Canada has achieved the impossible in energy economics: Our consumers pay sky-high costs and our energy companies get rock-bottom prices.
For example, B.C. motorists recently paid what might be the highest gas price in North American history, at about $1.70-a-litre. Meanwhile, in neighbouring Alberta, the petroleum industry has lately received the lowest oil prices in modern history.
With no new pipelines to tidewater, Western oil can’t earn world prices. And with insufficient east-west pipeline capacity, it can’t reach Eastern refineries either. So in the West, Canadians sell low to the Americans, while in the East we buy high from Saudi Arabia and Algeria. “Over the last 10 years, Canada has spent $20.9 billion on Saudi crude,” reported the National Post, last year.
Same with electricity: Hydro-Québec is trying to sell more low-priced power into the northeastern U.S. for a fraction of what Ontario consumers are forced to pay next door.
Everywhere, we buy high and sell low.
Canadian consumers could pay less, and our companies could make more, if Canadians could sell energy to each other.
What stops them?
Mostly government. Environmental assessment reviews are long, expensive and unpredictable. When Trudeau took office, three massive projects to tidewater were ready to go: TransCanada’s Energy East, Kinder Morgan’s Trans Mountain, and Enbridge’s Northern Gateway. All three companies have abandoned the projects because of governmental delays.
How do we fix the problem?
Andrew Scheer proposed a Canadian solution: a National Energy Corridor.
“Rather than have industry submit complicated route proposals for every new transmission line and pipeline project, we could have a single corridor — planned up front and in full consultation with the provinces and with Indigenous Canadians who would share in the prosperity that it would provide,” he told the Economic Club of Canada recently.
Some will assume that Quebec will oppose the corridor. Not necessarily. Since the Harper government approved the Line 9 Reversal and Capacity Expansion (which allows more Prairie oil to travel eastward), Western Canadian oil has grown to 44 per cent of Quebec’s total crude imports. Yet, the province is still getting 56 per cent of its crude (or 66 million barrels) from the U.S., Algeria and Azerbaijan. An east-west energy corridor could replace that foreign product with cleaner and cheaper Canadian energy, while boosting a Canadian industry that pays taxes toward national programs Quebecers enjoy, like Employment Insurance and the Canada Health Transfer.
Plus, the corridor would go both ways. Transmission lines could allow Quebecers to sell their abundant and pollution-free hydroelectricity to Ontario. Hydro-Quebec is planning major new energy corridors to the northeast United States, but faces opposition from some anti-energy environmentalists (sound familiar?) and competition from cheap natural gas-powered electricity. “Without exports, our profits are in trouble,” Hydro-Quebec CEO Éric Martel said in the Financial Post.
Look next door.
Ontario needs what Quebec is selling. “Pierre-Olivier Pineau, a professor at HEC Montréal, said (Hydro-Quebec) can generate power from its reservoirs at around two cents per kilowatt hour (KWh). By comparison, it is estimated that it would cost Ontario at least eight cents per KWh to extend the life of its two nuclear facilities,” reported the Financial Post. Quebecers can boast of the “lowest electricity rates in North America. In 2017–2018, they will pay half the price of customers in Toronto,” reports Hydro-Québec.
Ontario’s energy problems are only getting worse. The province faces massive pay-outs for unreliable and overpriced wind and solar contracts, signed under the Wynne-McGuinty governments, that the province’s auditor general forecasted will cost consumers $133 billion in over-payments between 2015 and 2032. To escape this rip-off, Ontario will need another source of market-priced electricity.
Ontario could pay less and Quebec could make more if an energy corridor connected them.
Business would not need taxpayer assistance to build along the corridor: Pipelines, rail lines and transmission lines are profitable commercial infrastructure funded by user fees on energy companies.
Government’s role would be to clear the regulatory approvals along the right-of-way and let it happen. If business takes it up, we’ll have a win-win-win: Jobs for Western energy workers, Eastern refinery workers and Ontario steel workers; transmission lines to get affordable, pollution-free Quebec and Manitoba hydro to other Canadians; and billions of tax dollars for hospitals and schools.
Let’s act like a real country and get power to the people.