Thank you, Mr. Richardson, for the invitation and the opportunity to speak to the committee.
I'm going to just explain what the New Brunswick System Operator is and talk about some issues on the concept of “green”, some opportunities in Atlantic Canada, what some of the challenges are that we face, and what I think is the role of the federal government.
First of all, New Brunswick System Operator is a not-for-profit, statutory New Brunswick corporation. We have an independent board. We were created under the Electricity Act in New Brunswick two and a half years ago. The key point here is that we're not a subsidiary of the NB Power group of companies, although I used to work for NB Power when I knew Mike years ago. But we've been carved out. We are an independent entity similar to the Alberta Electric System Operator in Alberta and the Independent Electricity System Operator in Ontario, which were carved out of those utilities.
Our duties are specifically to reliably plan and direct operations of the integrated power system and to facilitate and operate the electricity market. In addition to that, we are the reliability coordinator for the Maritimes area. We operate out of Fredericton. Now, as a reliability coordinator we are one of only 18 entities across North America that operate the bulk power system. Although we're one of the smaller ones—I think we're the second smallest—we're not the smallest. Saskatchewan is actually the smallest operator. We operate the Maritimes area.
The Maritimes area is made up of New Brunswick, P.E.I., Nova Scotia, and portions of the state of Maine, which are electrically connected only into Canada. They are electrically isolated from the rest of the United States. So, electrically, they form part of the Maritimes of Canada. It's a very interesting area to operate in, because even though we're a small region, we deal with three provinces, one state, two federal governments, and six regulators. So there are some complexities in terms of our interaction.
In terms of the concept of “green”, there are various definitions you could look at, whether it's EcoLogo-certified, which is really a program designed to encourage alternative technologies, and large hydro or storage hydro doesn't count. You could look at whether it's all renewables or whether it's any low emission source.
My view is that the real issue we have ahead of us in this country and around the globe is reducing total emissions to address climate change and air quality. In that sense, I think the concept of “green” that we should be pursuing—I would urge this committee to consider in your mandate—is its long-term sustainable energy supply with minimum environmental impact. That may not mean no emissions but a reduction and lower emissions.
In Atlantic Canada we have a number of opportunities to contribute to that long-term goal. We are continuing to pursue a number of distributed resources through conservation and demand management. I think a big area that we need a lot more work in is storage, and I think that's an area the whole electricity sector needs a lot of work in if we're going to accommodate a lot of these renewable technologies.
The other one is there's a clear opportunity in Atlantic Canada for alternative technologies, particularly tidal and wave, as well as solar and other. I know Chris Campbell on the line here will be talking about tidal and wave energy, I'm sure.
In Atlantic Canada the contributions we can make to climate change and the reduction of emissions mainly come through large projects, and the large projects that are there are the lower Churchill, hydro, plus wind in Labrador.
We have a world-class wind resource in Atlantic Canada, and across the region we have an untold potential. The issue is limited by what you can integrate into the system and what you can actually operate, but throughout the region we could probably do 4,000 to 5,000 megawatts if we can come up with the technologies and the ability to balance and accept that.
Also, concerning nuclear, New Brunswick is looking at a second nuclear unit at Point Lepreau, which again would contribute no greenhouse gas emissions.
We have the opportunity for low-emission natural gas co-generation plants with the LNG facility in Saint John and with the second refinery in Saint John. We have a number of opportunities for smaller biomass projects.
Combining all those in the region, there is a potential to reduce fossil fuel emissions by up to about 30 million tonnes of carbon dioxide.
Also, we sit on the edge of the New England market, so there are power and greenhouse gas emission credits available in that marketplace. This is attracting projects today in Atlantic Canada. Wind and biomass projects are being constructed for export to the U.S. and for selling credits to those markets.
Also, those markets are projecting shortages of power in the future. And they have siting issues for new plants, so one of the options ISO New England has looked at is increased export of low-emission energy from Canada.
The challenges we face, and that I think this committee faces in terms of a program for the greening of electricity use in Canada, are that, first, the way we're structured in this country is that electricity and energy are essentially a provincial matter. The jurisdiction of the federal government in electricity use is limited. So we actually have 10 or 12 different entities dealing with electricity policy. That makes it a little more difficult to come up with a national strategy.
There is an absolute need for non-discriminatory transmission access. Again, as electricity is a provincial matter, transmission tariffs and transmission access differ from province to province. It's not one common tariff or one common set of rules. There are different rules in different areas. That's because, again, in Canada, we don't have the equivalent of a Federal Energy Regulatory Commission as they do in the U.S.
Another point is that our transmission systems in Canada have grown up province by province. Most of our interconnections are north-south, with the United States; they're not east-west. So the benefits of low-emission sources that exist in provinces that are blessed with large hydro resources, from an environmental climate change viewpoint, flow to the United States rather than to adjacent provinces in Canada. That's partly because of transmission limitations and partly because of market opportunity for credits.
Certainly, much more of the hydro availability in B.C., Manitoba, and Quebec goes south to the bordering states than goes east-west into bordering provinces. Along those lines, we need greater interprovincial and federal cooperation to develop the infrastructure here to get the greatest value out of low-emission resources in Canada.
As an example, I could talk about the lower Churchill and look at where lower Churchill power will flow or at what the opportunities are for it.
Newfoundland and Labrador Hydro has transmission applications into Hydro-Québec TransÉnergie to study taking that power into Quebec, and through Quebec into New England, New York, Ontario, and New Brunswick.
We also have two transmission applications into New Brunswick System Operator—we administer the tariff in New Brunswick—to take power from Quebec, Labrador power, through New Brunswick and into the U.S. market or underwater from Newfoundland into New Brunswick.
On the ocean route, the lower Churchill would flow across into Newfoundland. You'd be able to shut down the Holyrood power plant, so there would be zero emissions out of Newfoundland from fossil fuel. You could take power into the Maritimes that could help shut down fossil fuel generation in the Maritimes and then have some additional power to go to the U.S.
My view is that the best solution for Canada, and likely for Newfoundland, is to do both of those options. They have so many resources in Labrador that you can't take it all in one direction or the other. It has the greatest benefit going both ways. To do that, of course, we need the eastern route to Newfoundland and down into the Maritimes.
The wind generation area is another challenge on which we have done a significant amount of work. Everybody acknowledges that the benefits of wind are increasing. It has public support and low emissions, but there are operational issues that are a concern for system operators.
In Alberta, they've placed a threshold on the amount of wind until they can resolve the operational issues and get the resources in place to be able to balance it and accept more. We're looking at the same things in the Maritimes.
The question we're faced with is, how do we accommodate as much wind as possible into the power system with the least economic and reliability cost? Reliability has to be number one. We have to continue to be able to provide reliable electricity for our societies.
To give you an idea, in maritime Canada we have the potential for 1,500 megawatts of wind. Mostly it's not just potential. I have an expectation that we will have 1,500 megawatts of wind in the Maritimes area by 2013. That's 25% of our peak load and 60% of our valley load. We will be the most heavily penetrated wind system in the world, other than Denmark, without all of the European Union and Scandinavia to help balance it, because the rules are a lot tighter in North America and you have to balance region by region.
What are we doing with that? We've done a lot of detailed wind integration studies. We've been working for the last two years and have reports that will soon be available. We're setting interconnection standards. We're working to do that on a national basis, so that all utilities across the country will have very similar standards for wind to interconnect into the systems. We're defining the rules for tariff and the market roles.
We're proposing that because of the multiple regions, the extra cost of integrating wind should be charged back to the wind projects. It's the only equitable manner, and then projects exporting out of the country are not going to be subsidized by local load customers.
We need to get these rules in place to provide certainty for developers as well as operators. We need technical solutions too. We need to include load customers into the operation of the power system on a much wider range. We need the ability to control end-use load.
Electric water heaters, for instance, could provide great storage opportunities to help balance wind and operate the system more reliably. We're doing studies to that effect with Saint John Energy in New Brunswick.
Storage is a key technology that we need. We need more industrial market participation, similar to what's going on in Ontario, where large industrial customers are bidding into the market and providing services to the marketplace.
Most of all, we need greater interconnection support. To do that requires regional cooperation. To that end, we are working through committees that are presenting resolutions to the New England governors and eastern Canadian premiers as to how we can accomplish more renewable integration into the system through the cooperation of the New England states and eastern Canada. Those resolutions will be presented to the governors and premiers at their meeting in P.E.I. at the end of June.
Lastly, what role can the federal government play with limitations and jurisdiction? Clearly there is a very strong role for support for R and D.
Wave and tidal energy is a major area that needs a lot of support in terms of development. It has a great deal of opportunity into the future.
Load control and storage technology are others that we need to work on. I must say that with all of the studies on the integration of wind, and the studies we've done, we received some funding from ACOA. I thank the federal government for that, in terms of a lot of the integration studies we have done. There's a need for more of those studies on a regional basis—not province by province but looking at the larger effect across the region.
There's an opportunity for the federal government to take a lead on east-west transmission, to fund it and work as a broker between the provinces and jurisdictions, because this is a plank that should be part of a national strategy on climate change, in order to get the greatest value of reduced emissions across the country.
I think there's an issue of CO2 and what the rules are going to be. We have an intensity target out there now with a couple of years. We need more than that. We need clear rules, we need targets, we need schedules, and more than that, we need trading systems in place so that power plant developers can then have the information to make the business decisions they need to value the low emissions and the credits so that they can fund these projects and get them to market.
Finally, again, I think you need to continue your financial support. I think there's a role in terms of sharing the risk in the development of some of these projects. Most of these low-emission sources come from projects that are high capital, that are upfront capital. So you have to spend all the money up front and then operate them over the long term, where you have to do the underwater HVDC long-term transmission. There are risks associated with those that I think the federal government could help to share in with the financing that would help to get some of these projects to go forward.
On that basis, I'd like to thank you very much for the opportunity to talk. Merci.