• Number of energy Regulators in the world:
  • 303
HOME »CountryFactsheets »North and Central America »Canada



Electricity Market
Sector structure
Upstream
Most of the generation companies in Canada are crown corporations and electric utilities are mainly owned by the provinces. Most of the generation provided in Alberta is privately owned.

There are more than 18 major power generators in Canada. The major companies include: Ontario Power Generation (OPG), ATCO Power, BC Hydro, Manitoba Hydro, SaskPower, NB Power, NovaScotia Power, and Hydro Quebec. These companies hold nearly all or close to 85-90% of the market share in their respective provinces.

Domestic production exceeds domestic demand in Canada. Canada is a net exporter of electricity to the United States.

The wholesale market organizational model varies by province. British Columbia, Saskatchewan, Quebec, Manitoba, New Brunswick and Alberta adopted a competitive wholesale market.

There is a mandatory electricity power pool in Alberta.

Electricity pricing varies by province or territory In Alberta electricity prices are more market-based compared to other provinces and territories. Ontario has chosen to partially restructure its electricity market. Prices in other provinces and territories are set by the electricity regulator to cover costs and allow for a reasonable rate of return to investors.

Some of the companies are vertically integrated, while other have functionally separate generation, transmission and distribution entities.

The unbundling regime varies considerably by province. In Quebec, Hydro Quebec owns and operates most of the electricity in the province and it is a functionally unbundled entity. Saskatchewan, Manitoba, NovaScotia and Ontario are also characterised by functionally separated electric utilities. BC Hydro which serves the majority of British Columbia is a vertically integrated utility.
Networks

Transmission and distribution segment is partially privatised. Owned by the vertically integrated utilities.

Canada’s transmission network is a highly complex interconnected system. There are about 35 major provincial inter-connections and over 100 international transmission lines.

Several provinces in Canada have adopted the Open Access Transmission Tariff (OATT) which allows independent power producers to bid on new generation development and use the transmission system to gain access to wholesale markets.

British Columbia and the American regions are in the process of developing a Regional Transmission Organization (RTO).

In Ontario and Alberta, transmission grids are operated by an ISO.

The unbundling regime varies by province: most electric utilities are vertically integrated.
Downstream

The supply segment is partially privatized.

The market is partially opened to competition:

  • Ontario: Electricity market opened for wholesale and retail access since May 2002.
  • Alberta: A competitive wholesale market which is facilitated by the Alberta Electric System Operator (AESO) and the Market Surveillance Administrator (MSA). Alberta also has retail open access since 2001.
  • British Columbia and New Brunswick: Wholesale and Industrial Open Access.
  • Nova Scotia, Quebec, Manitoba, Saskatchewan: Wholesale open access.

End-user prices varies by province:

  • British Columbia – cost-based rate structure
  • Alberta: Consumers can purchase power through regulated companies or through contracts with energy retailers
  • Saskatchewan – rates are reviewed by the provincial regulator
  • Manitoba – rates regulated by the provincial regulator
  • Ontario: provincial regulator regulates the rates but consumers have the option of switching to market rates through an energy retailer

Quebec – rates are approved by the provincial regulator:

  • New Brunswick – regulated rates
  • Prince Edward Island – follows a cost-of-service rate regulation model

The unbundling regime varies by Province.
Gas Market
Sector structure
Upstream Vast proven gas reserves (57.9 trillion cubic feet (Tcf) of proven natural gas reserves in January 2007). In the same period it produced approx. 6.5 Tcf while consumed 3.2 Tcf and exported the remaining production to US representing 86 percent of total U.S. natural gas imports that year.

Most Canadian natural gas exports enter the U.S. through pipelines in Idaho, Montana, North Dakota, and Minnesota.

Most of Canadian gas production comes from the Western Canada Sedimentary Basin (WCSB) - particularly in Alberta – contributing almost 98 percent of the total gas produced in Canada and will remain the mainstay for the outlook period. The remaining 2% of production is provided by the offshore Nova Scotia field.

Merchant functions have been separated by transmission functions since the 1985 when deregulation in Canada gas industry started. In that period, an agreement among the producing provinces (Alberta and Saskatchewan), the government of Canada and the consuming provinces (Manitoba, Ontario and Quebec) changed how natural gas would be bought and sold in Canada.

Prior to this agreement, TransCanada PipeLines acted as merchant for all the producers in western Canada, overseeing the sale of natural gas in eastern Canada, while the government of Canada determined the price of natural gas to be charged to end-use consumers.

As a result of this agreement, on Oct. 31, 1987, TransCanada PipeLines separated its merchant function from its transmission function, and consumers of natural gas in Canada were free to purchase their natural gas supplies from whichever producer they chose.

The largest integrated operator in the country is Imperial Oil, majority owned by ExxonMobil. Other major companies are Shell, Petro-Canada, Suncor, Talisman Energy. In 2002, Alberta Energy Company and PanCanadian Energy merged to create EnCana, Canada's largest independent upstream operator.

Wholesale price are market-based.
Networks Transmission, distribution and storage are partially privatised.

The Canadian gas market is served by several major transmission pipelines, which also interconnect with the U.S. pipeline grid at about a dozen export points. The privately owned TransCanada Pipelines is the largest operator, owning a 25,600-mile network that includes several province systems (the 13,900-mile Alberta system, the 120-mile British Columbia systems, the 8,900-mile Canadian Mainlline system, and the 600-mile Foothills system).

6 gas export pipelines connect Canada and US natural gas systems.

In Canada, the majority of gas storage is split between Ontario, in the east and Alberta, in the west. In Alberta, storage facilities are owned by utilities, midstream companies, pipelines and producers, whereas in Ontario, storage facilities were developed and are owned primarily by utilities.

Natural gas distribution utilities in Canada have been given franchise areas to serve customers. Generally, local municipalities grant a franchise of the natural gas distribution company to serve the residents and businesses of their municipality for a specified period of time.
Downstream The market is full liberalised since 1987 and end-user price are market based.
Current issues Regional integration. The increasing interdependence between Canada and US electricity networks, as shown during the 2003 Northeast blackout, make necessary efforts to increase coordination and cooperation. An Electric Reliability Organization, an intergovernmental organization, will be established to monitor network reliability, settle trans-border disputes, and formulate common industry standards.

Development of inter-provincial and international electricity trade is a key factor for ensuring new entry and effectively competition development within provincial and regional markets.

Supply is adequate in all regions during the 2005-2006 period, however, action must be taken to soon to ensure supply adequacy in future such as, diversity of generation options (i.e. natural gas-fired, renewable energy, as well as nuclear generation) increase inter-regional trade, and promote demand-side initiatives.

Several proposals for pipelines to deliver gas from either Alaska or the Mackenzie Delta are under discussion (the Mackenzie Gas Pipeline Project, proposed by a consortium of natural gas companies led by Imperial Oil Resource Venture Limited and the Alaskan Pipeline/LNG export project. These proposals, if approved, would provide access to additional gas supply and would utilize the existing pipelines throughout western Canada.

While a number of proposed LNG projects are being considered – in particular, to provide additional gas supply and storage for Western Canada growing market - none will be in operation by 2007.

Promotion of renewable and efficiency: main drivers are the government incentives to green generation, such as, the federal Wind Power Production Incentive (WPPI) plan, and the coming into force of the Kyoto Protocol (as an Annex I country, Canada has pledged to reduce its carbon dioxide emissions to 6% below 1990 levels by 2012). The Canadian government plans to spend over C$6 billion to meet the Kyoto requirements, chiefly by purchasing over C$1 billion worth of emissions credits, greater investment in green technologies, and tax credits for industrial reductions in carbon dioxide emissions.
National Legislation Acts and Regulation available on the National Energy Board website
Sources Canada electricity Association (electricity market) IERN staff on publicly available information (gas market)