Atlantic Canada Opportunities Agency
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Atlantic Energy Gateway - Regional Electricity System Operations

Executive Summary

The Atlantic Energy Gateway (AEG) is an Atlantic Canadian electricity and clean renewable energy project funded and coordinated by the federal government departments of Natural Resources Canada and the Atlantic Canada Opportunities Agency, with participation from the governments of the four Atlantic provinces, four of the major regional utilities, and the region’s two system operators.

The AEG is focused on contributing to achieving greater regional co-operation, benefits, and efficiencies among the various participants in the electricity and clean renewable energy sectors.

The Atlantic Canadian electricity industry can be described as three distinct systems: the Maritime Provinces system consisting of New Brunswick, Prince Edward Island, and Nova Scotia; the Island of Newfoundland; and Labrador.

Electricity demand in the region is growing slowly and there is overcapacity in current generating capacity, which, when combined with proposed new power projects, the expansion of energy efficiency programs, and provincial policies for clean renewable energy levels, increases the uncertainty for the outlook of the region’s electricity operations.

The profile of the Atlantic electricity industry consists of crown-owned utilities in NB and NL, investor-owned utilities: NSPI in NS, and Fortis’s subsidiaries in PEI and its retail distribution utility on the Island of Newfoundland. There are two system operators: the functionally unbundled NSP System Operator, and the independent NB System Operator. Each of the provinces has a provincially legislated utility regulator, and the federal government has the National Energy Board.

Atlantic Canada is a relatively small electricity marketplace with approximately 8900MW of generating capacity, not counting the Upper Churchill Falls output of 5428MW, which is mostly exported to Quebec. Peak load demand for the region in 2010 was approximately 6700MW or 75% of capacity.

The Atlantic region, like other jurisdictions, has introduced policies and legislated rules that relate to cleaner sources of energy and reduced impacts on air emissions, and these policies and rules are beginning to have an impact on the existing portfolio of generation assets in all four Atlantic Canada provinces and on electricity costs, on future planning for new generation, and also on the operations and requirements of a regional transmission system.

This Paper contains a description of the regulatory systems in place in the Atlantic Provinces, and also other relevant regulators including the Federal Energy Regulatory Commission (FERC), the North American Electric Reliability Corporation (NERC), the Northeast Power Coordinating Council (NPCC), and the National Energy Board (NEB).

Increasing co-operation and coordination in the Atlantic provinces will require the examination of a number of approaches to system operations in the northeast region of North America.

Proposed new developments such as the Labrador Muskrat Falls hydro project, increased renewable power, expanded regional transmission between NB/NS, between NL/NS and PEI/NB, plus the implementation of FERC Order 1000 dealing with regional and interconnection planning, will likely require individual or multiple jurisdictions to review various components of the regional electricity system.

As the Atlantic Provinces and utilities look to the future of system operations, the completion of new and expanded transmission capacity and linkages will be a very important factor in determining the needs for greater regional co-operation and shared opportunities to increase efficiencies and generate savings for consumers. A number of approaches to systems operations could be considered, collectively and individually, in addition to the changes that are currently underway with the “status quo”: 1) enhanced regional systems coordination; 2) independent system administrator; and 3) independent system operator.

Planning in the Atlantic region is primarily within the control of the individual utilities, except in NB where the NBSO currently has the legal responsibility as resource planner and reliability planning coordinator. However, NBSO’s role will be significantly changed under the recently announced NB “Energy Blueprint,” which commits to integrating the independent system operator back into NB Power.

The planning function is a key ingredient of the United States FERC and NERC regulatory planning functions, where significant effort is being placed on creating a standard that strengthens interconnection compatibility and reliability. Therefore, as a member of NERC and being interconnected to the US system, the Maritime region must also meet the reliability standards of NERC.

Increasing regional electricity and clean renewable energy co-operation could achieve potential efficiencies and cost benefits to consumers and industry, and expand economic opportunities and benefits for the region. Implementation considerations and some areas that could be reviewed in exploring increased coordination are:
i. existing generation and transmission structures and policies;
ii. examining opportunities for regional planning for expanded renewable energy
sources to maximize market competitiveness;
iii. planning for future system operations on a regional basis; and
iv. harmonizing certain regulatory functions, while ensuring the Atlantic region
maintains its close regulatory, reliability, and business relationships with the northeast USA and related agencies.

Increasing co-operation and coordination by the Atlantic provinces’ electricity sectors could become the start of an Atlantic Canadian power market that is more competitive, both locally and internationally.

View related Atlantic Energy Gateway studies.