Wednesday, February 16, 2011

The Smartest Guys in the Room - NOT

The National Energy Board’s Electricity Exports and Imports Monthly Statistics for December 2009 is a document that is educational in showing the differences between Canada’s provinces and their electricity policies.
Table 2A contains, for Ontario, 37 “Sources” for exports showing totals of $518,512,069 for 14,779,854MWh, which is $35.08/MWh.  Ontario’s public generator, OPG, appears to be affiliated with slightly under 13% of the transactions.   
For Quebec, the total is $1,061,889,413 for 17,779,064 MWh – which is $59.73/MWh.  There are only 7 “Sources” indicated for Quebec’s exports, and Quebec’s public generator, Hydro-Quebec, shows as being affiliated with over 82% of all transactions.    Quebec exported 38% more electricity than Ontario did, and received 136% more money for it.
Where Quebec and Ontario Shared export markets, Quebec collected 30% more, per MW, in New York, and 55% more in New England.  New England is Quebec’s largest market, and they averaged $61.53/MWh for their product there.  Michigan is Ontario’s (slightly over half), and we averaged $31.77 for our exports there.
It appears to me that the best thing for Ontario to do would be to cut a deal with Quebec to take all our excess generation – instead of dumping it in Michigan.  They fill the reservoirs, and sell it at higher prices.
It’s not a very attractive policy, but it would get Ontarians a little better value.  That would be better than the current consideration of the Ontario consumer.
C’est rien.


  1. A couple of comments:

    The new Ontario Quebec intertie is already being used heavily to move power from Ontario to Quebec during off peak time periods. The real issue it seems to be is that Ontario is heavily disadvantaged on how US power markets outside its borders have been configured. Michigan for example is at the center of a long time dispute between PJM and MISO. Originally MISO believed that all of the Midwest would under its control until several prominent utilities such as AEP and COMED decided to join PJM to the east creating several unintended market seams. This may or may not be recitified when FirstEnergy in Ohio switches from MISO to PJM effective July 1st of this year.

    The problem with this switch though is Michigan effectively become isolated from the rest of MISO and becomes sandwiched between IESO and PJM and pricing could become unpredictable. In certain areas of PJM and NYISO like around the NY/NJ Metro area the prices OPA has contracted for would be in line with market rate however there is a no way for power from Ontario to get there. The reason Hydro Quebec makes more money on their power sales is that they sell into NYISO in a zone further to the east than Zone A where all of Ontario's sales get priced off of and HQ has a direct HVDC right into the suburban outskirts of Boston. It was much more economic for TransCanada for example to extend there mainline pipeline system after the free trade agreement from Kingston, Ontario right into Manhattan than it is to build new overhead transmission lines from Niagara into NYC.

  2. Thank you for these comments.
    A couple of thoughts.

    The European experience, as I understand it, is that increased contribution from wind, and maybe solar, require more connections to more jurisdictions to allow excess power to find storage locations. A recent plan out to 2050 for Germany noted the need to utilize Norway's hydro storage. I posted regarding Texas' recent rolling black-outs that Dallas isn't much farther from Toronto than Churchill Falls is, and I think all jurisdictions in North America would benefit from freer trade via a more comprehensive grid. This may also become a 'green' issue.
    Regardless of connections and markets, it appears to me that the key is a more real-time ability to meet demand, and for that reservoirs will be increasingly valuable. Adding to this is increasing wind capacity - high wind output times are now lowering the IESO's HOEP, and European reports have indicated the same impact on markets adjacent to the wind powers.
    It appears to me that our excess in off-peak times should always have the highest value to Quebec - in a functioning market with sufficient delivery infrastructure, that should be the case.