Powering Atlantica: Energy security key to trade region

Electricity, petroleum, natural gas – all are key assets in powering and securing economic growth in Atlantica.

“It’s an energy age and people are going to be increasingly mindful about the diversity and security of energy sources,” says Tim Curry, director of the Atlantica Centre for Energy.

Along with transportation and tourism, energy is a major issue under discussion at the Reaching Atlantica: Business Without Borders conference this weekend in Saint John.

“It doesn’t matter what you’re doing. If you’re going to plunk money down to build a manufacturing plant or any other business that is critically dependent on a source of energy, then you’re going to look long and hard at the energy regime in the area where you are looking,” he says.

“If you don’t have both secure and diverse energy supplies, you’re not going to invest. Not anymore.”

The energy infrastructure within Atlantic Canada includes oil and gas reserves in Nova Scotia, Newfoundland and Labrador and, to a lesser extent, New Brunswick. The region is home to Canada’s largest oil refinery and soon to be the home of the first new liquefied natural gas terminal in North America in 25 years.

It’s also home to electricity assets such as the Point Lepreau nuclear power plant.

For Mr. Curry, all of these assets add up to provide the Atlantica region with both energy security and an exportable commodity.

Direct economic opportunities for New Brunswick in the energy sector lie in the ability to add value to its energy exports, for example through the production of new and more environmentally friendly fuels such as ultra low sulfur diesel, which is now being refined in Saint John, he says.

The energy sector surged to 60 per cent of New Brunswick’s total exports in 2005, fueling a 13 per cent growth in overall exports from the province. Energy exports were worth more than $6.3 billion in 2005.

“That’s a fair bit of economic activity that gets spun out of the barrels of oil that come in,” says Mr. Curry.

While oil exports remain a huge part of the energy picture for Atlantica, nuclear power will play an increasingly important role.

Mr. Curry hopes the Atlantica conference will prompt a thorough discussion of energy issues and strategies for the region that could be used to help form the basis for new policies.

“I think from a lot of perspectives our region will be stronger if we are able to adopt regional, consistent policies and positions in our dialogue with senior government officials on both sides of the border. We tend to be smaller provinces and states and, to the extent that we can adopt a regional perspective on things, it would seem to me to make sense that those perspectives would carry more weight in Ottawa or Washington.”

One of the energy issues under discussion at the Atlantica conference is international trade in electricity and the advantages of taking a regional approach to future electrical generating and transmission investments.

The idea of a regional electrical marketplace which would encompass the multiple states and provinces has been studied by Gordon L. Weil, an energy consultant and expert in the development of large scale wholesale energy markets.

In a report conducted for the Atlantic Institute for Market Studies, Mr. Weil notes that competitive power markets have been difficult to develop in North America. The California power crisis and the difficulties in Ontario are two examples of the perils of such an approach.

However, Mr. Weil argues in his report that Atlantica could learn lessons from the mistakes made in other jurisdictions while reaping the rewards of an enlarged regional energy market.

To make the concept a reality, Mr. Weil suggests that the creation of an independent transmission company, “whose only business would be the transmission, which could purchase the transmission facilities of exiting owners and operate them.”

One such regional transmission company is the U.S.-based PJM, which coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

PJM operates the world’s largest competitive wholesale electricity market and ensures the reliability of the largest centrally dispatched grid in the world.

Its members include power generators, transmission owners, electricity distributors, power marketers and large consumers.

The company is regulated by the U.S. federal government and provides independent and impartial management of the regional transmission system and the wholesale electricity market.

Altogether, PJM serves more than 51 million customers and has administered more than $52 billion US in energy and energy service trades since 1997.

“By co-ordinating on a regional basis, transmission lines and power plants owned by different companies or organizations, there is a greater level of efficiency,” says Ray Dotter, spokesman for PJM.

While working together can reduce wasteful duplication of power plant and transmission resources, there are also other benefits, he says.

“When the need for electricity increases, as it does minute to minute, we look at the offers that generators have put in, how much electricity at what price. We start with the lowest price units and you keep adding them until you can get up to meeting our needs,” he says.

“We’re making the most efficient use of all the generation that’s out there,” he says.

The ability to purchase energy from cheaper sources can cut down costs for its members by allowing them to buy cheaper power than they could produce from some of thier own power plants.

Tackling energy on a regional basis also offers the opportunity to generate power in the best locations for doing so, while at the same time selling that energy to local markets where it’s in demand, he says.

On Monday: What will it take to turn Atlantica from vision to reality?