Energy Biz - September/October 2008 - (Page 22) » Financial Front canadian exports Surge ENERgy FLOWS SHAPEd By PRiCE By KATE ROWLANd canadian power exporTs To The United States reached more than 50 terawatthours last year, up more than 70 percent from 2003. Canadian power imports from the United States fell to under 20 terawatt-hours last year, a decline of about 16 percent from 2006. For more than a century, the United States and Canada have engaged in a cross-border trade of electricity. What began with one transmission line built at Niagara Falls in 1901 has blossomed over the ensuing years, and especially in the past five decades, into a brisk trade in both directions, to the extent that existing international and interprovincial transmission lines permit it. Canadian exports to the United States were boosted by a number of events. The first was in 1959 when the Canadian government enacted a national energy policy that encouraged the development of power resources, more interconnection of provincial transmission systems, and the export of surplus electricity to the United States. By 1987, escalating electricity costs in the United States pushed imports of Canadian electricity to a new peak of 45 terawatthours, worth approximately $1.17 billion to the Canadian economy. By the early 1990s, surplus generating capacity in Manitoba, Ontario and Quebec carried Canada’s electricity exports even higher. According to statistics produced annually by the National Energy Board, an independent federal agency whose job it is to regulate international and interprovincial aspects of the oil, gas and electric utility industries, Canadian electricity exports to the United States have fluctuated from 43.06 terawatt-hours in 1997 to a peak September/October 2008 of 50.12 terawatt-hours in 2007, but dipped as low as 29.34 terawatt-hours in 2003. In the meantime, U.S. exports to Canada in 1997 equalled 7.47 terawatthours, rising as high as 23.58 terawatt-hours in 2003. Last year’s 19.56 terawatt-hours imported by Canada was a significant drop from its 2006 U.S. imports of 23.40 terawatt-hours. “Canada’s electricity exports in 2006 and 2007 were both higher than the average of 36.50 terawatt-hours over the past five years,” says Stephane Thivierge, market analyst, electricity, for Canada’s National Energy Board, based in Calgary. However, he says, “Overall, it’s really too soon to say a reduction in domestic demand is going to lead to an increase in exports.” Natural gas, too, has seen a steady cross-border trade in recent years, supported by a number of international pipeline interconnections. The largest electricity and natural gas supplier to the United States, Canada exported 3.6 trillion cubic feet of natural gas to the United States in 2006, or 86 percent of total U.S. natural gas imports that year. By the end of 2007, Canadian natural gas exports accounted for 51 percent of total annual production. While the National Energy Board isn’t prone to crystal ball gazing, last year it published a report titled “Canada’s Energy Future,” detailing potential scenarios for the future of Canadian electricity imports and exports through the year 2030. According to the report, “The mix of electric power generation will see significant changes as the use of wind power, nuclear power and clean coal technologies are all expected to grow.” Additionally, large hydro developments in Newfoundland and Labrador, Quebec, Manitoba and British Columbia may be built between now and 2030, “requiring substantial and unprecedented additions to transmission systems.” That being said, these are merely statistical scenarios. The “report is not a definitive prediction of the future. For now, there is not enough statistical evidence to declare a definite trend. All we can look at so far are very recent data,” Thivierge says. For one thing, the issue of transmission constraints continues to strangle the cross-border trade market for the foreseeable future. Even in 2003, the National Energy Board was already observing the difficulty. As noted in its 2003 energy market assessment: “In some cases, market integration is constrained by existing transfer limits on transmission systems and/or transmission congestion, and not all provinces have direct access to the export market.” “Nothing has changed in 30 years. Until the day that someone says ‘We can build transmission at an affordable price,’ then export potential is just that – it’s 22 E n E rgyB i z
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