When the U.K.’s Energy Efficiency and Green Finance Minister came to Canada on a recent trip, one of the most striking things he found about our exceedingly decentralized country is the dearth of cross-provincial electricity transactions.
“We’re not part of the EU,” Martin Callanan, a former Brexit minister, said of his own country, which withdrew from the European Union four years ago. But that hasn’t stopped the back-and-forth energy exchange. “I’ve lost count of the number of electricity interconnectors we now have with continental Europe.”
Speaking on the ARC Energy Ideas podcast, he said, “I was genuinely surprised to discover there isn’t even much electricity trading between the different provinces.”
There is certainly no perfect electricity system across the Atlantic. But Lord Callanan’s astonishment is warranted.
Canada’s grids stand apart from one another like islands: for the most part, each province has its own electricity system, with different quirks and characteristics. There are fewer electricity interconnections, or interties, east-west in this country than there is capacity to export to the United States.
That is increasingly a problem, because everyone from environmentalists to the federal Liberals to conservative Prairie premiers want to make electricity a larger part of the national mix in order to green growing energy consumption, and meet climate goals. They are counting on the country’s bountiful, non-emitting hydro resources to help. But those resources aren’t spread evenly throughout Canada, and some sharing will be required.
A long-simmering dispute between Saskatchewan and Manitoba that has now made its way to the Canada Energy Regulator (CER) is a case in point of how it’s often hard for provinces to play ball with one another.
In November, the trading arm of SaskPower – the province’s electric utility – filed a complaint with the CER. It alleges that Manitoba Hydro isn’t allowing domestic buyers, namely Saskatchewan, market access to its electricity as is stipulated by the regulator’s export permit. That permit allows Manitoba to sell its excess electricity to the U.S. Midwest.
“Manitoba Hydro is selling low-cost, low-emitting power to the United States to the exclusion of a Canadian jurisdiction, for no discernible benefit to Manitoba Hydro,” said Saskatchewan, which is asking the CER to go as far as revoking the permit.
Most of Saskatchewan’s generation now comes from coal and natural gas. As much as the province is battling Ottawa over the Clean Electricity Regulations, saying federal ambitions are unrealistic, it’s also working to green its grid. The Crown corporation said it needs hydropower from Manitoba to reduce its emissions.
On the other side, Manitoba Hydro said it’s willing to sell electricity to its western neighbour but claims Saskatchewan is asking for special treatment. Saskatchewan’s argument on greening its grid is a red herring, it said, and in fact the province is a potential market competitor in selling electricity to other jurisdictions. Manitoba calls Saskatchewan’s key argument “untrue” and “inflammatory,” and said the CER should dismiss the complaint.
Already, hydro-rich Manitoba has faced a massive drop in export revenues amid drought conditions that drained water levels in utility reservoirs, a scenario that could play out more frequently with climate change. The province said last year it plans to reduce electricity exports to Canadian neighbours and the U.S. as demand increases at home.
This is despite the fact it could use the cash. As The Globe’s Konrad Yakabuski has written, Manitoba Hydro has gone “from cash cow to financial basket case” after experiencing cost overruns on major projects.
The CER said the dispute process remains open, with Saskatchewan allowed another response early this year. The regulator will then determine next steps.
No matter the outcome of this particular dispute, Canada will need to build a stronger domestic electricity market. This is not only for climate goals themselves but also to meet rising demand. All the new people moving to our country need to be able to turn the lights on, and we need to power our economy.
Admittedly, there’s a short supply of positive examples on the Canadian electricity-sharing front. For any optimism about the planned Atlantic Loop, for instance, East Coast Canadians can also reflect on the seemingly unbreakable, decades-long deal that has allowed Hydro-Québec to buy low-cost power from Churchill Falls in Labrador that it resells for many multiples more.
Provinces will need – to the degree possible in our federation – to get past squabbles. They will still trade with the U.S. But Ottawa needs to do what it can to spur domestic electricity markets with carrots, such as speedy cross-provincial utility corridor approvals and funding aimed at more interties.
We can start to trade within our own country, perhaps with as much ease as electricity moves between different countries across the English Channel and North Sea. Otherwise, Canada doesn’t stand a chance at electrifying as we want to in the decades ahead.
Kelly Cryderman