a
Canadian Electricity Association
Enhancing Our Integrated
Electricity System
An Opportunity to Build on Success
www.canelect.ca
Table of Contents
Executive Summary
1
I. An Energy Success Story – Electricity Integration Between Canada and the United States
2
II. Building on the Success Story – Three Opportunities for Cooperation
3
A. Infrastructure Development
3
B. Reliability and Security Cooperation
4
C. Environmental Performance Improvement
4
III. Continuing the Dialogue
5
IV. Annex
6
Generation Mix
6
Canada/U.S. Electricity Trade Relationship
7
The Integrated North American Transmission Grid
8
Figures and Maps
Electricity Generation by Fuel Source in Canada and the U.S., 2008
6
Electricity Exports from Canada and Imports from the U.S., 1999–2008
7
Exports and Imports Between Canada and the U.S., 2008
7
The Integrated North American Transmission Grid
8
Major Transmission Interconnections Between Canada and the U.S.
9
© Canadian Electricity Association (CEA) 2009
All rights reserved. No part of this publication may be reproduced in any form whatsoever without the prior
permission of the publisher.
Ce document est aussi disponible en français sur le site Internet de l’ACÉ à l’adresse www.canelect.ca
Canadian Electricity Association
1
Executive Summary
The North American electricity market is facing a number
of challenges:
1) there is an escalating need for new infrastructure to
be developed and built;
on his first foreign visit, President Barack Obama chose
Canada, and in the first cooperative act between the
United States and Canada, he and Prime Minister Stephen
Harper chose to create a Clean Energy Dialogue.
3) there is a demand to develop and improve environmental performance — by reducing CO2 emissions,
improving the efficient use of resources, developing
new technology and maximizing the performance of
existing assets.
It is in the spirit of that dialogue that the Canadian
Electricity Association (CEA) presents this paper on
electricity cooperation between our two countries. It
highlights the key issues we are facing together, offers
some suggestions on how to deal with these, and provides
for American readers — particularly the newly elected
and appointed — an overview of the Canadian industry
and our trading relationship.
These are continental challenges: no country faces
them alone, particularly given the level of integration in
the energy marketplace. This integration is stronger between
Canada and the United States than any other trading
nations in the world. It is no coincidence therefore that
The Canadian Electricity Association is committed to
working to find mutually beneficial solutions to the
challenges faced by the North American electric industry.
We look forward to engaging with stakeholders inside
and outside of government as we pursue those solutions.
2) there is an ever-rising expectation for the delivery of
reliable and secure power; and
2
Enhancing Our Integrated Electricity System: An Opportunity to Build on Success
I. An Energy Success Story
Electricity Integration Between Canada
and the United States
The longstanding, open trading relationship between
Canada and the United States is without precedent in
the world in scope, scale, and by measure of the mutual
benefits to citizens. No two countries in the world have
a closer trading arrangement.
Central to that trading relationship is energy. It is the
cornerstone for both national economies, and represents a chain of activity from resource to consumer that
employs hundreds of thousands across many provinces
and states, and services the needs of millions of our
citizens in every corner of the continent.
One area of that energy relationship that often goes
unnoticed is electricity. This is ironic, given that it is
the backbone of the whole trading framework. There is
nothing on which we as North Americans rely more,
day-in day-out, to meet our basic needs. Homes,
commerce, industry — for all of them, electricity is critical
to any task. But does the New England office worker,
the Midwest industrial plant manager, or the California
homeowner realize that when the light is turned on, the
electricity might be coming from Canada?
Probably not, or at least no more than his or her Canadian
counterparts would notice the corresponding Americangenerated electricity on any given day. But this isn’t a
sign of a problem. Rather, it is a measure of how successful our integrated electricity system really is. The
international network of high voltage lines that connect
customers north and south ensures that electricity is
delivered in the most effective and efficient way possible, so that no one questions whether the power will
be available on any given day. Canada and the U.S. are
each other’s best customers.
It is this measure of reliability that has ensured for North
Americans incredible energy security in electricity, and
the quality of life that goes with it. Night or day, weekday
or weekend, winter or summer, Canadians and Americans benefit from the ability to import affordable electricity
into their markets from their neighbour without question,
without concern. It is an energy success story in which
all should take pride.
The danger of all this quiet success is that sometimes
decision makers, unaware of the implications for electricity,
take or propose other actions that can threaten this
integration. This paper is a response to that danger.
First, it proposes three key areas where this relationship
could be enhanced: 1) through infrastructure development, 2) through reliability and security cooperation,
and 3) through a drive for environmental performance
improvement. Second, it provides background information to elevate the level of awareness of the great success
story that is the North American electricity sector.
...does the New England office worker, the Midwest
industrial plant manager, or the California homeowner realize that when the light is turned on, the
electricity might be coming from Canada?
3
Canadian Electricity Association
II. Building on the Success Story
Three Opportunities for Cooperation
A. Infrastructure Development
developed, and that there are no undue impediments to
that development.
The recent elections in Canada and the U.S. have brought
forward new and ambitious government targets for infrastructure development: both in terms of lower-emission
generation (renewable and non-renewable) and transmission.
The Government of Canada is committed to seeing 90 per
cent of Canada’s electricity as emission-free by 2020,
with approximately 74% of the Canadian fleet meeting
that target today. The U.S. Administration is committed
to a target of 25% of U.S. power from renewable fuels by
2025, with something in the order of 10% qualifying now
as renewable. In addition, both governments have
indicated a strong desire to see new transmission built.
In terms of generation technology development, there
is intense activity on both sides of the border aimed at
lowering the emission profile of existing fossil-fueled
generating facilities. A coordinated effort to share the
knowledge gained, to create bi-national research and
development opportunities around clean coal applications
or new fuel projects, or to cooperate on pilot projects,
could serve to benefit efforts in both countries, and
thereby ensure the most environmentally sound use of
this abundant resource. On the continuing integration
of renewable resources with the bulk power system,
there also exist opportunities for cooperation, such as
research on remote wind integration and forecasting,
investigating new fuel development opportunities in areas
like bio-fuels or solar power, or sharing experiences on
maximizing efficiencies of hydroelectric fleets. Regarding
hydropower, it should be noted that it constitutes the
majority of all generation in Canada, and though a
smaller proportion of overall generation in the U.S.,
the most important renewable. Continuing to identify
opportunities to maximize the sustainable use of this
renewable resource is an important part of the energy
discussion between the two countries. The above does
not constitute a comprehensive list but merely gives a
sense of where opportunities are known to exist.
Terms are not always similarly defined and so direct
comparisons are difficult, but what is clear is that both
governments have set ambitious targets requiring significant investment. Both present difficulties at different
levels — jurisdictionally, in terms of legislative and
regulatory hurdles, and technically. However, viewed
together, these targets present opportunities for
cooperation and significant mutual benefit. Three areas
for cooperation are worth highlighting: transmission,
generation technology development, and regulatory
efficiency initiatives.
In terms of transmission, there is growing recognition of
the need and value of new or stronger inter-connections
within the two countries, but also between them. Much
of the current system dates from the decades immediately
following the Second World War, and development since
then has been much more limited. The time for new
investment and development in the face of aging or
insufficient assets is upon us. A more robust system will
permit the more efficient transmission of power within our
own countries, but also across the natural north-south
trading corridors that run from the Pacific coast right across
to the Atlantic coast. Enhanced transmission is essential
for effective access to and integration of many new
low-emission power generation opportunities, and for the
elimination of costly and inefficient bottlenecks that increase
congestion and can thereby detrimentally affect reliability.
There is a need for more cooperation between the two
countries to ensure that the best opportunities are being
In terms of regulatory efficiency, there is an ongoing need
on both sides of the border to review the regulatory process
to ensure that the many objectives agencies have — human
health and safety, environmental protection, market
participation or whatever else — are being met efficiently
and effectively. Those objectives are not intended to serve
as impediments to trade and new infrastructure but rather
to ensure that development proceeds in a way consistent with the public interest. When regulatory process
has the effect of inhibiting trade and infrastructure
development there can be many unintended negative
consequences: reliability can be undermined, new technology introductions can be delayed, and opportunities for
efficiency can be lost. Cooperation across the border
needs to be based on the premise that expanded trade
and infrastructure renewal is good for both countries.
4
Enhancing Our Integrated Electricity System: An Opportunity to Build on Success
B. Reliability and Security Cooperation
The day-and-night, seven-days-a-week provision of reliable
power delivered securely to homes, businesses and industry
across North America is a remarkable feat. Very few citizens
in Canada and the U.S. really understand it and probably
do not really care as long as the lights stay on. Meanwhile,
behind the scenes, thousands of qualified professionals
are working with electricity companies and system
operators across the continent to ensure the electricity
network is functioning in a reliable and secure manner.
These industry professionals do not work in isolation, but
in concert across the border. The virtually instantaneous
movement of electricity demands coordination and
cooperation. First, there evolved regional cooperative
agreements. However, given that electrons don’t stop at
border crossings, regional cooperative agreements grew
into a highly efficient international system for managing
the flow of power. And to ensure the reliability of this
integrated international grid, the North American Electric
Reliability Corporation (NERC) was established.
NERC’s success depends on its ability to function with
limited governmental involvement. Oversight is necessary — and NERC’s actions are overseen by the appropriate
authorities in the U.S. (FERC) and Canada (where both
federal and provincial governments exercise authority).
However, where that oversight turns into efforts by officials
to determine NERC’s day to day operating activities, it
interferes with NERC’s ability to get its job done. Reliability
is best guaranteed through the continuous improvement
assured by NERC’s ongoing process of establishing and
enforcing NERC standards. A detailed standards development
and improvement process is constantly under operation
for this purpose. Governments in both countries observe
this process, and provide the legislative backstop to
give it ultimate credibility for enforcement purposes.
A related concern with undue governmental involvement
is that it can undermine the international character of
NERC — a character which is fundamental to its effective
operation. Where a government becomes very involved
it raises questions about that international character,
and about jurisdictional sovereignty. Respecting that
sovereignty requires that the relevant governmental
authorities in the U.S. and Canada allow NERC to function
as the entity responsible for the reliability of the North
American bulk power system.
Security, both physical and cyber, is a more complicated
issue. Governments are directly responsible for the
security of citizens. The electricity system in North
America, like roads, railways, gas pipelines, or any other
critical infrastructure, is a potential target for those who
seek to undermine that security. Guaranteeing security
is not something that governments on either side of
the border can do in isolation — it needs to be done
cooperatively because the system is so integrated.
Departments of security in both countries play a role —
the Department of Public Safety in Canada, and the
corresponding agencies in the United States. Agencies
on both sides of the border must continue to work
together to ensure the most effective security protections — ones that complement rather than interfere with
the electrical system cooperation in place through NERC.
C. Environmental Performance Improvement
When governments on either side of the border set
targets for better environmental performance, they are
focusing on how the environmental footprint of our
electricity infrastructure can be made smaller across
Canada and the United States. Often those targets are
set with very short time frames in mind. While the goals
may be worthwhile, they do not always reflect the long
planning and depreciation cycles of generation and
transmission assets. Electricity infrastructure is not built
with 5 or 10-year life spans in mind, with rapid deprecia-
tion of asset valuation and fairly simple investment.
Rather, electricity infrastructure is done with 30, 50,
70-year or even longer time horizons. This guarantees
the stable reliable provision of electric power to which
we have become accustomed. The tradeoff is that not
every new technological development can be readily
incorporated in the short term — the costs of trying to
do that would be prohibitive. That doesn’t mean innovation is ignored — but that system owners and operators
have to constantly assess how best to incorporate it given
5
Canadian Electricity Association
the other system constraints. Trying to meet ambitious
targets is an area where cooperation can be beneficial
as Americans and Canadians learn from one another’s
experience and leverage from one another’s opportunities, such as the following:
• Cooperation on new technology applications: By
harnessing the expertise and wealth of information
within industry on both sides of the border much progress
can be made to model and implement more effective
applications of new technologies to the benefit of all.
• Cooperation on mechanisms to reduce CO2
emissions: There is increasing discussion of the idea
of a comprehensive cap and trade system for carbon
emissions to provide economic incentives and
practical mechanisms for the electricity industry and
other sectors to reduce emissions. Systems need to
be developed by public officials and industry on both
sides of the border to ensure that they are achievable
and effective.
• Cooperation aimed at maximizing the environmental
performance of existing assets: The infrastructure
already in place across North America — hydro,
nuclear, fossil fuel — represents a significant invest­
ment over decades. Those assets are being reviewed
all the time to ensure the most effective and efficient
operation. There is an opportunity to cooperate in
highlighting best practices that can improve environmental performance to the benefit of all.
• Cooperation on the more efficient use of resources:
A range of initiatives from demand side management
programs to energy efficiency technologies are under
way in jurisdictions across North America. Sharing
information on these can serve to broaden their
application and bring forward new innovations.
This is not an exhaustive list, merely a representative one.
The point is that the opportunities exist in many different
areas. What should be pursued is a cooperative discussion
between industry and government to highlight these
opportunities, and to thereby ensure their more effective
dissemination across both countries.
III. Continuing the Dialogue
This paper is a very brief overview of the opportunities
that exist to build on the remarkable success story that
integration in electricity has come to mean between
Canada and the United States. It sets out some
high-level ideas for enhancing cooperation — in terms
of infrastructure development, reliability and security,
and environmental performance improvements.
Acting on these opportunities is a challenging task. It is
one that needs to be taken up by all parties — elected
and non-elected public office holders and industry, on
both sides of the border.
The Canadian Electricity Association is interested in
facilitating such an ongoing dialogue, and will follow-up
on this paper with an engagement strategy with officials
in both countries, and our industry counterparts.
Our view is that when times are challenging, the opportunities for cooperation are all the more important, and we
intend to pursue them.
As a final note, we think it is important that Canadians and
Americans have a deeper appreciation of some of the
details of the integrated relationship. With that in mind
we have prepared an annex to this paper that provides
an overview of some key facts about that relationship.
6
Enhancing Our Integrated Electricity System: An Opportunity to Build on Success
IV. Annex
Canada and the U.S. share a very close relationship with
respect to the generation, transmission and trade of
electricity. The following series of charts and graphs
gives a visual account of electricity generation in the U.S.
and Canada; the interconnected Canada /U.S. Grid; and
the amount of trade between the two nations.
Generation Mix
As can be seen the pie charts below — Canada and U.S. have very different generation mixes. These
differences primarily reflect availability of resources, as different geographic regions have access to different
input resources. Cross-border trade enables market participants to take advantage of diversity between the
Canadian and U.S. electricity systems.
Electricity Generation by Fuel Source in Canada and the U.S., 2008
Canada
Net Electricity Generation, 2008
Total = 598.8 TWh
U.S.
Net Electricity Generation, 2008
Total = 4,115 TWh
Conventional Steam (Coal) 20.6%
Coal 48.5%
Internal Comb. (Diesel) 0.2%
Petroleum 1.1%
Comb. Turbine (Natural Gas) 4.1%
Natural Gas 21.3%
Nuclear 14.8%
Nuclear 19.7%
Hydro 61.7%
Hydro 6.1%
Other Renewables <1.0%
Other Renewables 3.0%
*Numbers may not sum to 100 percent due to rounding.
Source: Statistics Canada, Survey 2151, 2009
*Numbers may not sum to 100 percent due to rounding.
Source: US Energy Information Administration, Electric Power Monthly
7
Canadian Electricity Association
Canada/U.S. Electricity Trade
Relationship
Electricity is an established and growing part of the
larger energy trade between Canada and the U.S.,
The bar graph demonstrates the extent of this two-way
trading relationship. The quantity of electricity exported
from Canada has typically been 6 to 10 percent of
production. At the same time, electricity imports to
Canada have increased over time.
Electricity Exports from Canada
and Imports from the U.S., 1999–2008
GWh
60,000
❚ Exports ❚ Imports
50,000
40,000
30,000
20,000
10,000
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: NEB Electricity Exports and Imports. Monthly Statistics,
various years.
Exports and Imports Between Canada and the U.S., 2008
CAN
Exp
55,732
Imp
23,499
Net 32,233 GWh
Yukon
Territory
Northwest
Territories
Nunavut
BC
AB
hewan
Saskatc
Alberta
Exp 8,081
Imp 11,514
Net -3,433
Newfoundland &
Labrador
Canada
British
Columbia
Manitoba
Quebec
Exp 228
Imp 761
Net -533
MB
SK
Exp 137
Imp 432
Net -295
Exp 9,880
Imp
87
Net 9,793
Ontario
ON
Exp 18,571
Imp 7,998
Net 10,573
United States of America
Source: NEB Electricity Exports and Imports. January 2008 to December 2008 (GWh).
QC
Exp 17,455
Imp 1,352
Net 16,103
P.E.I.
New
Brunswick
NB
Exp 1,367
Imp 1,081
Net 286
Nova Scotia
NS
Exp
13
Imp 273
Net -260
8
Enhancing Our Integrated Electricity System: An Opportunity to Build on Success
The Integrated North American Transmission Grid
These maps of the North American Transmission Grid offer a clear visual indicator of the extent of current integration.
Electricity trade occurs at a range of points across the Canada-U.S. border, reflecting the largely north-south nature of
the Canadian grid, as it is integrated with the more dense web of transmission infrastructure in the U.S.
Yukon
Territory
The Integrated
North American Transmission Grid
Northwest
Territories
Nunavut
Newfoundland &
Labrador
British
Columbia
Saskatch
ewan
Alberta
Manitoba
Quebec
Ontario
Washington
P.E.I.
N. Dakota
Idaho
S. Dakota
California
Wisconsin
Nebraska
Colorado
Iowa
Pennsylvania
Illinois
Kansas
Missouri
New
Mexico
Oklahoma
Texas
Ohio
W.Virginia
Virginia
Kentucky
Tennessee
Arkansas
Mississippi
Arizona
New York
Michigan
Nevada
Utah
Maine
Indiana
Wyoming
Minne
sota
Montana
Oregon
New
Brunswick
Nova Scotia
New Hampshire
Vermont
Mass
RI
Conn
New Jersey
Delaware
Maryland
Virginia
N. Carolina
S. Carolina
Alabama Georgia
Louisiana
Florida
Map copyright CEA. Lines shown are
345kV and above. There are numerous
interconnections between Canada and
the U.S. under 345kV that do not appear
on this map.
9
Canadian Electricity Association
Major Transmission Interconnections Between
Canada and the U.S.
Yukon
Territory
Northwest
Territories
Nunavut
Newfoundland &
Labrador
Saska
tchew
Alberta
an
British
Columbia
500 kV(2)
Manitoba
Quebec
500 kV
230 kV
230 kV(2)
230 kV
Ontario
230 kV(2)
115 kV
230 kV(3)
345 kV(1)
Note: The numbers indicate the voltage of the power lines from each
province to the states. If there is more than one line with a given voltage,
the number of lines is indicated in parentheses.
Source: NEB, Canadian Electricity Association and Natural Resources Canada.
115 kV(1)
230 kV(4)
345 kV(2)
P.E.I.
kV
765 kV(2)
Nova Scotia
120
V 3 New
k
0
4
45
13 5 kV Bru
ns
) 69 8 kV (2)
wi
2
(
kV
kV
ck
(3)
120
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