Electricity

Canada has one of the most diversified electricity generation bases in the world. Sources include hydro-electricity, natural gas, oil, coal and nuclear power, and renewable energy. The country also has some of the most competitive global electricity rates.

Electricity is vital to almost every aspect of the Canadian economy. It is projected to continue expanding its role. Between 1990 and 1997, net electricity generation increased at an average rate of 2.5 percent per year, compared with a real gross domestic product of 1.9 percent, and total population growth of 1.2 percent. Canada's electric power industry is made up of provincial Crown corporations, investor-owned utilities, municipal utilities, industrial own-use establishments, and non-utility generators that sell electricity to the grid.

In addition to the 17 major electric utilities, about 60 industrial establishments generate electricity, mainly for their own use. A few also sell energy to municipal distribution systems or utilities. These establishments are concentrated in three sectors: pulp and paper, mining, and aluminum smelting. In 1997, industrial establishments owned about six percent of total capacity and produced about eight percent of total electricity generated in Canada.

In addition to the major electric utilities and industrial establishments, there are about 350 smaller utilities across Canada. Eighty-five percent of them are located in Ontario. Most of the small utilities are owned by municipalities. They do not own generating capacity; instead, they usually purchase power from the major utility in their province. Several small investor-owned utilities, however, have their own generating capacity. In 1997, small utilities accounted for 1.5 percent of total Canadian capacity and produced 1.5 percent of the electrical energy.

The electric power industry has been a significant presence within the Canadian economy for more than a century. In 1997, almost 80 000 people were directly employed by the industry. Total revenue increased to about $26.8 billion in 1997 and revenue from exports were about $1.4 billion. The electric power industry contributed 2.9 percent to Canada's gross domestic product.

The electric power industry, furthermore, has a large investment share. In 1997, total capital expenditures were $5.5 billion. They accounted for about 27 percent of the total investment in the energy sector and 4 percent of the total investment in the economy. Total assets of the industry were about $145 billion. These assets accounted for about eight percent of the gross capital stock of the economy, excluding the residential sector. This reflects the capital-intensive nature of the electric power industry. Ontario Power Generation, Inc., Hydro-Québec and B.C. Hydro are the three most prominent electric utilities in Canada.

Resources and Capacity
Canada is not only a world leader in long-distance electric power transmission, but also the largest hydro-electric power producer. During the past 24 years, Canada's system increased from 43 GW to 113 GW, with an average annual growth rate of four percent. As shown in Table K, the Canadian system is predominately hydro, accounting for close to 66 percent in 1997. In contrast, total world generating capacity is mainly conventional thermal.

Canada ranked sixth in the world with an installed generating capacity of about 113 GW (behind the U.S., the Russia Federation, Japan, China and Germany), accounting for 3.7 percent of the world total. In terms of fuel type, Canada's hydro capacity is the second largest in the world, next to the U.S. Canada's nuclear capacity is sixth in the world, and its conventional thermal capacity, ninth. Canada's total generation rose from 205 TWh in 1970 to 537 TWh in 1995. This represented an average annual growth rate of 3.9 percent.

Demand
Canada's total electricity consumption grew rapidly from 1960 to 1974, followed by a period of low growth from 1975 to 1996. The abrupt change coincided with the first oil crisis in 1973 and 1974. It was mainly attributed to reduced economic growth, high energy prices and energy conservation efforts.

Although its market share has been declining, the industrial sector is still the major user of electricity in Canada. Of the total electricity consumed in 1997, about 41 percent was consumed in the industrial sector, 28 percent in the residential sector, 23 percent in the commercial sector, and 8 percent in transmission and distribution losses and producers' consumption.

In 1997, Quebec was the largest electricity user in Canada at 24 590 kWh per person, about 43 percent higher than the national average. This high electricity use is attributed to relatively low electricity prices and a high percentage of households (about 72 percent) using electricity for space heating. In comparison, Prince Edward Island was the smallest electricity user in Canada with 6749 kWh per person (only about 39 percent of the national average). Prince Edward Island had the highest electricity prices of the 10 provinces and a majority of households in Prince Edward Island, about 88 percent, used oil for space heating.

Canadian Centre for Housing Technology The Canadian Centre for Housing Technology opened on October 7, 1999 in Ottawa. Consumers, home builders and manufacturers will benefit from research taking place at this unique housing research facility. The Centre will encourage the development and use of innovative Canadian technologies in both domestic and export housing markets. The Centre is a $1.5-million partnership of the National Research Council Canada (NRC), Canada Mortgage and Housing Corporation and Natural Resources Canada. It has two research houses, which represent current single-family homes, plus a display-and-demonstration InfoCentre. The Centre is located at NRC's Ottawa Campus. Minto Developments Inc., Canada's largest production builder of R-2000 homes*, designed and built all three buildings. The research houses will evaluate the performance of innovative products and building techniques. Testing products under realistic conditions gives manufacturers and home builders a more accurate picture of the effectiveness of new products and techniques. * R-2000 is an official mark of Natural Resources Canada.

Trade
Electricity exchanges among countries can provide a wide variety of benefits to the consumers and the electric utilities of trading countries. Interconnections improve the economics and security of electricity supply, and reduce the level of capacity needed to meet peak loads. Interconnections also improve the flexibility of electricity supply. This makes it possible to minimize costs by replacing the highest-cost generation, such as oil-fired generation, with imported hydro-electric energy.

Access to U.S. markets increases the security of power supply by: permitting mutual emergency backup; lowering generating capacity needs by taking advantage of the diversity of the loads in Canada and the U.S.; and providing a profitable market for Canada's abundant energy resources. Exports account for 5 percent to 10 percent of Canada's total generation. They are sold primarily to the New England states, New York state, the upper Midwest, the Pacific northwest and California.

Pricing
Relative to other countries, Canada's electricity prices are highly competitive in the residential, commercial and industrial sectors.

Table L International Comparison of Electricity Prices

	Price (U.S. cents/ kWh*)
City	Country	Residential	Commercial	Industrial
Sao Paulo	Brazil	15 40	9 82	4 72
Brussels	Belgium	14 52	13 61	12 40
New York	U.S.	13 36	13 90	10 75
Los Angeles	U.S.	12 92	9 71	7 08
Boston	U.S.	11 84	10 50	8 93
San Francisco	U.S.	11 80	8 08	6 82
Cleveland	U.S.	11 47	11 66	7 57
Chicago	U.S.	10 30	n/a	7 84
Detroit	U.S.	9 32	9 16	6 90
Tapei	Taiwan	9 12	7 95	6 61
Baltimore	U.S.	8 62	7 50	6 18
Houston	U.S.	8 41	7 09	5 83
Halifax	Canada	7 56	7 97	5 15
Toronto	Canada	7 42	8 38	6 27
Regina	Canada	6 97	8 36	6 11
Portland	U.S.	6 20	4 84	4 08
Minneapolis	U.S.	6 11	5 48	4 54
Ottawa	Canada	5 78	6 08	5 35
Calgary	Canada	5 19	6 36	4 24
Montréal	Canada	5 19	7 09	4 17
Winnipeg	Canada	5 04	5 54	3 54
Vancouver	Canada	4 97	4 99	3 70
Seattle	U.S.	4 76	5 40	3 91

* kWh kilowatt hour

Source: Canadian data were obtained from the Energy Resource Branch, Natural Resources Canada. Data for other countries were obtained from a survey undertaken by the Energy Resource Branch, Natural Resources Canada, March 1997.
Note: Based on typical monthly consumption of 750 kWh.

Alternative Generation
Alternative sources of electricity generation include electrical generating capacity, owned and operated by producers, other than the major electric utilities. These are minor utilities (small private utilities and municipal utilities) or industrial establishments (pulp and paper, oil and gas, petrochemical, mining, and aluminum smelting operations). Most of the electricity generated by alternative generators is used to meet the producers' own needs. This reduces the demand placed on major utilities and frees up capacity. Since the 1980s, some independent power producers (IPP) have emerged to sell electricity under long-term contract to utilities.

As of December 31, 1997, alternative producers or non-utility generators (NUGs), had a total installed capacity of about 8232 MW (7.3 percent of Canada's total generating capacity). Industrial establishments owned 82 percent of this; the remainder was owned by small utilities and IPPs.

Outlook
In Canada, provincially owned and regulated electric utilities are being restructured. This is to meet the challenges of a more competitive, increasingly integrated electricity market in North America.

Non-utility generators are expected to play an active role in the development of Canada's electricity services in the next decade or two - especially where such generation is produced from renewable or waste resources.

Economic and population growth in Canada over the next few decades are expected to be lower than in previous decades. Electricity demand in Canada is projected to grow at the relatively modest rate of 1.7 percent per year. This low growth in demand, combined with adequate capacity, means that few utilities are planning major capacity additions over the next 10 years.