America's Canadian Problem

Deck: 
U.S.-Canada electricity trade is shrinking, and some American companies may be left without their megawatts for the summer.
Fortnightly Magazine - April 15 2003
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U.S.-Canada electricity trade is shrinking, and some American companies may be left without their megawatts for the summer.

The megawatt flow to the United States from Canada is winding downward despite the continuing U.S. requirement for substantial peak demand, energy experts say. This downward trend in cross-border electricity trade is due in large part to rising demand from Canada's economic growth. And with more natural gas-fired generation starting up on both sides of the border, signs also indicate that during the rest of the decade, the United States and Canada increasingly will become less dependent on one another for peak demand electricity needs.

Traditionally, as U.S. summer peak demand drives the market to attractive, if not volatile, pricing levels, Canada exports between 6 percent and 8 percent of its total electricity generation to a host of U.S. states. Then, during the winter (Canada's peak demand period, except for heavily air-conditioned Ontario), U.S. generators export electricity across the well-connected border to the north, in a natural complement of seasonal trade.

Last year, Canada exported a total of 36.7 million megawatt-hours (MWh) to the United States, at an average price of Cdn$46.00 (about US$30.00) per MWh, according to statistics compiled by Mary-Jane Sam, the statistical research officer in the Commodities Business Unit at Canada's National Energy Board (NEB), in Calgary. And in 2002, Canada imported 13.9 million MWh from the United States at an average price of Cdn$36.18 per MWh. This trade resulted in a net Canadian export of 20.8 million MWh, which netted some Cdn$1.4 billion, mostly for hydroelectric generators, which purchase electricity from the United States when prices are low and pump water up into reservoirs with available capacity.

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