July 16, 2014

What’s in it for Quebec?

One of the questions we frequently hear about the idea of increasing water imports to Ontario is “What’s in it for Quebec?”

Quebec Ontario benefitsAs it turns out, quite a bit. According to the Commission sur les enjeux énergétiques du Québec, which looked into the province’s energy future in 2013, the province will be exporting the majority of its power at low prices (about 3 cents per kWh) for the foreseeable future. That’s because shale gas and increased efficiency have put strong downward pressure on electricity prices in the U.S. Northeast, and because Quebec simply cannot export any more power during peak periods to the U.S. market due to transmission line constraints.

Quebec is hoping that new transmission lines will help it address the latter problem, but these lines will take some years – and hundreds of millions of dollars – to construct and not everyone on the U.S. side is welcoming of new transmission corridors through places like the Adirondack Mountains.

So what’s a province with a growing surplus of water power to do? Well, one idea is to split the difference between the price of Quebec’s exports to the U.S. and Ontario Power Generation’s forecast of the cost of power from a re-built Darlington Nuclear Station in Ontario (currently 8.3 cents per kWh). This would allow Quebec to earn substantial additional revenues – in the order of $600 million per year – without having to string a single kilometre of new transmission line.

While power prices on the open market rise and fall with cold winters and cool summers, Quebec’s expert panel was clear that the province needed to explore more options on how to maximize the benefit of its water power resources. What the Commission didn’t touch on was the fact that Quebec could also earn greater revenue by improving its energy efficiency, thereby freeing up even more water power for export without having to build a single new dam.

One of the best ways for Quebec to maximize the benefit of its water power resources is to strike a long-term deal with Ontario to replace high-cost nuclear energy. With both provinces struggling to tame difficult deficits and paying down large public debts, such a deal could be a real gift to both parties, saving Ontario at least $600 million a year and nearly doubling the price Quebec receives for its power.

For our full assessment, developed with the Quebec environmental organization Equiterre, of how both provinces will benefit from increased electricity trade, click here. And see the coverage of our recently released assessment by the Canadian Press and Le Devoir.

– Angela Bischoff