Montreal, January 17, 2004  /  No 136  
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Harry Valentine is a free-marketeer living in Eastern Ontario. He can be reached at
by Harry Valentine
          Several recent reports on climate change have forecast more winter rainfall, more winter ice storms, more freezing rain in winter, reduced summer rainfall, more frequent summer drought and reduced summer time hydro electric generation capacity. Canada is heavily dependant on hydro-electricity, with power dams being located in every province except Prince Edward Island. Canada's ratification of the Kyoto Protocol could curtail coal-fired electric power production in several Canadian provinces. Climate change and political behaviour risk causing future power shortages in several regions of Canada.
          Government bungling of "deregulation" of electric power has caused problems in both Alberta and Ontario. Both Alberta premier Klein and former Ontario premier Eves "deregulated" electric power, by making cosmetic changes to regulatory regimes that essentially remained intact along with the regulatory tribunals. Electric power prices subsequently escalated in both provinces, the result of previous government control over electric power generation. Ontario subsequently froze electric power prices while Alberta provided rebates to users. Both provinces have shown how government economic control creates shortages and/or market chaos. Their "deregulation" debacles now risk threatening future economic development in both provinces. New Brunswick's intention to "deregulate" its electric power market beginning in April, 2004, will likely duplicate Ontario's and Alberta's debacles. 
Dropping water levels 
          Canada's economic power house, Ontario, generates 35%-40% of its hydro-electricity on rivers on the Great Lakes system. Water levels in these lakes are projected to drop by over 2-metres (6-ft) over the next century, while the system's water flow rate is projected to drop by 50%, both due to less summer rainfall and increased summer evaporation rates. Ontario's future summer-time hydro-electric power generation may drop by some 20%. The government-owned utility has incurred an accumulated debt of over $30-billion, a politically-incurred liability that may constrain Ontario's ability to construct new state-owned electric power stations at a time when the province intends to close its coal-fired power stations in 2007. A powerful pro-regulation lobby vehemently opposes any form of deregulation or privatization of electric power in Ontario, despite the province urgently needing to generate more electric power or risk sending its economic future straight down the St. Lawrence River into Quebec. 
          Northern Quebec's higher elevations receive high levels of summer time rainfall, caused by winds picking up moisture over Hudson Bay and James Bay. This summer rain supplies water to most of Quebec's hydro-electric power stations. Polar temperatures are projected to rise to a greater degree than temperatures at the equator, causing warmer winds to blow over warmer water in Hudson Bay and James Bay. Quebec still may receive sufficient future summer rainfall to sustain the province's projected hydro-electric power generation potential of over 45,000-Mw. Quebec also has an estimated 2,000-Mw of future wind generated electric power potential, as well as low-grade geo-thermal energy. Quebec's abundance of renewable energy potential and the revenue that it earns may underlie its government's reluctance to deregulate or privatize electric power production. 
          In Canada's maritime provinces, Newfoundland depends heavily on hydro-electric power, while Nova Scotia, New Brunswick, Prince Edward Island as well as Alberta and Saskatchewan depend on fossil fuel to generate electricity. Rising oil and natural gas prices have raised electric power prices in several provinces, despite Saskatchewan and Alberta also generating electricity at coal-fired power stations. Canada's windswept and often rainy coastal regions have high potential for ocean wave generated electric power conversion. The west coast of Ireland has several successful installations of small-site ocean wave power stations, a technology that could be adapted for use at several Canadian coastal sites.  
     «Without state control, entire neighbourhood local alternative electricity energy networks could develop in upscale areas and operate independently of the state-regulated grid.»
          Canada's Atlantic and Pacific coastal regions are blessed with an abundance of bays, coves and inlets that can be used to generate tidal electric power. Inlets such as BC's Masset Inlet (Queen Charlotte Islands), Nova Scotia's Minas Basin (Bay of Fundy), Lake Bras D'or (Cape Breton), Saint John (NB) or Charlottetown (PEI) have narrow channels connecting large inlets to the ocean, enabling lower cost installation of tidal energy conversion equipment. Canada's rainy coastal regions feature many rivers capable of generating small-site hydro-electric power, while the strong coastal winds allow for the installation of wind turbines on many of a vast number of small, uninhabited coastal islands and desolate coastal areas. Electricity generated at such sites by private companies may be sold to unregulated local power markets or used to produce hydrogen for export. 
          A private operator in Springfield, Nova Scotia, has successfully used low-grade geothermal energy from ground water that flooded an abandoned coal mine, to heat industrial buildings at reduced cost during the winter months. Saskatchewan and Alberta have large amounts of easily accessible low-grade geothermal energy in dry oil wells and in disused mines. Over 10,000 such wells exist in Alberta, where the temperature at the lowest levels of several wells is near the boiling point of water. During winter, heat from these wells can heat buildings or be used to generate electricity using a technology similar to OTEC (Ocean Thermal Energy power Conversion). Abandoned mines located near numerous Canadian populated centres hold similar promise. Summer heat rejected from large air-conditioning systems could be deposited in such underground reservoirs, for use in winter. All of this represents future opportunity for private, unregulated businesses. 
          In regulatory-free energy environments, combined heat and power (CHP) power stations could operate in industrial areas, burning a fuel such as natural gas, garbage or biomass. During winter, industrial customers would receive the power stations' reject heat for building heating along with the electricity, at lower overall energy costs. During summer months, reject heat from steam power stations could power vacuum refrigeration systems, a large-scale technology that uses water as a refrigerant and provides lower cost air-conditioning to cool buildings. Reject heat from non-steam thermal power stations could drive new generation absorption coolers to supply summer-time air-conditioning to buildings. Unregulated CHP power stations could be privately built in many parts of Canada and be connected to local clients by underground electric transmission cables. 
          A very small yet increasing number of Canadian homes are generating their own electric power from wind, micro-hydro and solar photo-voltaic installations. Insulated cookware and LED lighting are common in such homes. Emerging technologies such as solid-oxide fuel cells (SOFC's) convert natural gas into heat plus electricity. The heat can power absorption refrigeration or a variety of heat-driven air-conditioning technologies, or provide home heating. Technologies such as Stirling engines, solid-state thermo-electric converters and thermo-acoustic engines can generate electricity from heat sources such as wood or pellet stoves during winter, concentrated summer solar heat or heat from thermal energy storage technology. Private Canadian homeowners are prohibited by regulation, from connecting unregulated private power lines across property lines. Without such state control, entire neighbourhood local alternative electricity energy networks could develop in upscale areas and operate independently of the state-regulated grid. 
How to regulate 
          The political bungling of electric power "deregulation" in Ontario and Alberta led to rapidly rising prices and a subsequent consumer uproar. Both provinces initiated their deregulatory escapades during periods of near electric power shortages, which caused power prices to escalate following the bungled deregulation. Deregulation ultimately has to involve the closing of the regulatory tribunal, as well as the repeal of all economic regulations pertaining to the generation and sale of electric power. This is best undertaken during a surplus of low-cost electric power. With its relative abundance of electric power potential, Quebec could more easily deregulate and privatize its electric power production, with few political and economic upheavals. 
          To save political reputations, a pre-deregulatory transition period may allow new unregulated, small-site power producers to supply a variety of local markets. Unregulated CHP power stations, serving industrial and commercial customers in industrial areas, would allow new players to increase the power supply. Such power stations could also serve new rental residential developments and new housing subdivisions. Homeowners generating power need to be free to connect power lines across residential property lines, to supply power to their neighbours. Large number of unregulated, competitively-priced, small-site power producers entering the market prior to total market deregulation, could sufficiently increase the supply of electricity so as to moderate post-deregulatory power price upheavals.  
          Ontario has recently shown that cancelling electric power deregulation will still involve power price increases, possible future power shortages and a potential loss of future economic development. Unless a sensible transition is made into a regulation-free electric power regime, Alberta, Saskatchewan, New Brunswick, Nova Scotia and Ontario will likely experience drastic future power shortages. 
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