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Ontario and Québec announce new electricity trade agreement

Published on
October 21, 2016

Earlier this afternoon following a joint Cabinet meeting of Ontario and Québec, Premiers Wynne and Couillard announced a new Agreement to trade electricity, energy capacity and energy storage between the two provinces.  The stated purpose of the Agreement is to reduce greenhouse gas (GHG) emissions while making electricity more affordable and reliable for Ontarians.

The Agreement between Hydro Québec and the Independent Electricity System Operator (IESO) contains the following key elements:

  • Hydro-Québec will provide, for a duration of 7 years from January 1, 2017 to December 31, 2023, up to 2 TWh of energy per year to Ontario.
  • Hydro-Québec will supply IESO, throughout the duration of the Agreement, with 500 MW of energy to help Ontario meet its peak electricity needs for the summer.
  • IESO will supply Hydro-Québec, throughout the duration of the Agreement, with 500 MW of energy to help Québec meet its peak electricity needs for the winter.
  • IESO’s surplus renewable energy will be stored in the Hydro-Québec reservoirs during under-loaded intervals.
  • Hydro-Québec will return some of that energy to Ontario during the hours natural gas power plants in Ontario produce electricity, to reduce GHGs.

The provisions in the Agreement envision that the above attributes will be established in contracts, and that Ontario and Quebec may jointly agree by the end of March 2022 at the latest to continue seasonal power exchanges beyond the expiration of the Agreement (December 31, 2023).

Ontario has announced that as a result of this Agreement, costs for Ontario consumers will be reduced by approximately $70 million based on projects in the 2013 Long-Term Energy Plan (LTEP).  GHG emissions will corresponding be reduced by approximately 1 million tonnes per year.

The Agreement fulfills a Memorandum of Understanding between Québec and Ontario that was signed in September 2015, which stated that the provinces would explore the potential for increased electricity trade to help meet Ontario’s needs through Québec’s clean and renewable electricity supply.

Sussex will continue to following these developments very closely.  Please do not hesitate to contact us with any questions you may have.

Thank you.

‍

‍Chris Benedetti

Principal

Sussex Strategy Group

T: 416-961-6611 ext. 104

F: 416-961-9935

M: 416-312-8749

cbenedetti@sussex-strategy.com