John Partridge
The Globe and Mail
March 8, 2005

Canada has enough electricity to meet demand for the time being, but even power-rich Quebec and British Columbia face potential problems down the road, Toronto-Dominion Bank says.

In fact, like most other regions across the country, Quebec and B.C. have already experienced a deterioration in supply-demand positions in recent years as shown by a combination of declining power exports, rising imports and dropping reserve margins, TD said yesterday in a report on electricity in Canada.

"We hear a lot about Ontario . . . but even provinces that we think of as being very rich in terms of electricity supply are also looking at challenges going forward," TD senior economist Derek Burleton, one of the study’s authors, said in an interview. He was alluding to the August, 2003, power blackout that paralyzed Ontario and eight U.S. states, as well as warnings by the province that demand for electricity will outstrip supply as early as 2007 if present trends continue.

As well as seeking out new sources of supply, the electricity sector will need to spend massive amounts of money to upgrade aging power transmission and distribution networks, while major expenditure also will be required just to accommodate soaring economic growth in such areas as Alberta, Newfoundland and Labrador and the Northwest Territories, the report said. It cited a 2003 estimate by the Canadian Electricity Association that it will cost a total of $150-billion in public and private funds over the next 20 years to make sure the power system is reliable.

However, government authorities also must encourage conservation, in particular by moving further toward market-based pricing for electricity, the report says.

It argues that electricity prices must be allowed to increase in order to improve efficiency, attract private sector investment and "hence assist in averting a full-blown power crisis in the longer run." Such a crisis, it added, "would almost certainly entail a much more painful price adjustment and more significant adverse economic impacts."

The report cites Alberta as a case in point. It says that after deregulation in the late 1990s, electricity prices initially soared by about 60 per cent but have since "fallen back close to their prederegulation levels, spurred by a surge in private sector investment in new [power] generation."

Mr. Burleton said ensuring the power system’s reliability is vital because it is "so fundamental to the future health of this economy and the quality of life."

The TD report came as Energy Probe, a Toronto-based energy watchdog, warned that "significant portions" of Ontario’s electricity transmission and distribution infrastructure have reached "an advanced state of disrepair" and, in some cases, "appear to present a danger to public safety."

In its report, Energy Probe criticizes the Ontario Ministry of Energy for ignoring the aging infrastructure issue in a review of transmission and distribution that it issued in December.

Energy Probe, a staunch opponent of nuclear power, contends that the system deteriorated on "a vast scale" because the former Ontario Hydro for decades "mined its transmission assets" and diverted funds that should have been invested in these assets to a nuclear generation program and to "uneconomic aspects" of fossil fuel power generation.