Canada’s electricity sector Reform Priyank Jain n frindz

1. Reforms in Canadian Electricity
Sector
Pankaj Rathee(89)
Priyank Jain(92)
Ratanjeet Singh(95)

2. Introduction
• The electricity sector in Canada has played a significant role
in the economic and political life of the country since the late
19th century.
• The sector is organized along provincial and territorial lines.
• In a majority of provinces, large government-
owned integrated public utilities play a leading role.
• Canada is the world's second-largest producer
of hydroelectricity, which accounted for 63% of all electric
generation in 2011.
• Ontario and Alberta have created electricity markets in the
last decade in order to increase investment and competition
in this sector of the economy.

3. A Provincially Owned and Regulated
Industry
• Electricity is viewed by many as a “public good”.
• Section 92A(1)(c) of the Constitution Act, 1867 places
“development, conservation and management of sites and
facilities in the province for the generation and production of
electrical energy” under the jurisdiction of provincial
governments.
• Initially, crown-owned utilities were largely self-regulating.

5. Regulatory framework
• In Canada's federal system of government, jurisdiction over
energy is divided between the federal and provincial and
territorial governments.
• Provincial governments have jurisdiction over the exploration,
development, conservation, and management of non-
renewable resources, as well as the generation and
production of electricity.
• Federal jurisdiction in energy is primarily concerned with
regulation of inter-provincial and international trade and
commerce, and the management of non-renewable resources
on federal lands.

6. Provincial regulation
• Provincial regulation of generation activities, power lines, and
distribution systems is administered by provincial utility boards. The
producing provinces impose royalties and taxes; provide incentives;
and grant permits and licenses to construct and operate facilities.
• The consuming provinces regulate distribution systems and oversee
the retail price of natural gas to consumers.
• The key regulations with respect to the wholesale and retail
electricity competition are at the provincial level.
• To date, two provinces (Alberta and Ontario) have initiated retail
competition. In Alberta, the electricity sector is largely privatized, in
Ontario the process is ongoing. In other provinces electricity is
mostly generated and distributed by provincially-owned utilities.

7. Federal regulation
• The National Energy Board(NEB) is an independent
federal regulatory agency that regulates the Canadian energy
industry. The NEB was created in 1959 and reports through the
Minister of Natural Resources to the Parliament of Canada. Its
primary responsibilities include:
 Inter-provincial and international power lines,
 Export and import of energy under long-term licenses and short-
term orders,
 In 1985, the federal government and the provincial governments
in Alberta, British Columbia and Saskatchewan agreed
to deregulate the prices of energy.

10. Facts about Canadian power sector
• Organized along provincial & territorial lines.
• All provinces have their own utility boards to regulate
transmission & distribution rates.
• Worlds second highest producer of hydro power.
• Canadian per capita power consumption is one of the highest
in the world ~17k KW-hr per annum.
• Majority of Canadian utilities function as vertically integrated
crown corporations operating as regulated monopolies.
• Nuclear Energy consumption of Canada is 3 times that of India
• Canada Exports nearly 10% of its power to USA.

11. International power trading carried
out by Canadian provinces with USA
Province Canada to USA (GW-Hr) USA to Canada (GW-Hr)
Alberta 41 991
British Columbia 9,955 9,999
Manitoba 9,344 139
New Brunswick 1056 585
Nova Scotia 0 146
Ontario 11,066 1,764
Quebec 19,879 443
Saskatchewan 991 321
Total 51,341 14,387

12. Cross-Canada Cross-Border
• As the provincial electricity systems matured, interties to
neighboring provinces as well as to bordering US States
allowed for increased optimization of generation resource
endowments.
• Increasing the size of the network reduced electricity prices
by allowing the development of larger, more efficient plants
to serve the larger loads.
• The economics behind today’s electricity system dictate that
in most jurisdictions, customers are afforded lower costs by
transmitting electricity from the most efficient generating
sources to the load centres, sometimes over thousands of
kilometers.

13. Generation
• Net Installed capacity: 130,543 MW
• Hydro Power has the dominant share approx 57%
Type
Hydro 75,077
Thermal 51,365
Wind 3,973
Solar 108
Tidal 20
Total 130,543

15. Type Hydro Wind Tidal Solar Thermal
NEW FOUNDLAND 6,781 54 0 0 584
PRINCE EDWARD ISLAND
0 152 0 0 117
NOVA SCOTIA 374 218 20 0 2,006
NEW BRUNSWICK 947 249 0 0 2,849
QUEBEC 38,438 658 0 0 3,018
ONTARIO 8,406 1,457 0 108 25,516
MANITOBA 5,054 104 0 0 501
SASKTAWACHEN 856 171 0 0 3,159
ALBERTA 883 806 0 0 11,107
BRITISH COLUMBIA 13,205 104 0 0 2,291
YUKON 78 1 0 0 33
NORTH WEST
TERRITORIES 56 0 0 0 127
NUNAVUT 0 0 0 0 54

16. Transmission & Distribution
• The Canadian transmission networks extend over 160,000 km.
• The Canadian transmission networks are largely integrated to
the continental power grid.
• Transmission and Distribution tariffs in Canada are split in 4
groups :
1. Residential : Monthly usage: 1000 kWh
2. Small Power : Power demand: 40 kW; Consumption
10,000 kWh, load factor: 35%
3. Medium Power : Power demand: 1,000 kW;
Consumption: 400,000 kWh, load factor: 56 %
4. Large Power: Power demand: 50,000 kW;
Consumption: 30,600,000 kWh, load factor: 85%.

17. *Canada has historically been a net exporter of
electricity to the United States.

18. Constitutional issues
• The provincial governments own most of the petroleum, natural gas and coal
reserves, and control most of the electricity production. This means that the
national government must coordinate its energy policies with those of the
provincial governments, and intergovernmental conflicts sometimes arise.
• The problem is particularly acute since, while the energy consuming provinces
have the bulk of the population and are able to elect federal governments which
introduce policies favouring energy consumers, the energy producing provinces
have the ability to defeat such policies by exercising their constitutional authority
over natural resources.
• Section 92A of the Constitution Act, 1867 assigned to the provincial governments
the exclusive authority to make laws in relation to non-renewable resources and
electrical energy, while Section 125 prevented the federal government from taxing
any provincial government lands or property.
• On the other hand, the federal government has the power to make treaties with
foreign countries. This has important implications for treaties involving energy
production, like the Kyoto Protocol, which the Canadian government signed in
2002. Although the federal government had the authority to sign the treaty, it may
require the cooperation of the provincial governments to enforce it.

19. Restructuring
• Jurisdictions that have introduced private sector reforms, the
results have been mixed and the process has been slow.
• Alberta’s electricity market is the most evolved, and it has
stimulated the most private sector investment.
• Ontario sought to introduce both wholesale and retail
competition in 2002.
• High prices and other circumstances, however, conspired to
bring a quick end to this new market.
• Ontario has since adopted a “hybrid market.”
• Major step was Ontario power authority’s release of Supply
Mix Advice Report and the provincial government’s ensuing
Supply Mix Directive.

20. Electricity Restructuring: New Institutional Structure
Competitive
Generators
Large
Consumers
Small
Consumers
Fixed-Price
Generators
(e.g., OPG
Nuclear and
Baseload Hydro)
Independent
Electricity
System
Operator
(IESO)
Regulated
Price
Plan
Ministry of Energy
• Overall policy/legislative
framework
• Sets targets for technology,
conservation, renewables.
Energy Board
• Guarantees public input/fairness
• Approves prices for price
regulated generators; oversees
contracts for new supply
Power Authority
• Prepares integrated system
• Contracts for new supply and DSM
• Manages regulated price plan
• Conservation Bureau
Energy
Retailers

21. Conti….
• Limited progress was made in British Columbia with the
creation of the British Columbia Transmission Corp. (“BCTC”),
whose mandate is to manage and provide non-discriminatory
access to BC Hydro’s transmission system.
• In March 2007, the British Columbia Utilities Commission
approved BC Hydro’s Integrated Electricity Plan and Long-
Term Acquisition Plan.

22. Market and pricing
• Electricity pricing varies by province or territory according to
the volume and type of available generation and whether
prices are market-based or regulated.
• Since Alberta has moved the furthest in restructuring its
electricity market, Its electricity prices are more market-based
compared to other provinces and territories.
• Ontario has chosen to partially restructure its electricity
market, so mixed approach is followed.
• Prices in other provinces and territories are set by the
electricity regulator to cover costs and allow for a reasonable
rate of return to. investors

23. Residential prices across various cities

24. Regulatory bodies
Quasi-judicial bodies regulate provincial utilities:
 British Columbia: Public utilities commission.
 Alberta: Alberta utilities commission
 Saskatchewan: Province of Saskatchewan
 Manitoba: Province of Manitoba n Public utilities board
 Ontario: Ontario energy board
 Québec: Régie de l’énergie
 New Brunswick: Provincial Government
 Nova Scotia: Utility review board
 Prince Edward Island: Regulatory and appeals comm of PEI
 Newfoundland and Labrador: Commission of Public utilities
 Yukon: Yukon utilities board
 Northwest Territories: Public utilities board
 Nunavut: Government of Nunavut

25. Thank You…..!!