October 23, 2012

Atlantic power deal could cut customer costs, preserve provincial control

A regional agreement among the Atlantic Provinces to use the lowest cost electric energy available and share generating reserves would produce savings for customers and greater operating efficiency, according to a new report released by the Atlantic Institute for Market Studies (AIMS).

The report, Regional Cooperation in Electricity Exchanges in Atlantic Canada: Steps Toward the Creation of an Atlantic Power Pool, written by Gordon L. Weil and Ross McEacharn, both of whom played key roles relating to the New England Power Pool, finds that such an agreement could bring significant benefits to all four provinces.

“Atlantic Canada has been seeking ways of increasing cooperation in the electric sector without sacrificing provincial control over utilities, and the authors lay out the path toward achieving that objective,” says AIMS President and CEO Charles Cirtwill.

Weil and McEacharn note that Atlantic Canada has discussed for many years how to operate their electric utilities to achieve greater efficiency.  Talks have focused on the current U.S. market model, in which utilities may lose control of their generators, but have not produced a result.

A regional approach “must limit change from the current structure as far as practicable, while ensuring increased opportunities for greater economy and efficiency,” the authors say.  They find that a power pool model, which predated today’s U.S. markets, could work well.

With a pool, “economy energy” could flow among provinces, while utilities would operate virtually the same as they do today.  Fewer generators would be needed to be kept in reserve.  The result would be savings that could be passed on to customers.

If the Muskrat Falls project is undertaken with new transmission lines linking both parts of Newfoundland and Labrador to the North American grid, the authors find the power pool could help assure short-term power sales from the proposed hydropower resource.

The New England Power Pool operated for more than 30 years.  McEacharn headed its power exchange, and Weil led the negotiations that produced its single transmission system.


Read the full report here

For more information please contact:

Gordon Weil
Atlantic Institute for Market Studies
207-833-6891 or 207-841-0334