a copy of the report, visit http://www.neb-one.gc.ca.

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