Bucking the overall trend in Canada of little to no progress on the electric competition front, Alberta and Ontario earned high marks in a recently released report issued by the Center for the Advancement of Energy Markets (CAEM).
When it comes to electric competition, most Canadian provinces and territories have been unable to claim success to date, and on a national basis, Canada lags far behind the United States, according to the update to the second edition of CAEM’s Retail Energy Deregulation Index 2001 (RED Index). The index is a 200-page report that measures the progress provinces, states and territories have made in moving from the monopoly model of public utility regulation to a competitive framework. A RED Index score of zero or less represents the traditional set of utility policies or total monopoly, while a score of 100 represents complete and effective implementation of the policies that CAEM believes are the necessary foundation of the customer choice or competitive model. Negative scores are possible if provinces, states or territories explicitly reject restructuring or where there is government ownership of generation facilities.
The latest RED Index update includes Canada for the first time. The update shows Alberta and Ontario achieving scores of 62 and 39, respectively, out of a possible 100. Alberta’s score ties for third place in the ranking for North America, and Ontario ranks 14th. The RED Index Canadian national average is two out of a possible 100, compared to the U.S. national average of 17. This demonstrates that a majority of Canadian provinces and territories, with significant ownership of their energy facilities, have not identified retail restructuring as a priority, the CAEM noted.
That sentiment may be changing, according to CAEM. CAEM notes a recent New Brunswick government white paper in which the government states that it must operate by rules and procedures compatible with those established by the Federal Energy Regulatory Commission in order to participate and to continue to capture the benefits of a competitive market.
The RED Index has 22 key attributes that CAEM has identified as the foundation for an effective transition to competition. These attributes are weighted and scores are assigned to the different options that provinces, states or territories have regarding that attribute. CAEM then conducts research to determine the option chosen by each province, state or territory on each of the 22 attributes. The index scores are then calculated on the basis of the methodology and research. The results are in turn circulated to each provincial, territorial or state regulatory commission for comment, with appropriate revisions subsequently made.
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