What are the opportunities for grid infrastructure investment between the United States and Canada? During today's OnPoint, Pierre Guimond, president & CEO of the Canadian Electricity Association, explains how the United States' transmission and environmental regulations will affect the Canadian electricity industry. He also weighs in on the clean energy standard discussion in light of Senate Energy and Natural Resources Committee Chairman Jeff Bingaman's (D-N.M.) push to introduce legislation next year.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Pierre Guimond, president and CEO of the Canadian Electricity Association. Pierre, thanks for coming on the show.
Pierre Guimond: My pleasure.
Monica Trauzzi: Pierre, as the U.S. and Canada move forward on several strategic relationships relating to energy, your group's perspective on power is an interesting one. What are the opportunities you see for infrastructure investment between the United States and Canada?
Pierre Guimond: The North American grid, both the American and Canadian grids are interconnected. They operate almost as a single unit and so what we have on our side of the border is -- looks a lot like what you have on your side of the border, the same sort of assets, the same sort of equipment. Our side is predominantly non-emitting electricity in that we have 60 percent hydroelectricity, another good 15 percent nuclear and then add wind and solar and the others to that and we're looking like about 80 percent non-emitting. Whereas on the U.S. side, you use a lot more coal than we do. So, we have different strengths and positions in terms of assets and the ability to generate. In terms of transmission, we're interconnected. We move a lot electricity from faraway sites to where the customer lives and we've always been interconnected with the U.S. At first it was just to stabilize the systems, but in recent decades it's turned into a real commerce of electricity proposition.
Monica Trauzzi: So, when FERC releases a major rule like Order 1000 as it did earlier this year, you look at it. Do you see that there's a consideration of Canada and the relationship on transmission that the United States has with Canada?
Pierre Guimond: Well, that's the magic ingredient that needs to be there. We look at FERC orders and we're compliant with a lot of FERC orders in that we agree that they are needed in order to have a fully functioning marketplace for electricity. We comply with FERC orders by, on our side of the border, having the provinces which have jurisdiction over electricity in Canada, basically adopt similar regulations and similar standards. The way we do that is very much a function of how we govern ourselves. So, we are always mindful when we see a FERC order come around as to what is it trying to achieve? Do we agree with that and what's the best way of dealing with it? Oftentimes we have to consider the possibility that FERC may be going a little bit too far and that happens, but it happens in a very gentle way so far and so we're able to deal with it. Our provinces are pretty understanding and pretty flexible when it comes to certain things.
Monica Trauzzi: So, on Order 1000 specifically, what's your view? There's been a lot of criticism here in the U.S. that FERC didn't quite handle the cost allocation fairly. What's your view?
Pierre Guimond: We're trying to figure out. Like many U.S. utilities, our utilities that are involved in the commerce of electricity, are looking at the order and trying to determine just how far it goes and how far it needs to go. We, as a sovereign country, don't like to have someone else's government too far into our own affairs and so that's a judgment call on our part. We'll have to figure that out. FERC is always best able to serve North America when the Canadians agree to be served.
Monica Trauzzi: When you think about transmission differences between the United States and Canada, it sounds like the Canadians are using a lot more renewable energy at this point. What do you see as the key differences and challenges?
Pierre Guimond: As we go forward, North America, both the Canadian and the U.S. sides are going to be facing three basic challenges. One, our system is aging. Our equipment was built by our father's and grandfather's generations and we have to invest a lot in refurbishing some of the basic equipment that we have. Secondly, we're changing technologies. We're moving from the old analog equipment to more digital and that's where the smart grid idea comes in and that is a pretty big change in the way we make, move, and sell electricity. And the third one is the one that we like to talk about so much in the media and that is dealing with greenhouse gas emissions. That will bring a new set of choices to the electricity sector in both countries and we'll have to figure out how we're going to produce all of that electricity that so many of our customers love to enjoy and to use and are using in more and more varied ways every day, so that we can produce that electricity so that it's affordable, reliable and also competitively priced. So, those are the big challenges as we go forward. You know, the three sisters as we like to call them.
Monica Trauzzi: Do you think it's possible to implement strong air regulations and not compromise power sector reliability?
Pierre Guimond: I think reliability is the number one importance to everyone that is in the business and in order to maintain and ensure increased reliability as we go forward, we have to really talk to each other. We have to make sure that we understand what we're proposing by ways of rules of the road, regulations, and even legislation. I think electricity on our side of the border is less intense in terms of air emissions than the electricity produced on the U.S. side. Over time, I suspect that the two systems will be more consistent, that we'll look like each other a lot more. So, I think we continue to need fossil fuels and we will continue to need fossil fuels for many decades to come. We have to figure out how to keep the environment clear, clean and also use those fossil fuels. That's another big challenge.
Monica Trauzzi: You mentioned smart grid, cyber security is a big issue that we're talking about here in the United States that relates directly to the smart grid. What kind of solutions, cooperative solutions do you see in handling the cyber security issue?
Pierre Guimond: On our side of the border we're pretty well organized in terms of cyber security in that we have a very robust system for talking to each other and sharing information. We've come to a clear understanding of what kind of information that we need to share and how we should share it. In many ways, that is a very useful lesson. We can help the U.S. on that because we've developed a workable model. Tomorrow, for example, back in Ottawa I'll be spending a day with our public safety officials of the federal government where they're going to be sharing information with the energy sector. And it's a full day being locked up and sharing information, as much as we can, so as to improve the overall objective that we share.
Monica Trauzzi: One final question here. Senator Bingaman has signaled that he would like to move forward with a clean energy standard early next year. How would Canada benefit if a CES were to be implemented here in the United States?
Pierre Guimond: The CES should, in our view, have due regard for the fact that we have a lot of non-emitting, affordable and reliable electricity that is available to Canadians and also available to the United States. There are many times during the day when U.S. homes are lit and heated with Canadian electricity and sometimes during the day and night Canadian industrial plants are powered by U.S. electricity. It's a robust commerce that goes back and forth. I think any CES should really take that into consideration and to take advantage of all that Canadian electricity can offer U.S. customers.