L'ouverture du marché d'exportation d'électricité québécoise: réalité ou mirage à l'horizon?

Jean-Thomas Bernard () and Joseph A. Doucet

Canadian Public Policy, 1999, vol. 25, issue 2, 247-258

Abstract: Worldwide the electricity industry is undergoing a substantial process of restructuring. The most significant aspect of this process is the introduction of competition in the production sector. The principal objective is cost reduction, which should eventually lead to lower electricity prices. In the United States bulk power markets, that is, markets involving transactions between producers and distributors, have been open since the beginning of 1997. Hydro-Québec believes that this opening represents an opportunity for it to increase its sales in the northeastern US. This belief is based in large part on the considerable differences between electricity prices in the latter market and in Quebec. In this paper we outline two factors which we believe will limit profitable exports of electricity by Hydro-Québec. The first is the fact that transmission on Hydro-Québec's grid must now be priced at the average system cost. The second is the fact that Hydro-Québec's domestic tariffs continue to be pegged to the average cost of production which is lower than the system marginal cost. This implicitly encourages domestic consumption rather than exports. Both of these factors illustrate the importance of correct price signals for efficient resource allocation.

Date: 1999
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Working Paper: L'ouverture du marché d'exportation d'électricité québécoise: réalité ou mirage à l'horizon (1998)
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