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Enhancing Our intEgratEd ElEctricity SyStEm An Opportunity to Build on Success

© Canadian Electricity Association (CEA) 2009All rights reserved. No part of this publication may be reproduced in any form whatsoever without the prior permission of the publisher.

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Table of ContentsExecutive 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 MapsElectricity 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 1

Executive SummaryThe North American electricity market is facing a number of challenges:

1) there is an escalating need for new infrastructure to be developed and built;

2) there is an ever-rising expectation for the delivery of reliable and secure power; and

3) there is a demand to develop and improve environ-mental performance — by reducing CO2 emissions, improving the efficient use of resources, developing new technology and maximizing the performance of existing assets.

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

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.

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.

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.

Enhancing Our Integrated Electricity System: An Opportunity to Build on Success2

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 repre-sents 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 American-generated electricity on any given day. But this isn’t a sign of a problem. Rather, it is a measure of how suc-cessful 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 pos-sible, 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 Ameri-cans 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 develop-ment, 2) through reliability and security cooperation, and 3) through a drive for environmental performance improvement. Second, it provides background informa-tion to elevate the level of awareness of the great success story that is the North American electricity sector.

I. An Energy Success Story Electricity Integration Between Canada and the United States

...does the New England office worker, the Midwest industrial plant manager, or the California home-owner realize that when the light is turned on, the electricity might be coming from Canada?


A. Infrastructure Development

The recent elections in Canada and the U.S. have brought forward new and ambitious government targets for infra-structure 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.

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 signifi-cant 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

developed, and that there are no undue impediments to that development.

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.

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 consis-tent 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 technol-ogy 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.

II. Building on the Success StoryThree Opportunities for 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 neces-sary — 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 protec-tions — ones that complement rather than interfere with the electrical system cooperation in place through NERC.

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 innova-tion is ignored — but that system owners and operators have to constantly assess how best to incorporate it given

B. Reliability and Security Cooperation

C. Environmental Performance Improvement


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 opportuni-ties, such as the following:

• 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 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.

• 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 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 environ-mental performance to the benefit of all.

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 DialogueThis 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 opportu-nities 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.


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.

IV. Annex

Conventional Steam (Coal) 20.6%

Internal Comb. (Diesel) 0.2%

Comb. Turbine (Natural Gas) 4.1%

Nuclear 14.8%

Hydro 61.7%

Other Renewables <1.0%

Coal 48.5%

Petroleum 1.1%

Natural Gas 21.3%

Nuclear 19.7%

Hydro 6.1%

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

Electricity Generation by Fuel Source in Canada and the U.S., 2008

Total = 598.8 TWh Total = 4,115 TWh

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.

CanadaNet Electricity Generation, 2008

U.S.Net Electricity Generation, 2008


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.

0

10,000

20,000

30,000

40,000

50,000

60,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

❚ Exports ❚ ImportsGWh

Source: NEB Electricity Exports and Imports. Monthly Statistics,various years.

Electricity Exports from Canadaand Imports from the U.S., 1999–2008

Yukon Territory

NorthwestTerritories Nunavut

BritishColumbia

Alberta

Sask

atch

ewan

Manitoba

Ontario

Quebec

Newfoundland &Labrador

P.E.I.

BCExp 8,081Imp 11,514Net -3,433

ABExp 228Imp 761Net -533

SKExp 137Imp 432Net -295

MBExp 9,880Imp 87Net 9,793 ON

Exp 18,571Imp 7,998Net 10,573

QCExp 17,455Imp 1,352Net 16,103

NBExp 1,367Imp 1,081Net 286

CANExp 55,732Imp 23,499Net 32,233 GWh

NSExp 13Imp 273Net -260

Nova Scotia

Canada

United States of America

New Brunswick

Exports and Imports Between Canada and the U.S., 2008

Source: NEB Electricity Exports and Imports. January 2008 to December 2008 (GWh).


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.

Ohio New Jersey

Yukon Territory


BritishColumbia

Alberta

MontanaN. Dakota

S. DakotaWyoming

Idaho

Nevada

Oregon

Sask

atch

ewan

Manitoba

Ontario Quebec

New Brunswick


Nova Scotia

P.E.I.Washington

California

Arizona NewMexico

Texas

ColoradoUtah

Nebraska

Kansas

OklahomaArkansas

Tennessee

Missouri

Iowa

Min

neso

ta

Wisconsin

Illinois

Florida

Alabama Georgia

S. Carolina

N. Carolina

Mis

siss

ippi

Louisiana

Indi

ana

Michigan

Pennsylvania

New York

W.Virginia

VirginiaKentucky

Delaware

Vermont

Maine

Virginia

RI

Maryland

New Hampshire

Mass

Conn

The Integrated North American Transmission Grid

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.


Yukon Territory


BritishColumbia

Alberta

Sask

atch

ewan

Manitoba

Ontario

Quebec

New Brunswick


Nova Scotia

P.E.I.500 kV(2)

230 kV(2)

230 kV 230 kV(2)

500 kV230 kV

115 kV

230 kV(3)345 kV(1)

115 kV(1)230 kV(4)345 kV(2)

120 kV(2)

450 kV 345 kV(2)138 kV69 kV(3)

765 kV

120 kV(2)

Major Transmission Interconnections Between Canada and the U.S.

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.

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