While I hate to disagree with a fellow Vermonter, I find Richard de Grasse’s op-ed in the May issue of The Working Waterfrontflawed. Maine is in fact being offered a pittance for disrupting both the ecology and the heritage of its North Woods, and not for clean energy, but for expanded Hydro-Quebec profits in the North America electricity market.
The 25-year post-NAFTA history of the North America electricity market is important for public understanding. In 1996, the U.S. Federal Energy Regulatory Commission (FERC) created the market when it issued two landmark “open access” rulings, orders 888 and 889, for any producer willing to pay the tariff on the grid.
We talk about “buying” power from Quebec, but power is traded north and south, and it’s a game we can never win.
Hydro-Quebec soon created TransÉnergie to make it market compliant, and soon after opened an electricity trading floor in Montreal. This commodity exchange, staffed with traders and analysts, focused specifically on the cross-border market. With these, Quebec stepped into an open lane that it still dominates, and the proposed energy corridor is key to its New England strategy.
Temperatures in the northeastern U.S. speak to energy use and potential profits, so a team of meteorologists staff the H-Q trading floor too. Computers track energy prices and electricity usage in real time, around the clock, because the generation and delivery of electricity is constantly important. When prices are high, Hydro-Québec sells. When prices fall below the cost of production, it buys, and always profitably. We talk about “buying” power from Quebec, but power is traded north and south, and it’s a game we can never win.
To understand Hydro-Québec’s market leverage, you must understand northeastern North American electric generation. Quebec has almost all the hydroelectric capacity, while the U.S. relies on nuclear, coal, oil, and natural gas. Quebec has spent the last six decades reengineering its landscape of innumerable lakes and rivers to generate electricity.
The James Bay Hydroelectric Complex is the biggest, harnessing four massive watersheds that combined are almost twice the size of Maine, but most of the other rivers in Quebec’s southern two-thirds are also harnessed. Hydro operates under entirely different conditions from other generation, and therein lies the advantage.
What makes hydro different is how easy it is to turn on and off. All other generating plants take days and days to come to full capacity or to shut down, so they never really do shut down. At night, when we sleep, there is surplus power on the grid, and generators are required to either stop producing or get rid of the power somehow.
Shutting down is not an option because people will start using electricity in the morning and they cannot react fast enough. They must sell power below the cost of production, and Quebec is more than willing to buy at these times, especially in winter when Quebecers run their electric heat all night.
Quebec on the other hand can be generating megawatts of power, selling a surplus into the market, and within a half hour it can be generating no power and buying cheap on the same market. This is the incredible flexibility that hydroelectricity gives them.
At the same time, Quebec is storing water, ready whenever the price is right, so the only real challenge is finding the perfect balance on the transmission lines and on the price indexes. Quebec does not have a huge surplus of electricity, less than ten percent, but it plays this market to great advantage.
In 2008, when fossil fuel prices reached record highs of $140 U.S. a barrel, Quebec made $977 million by exporting that small surplus—eight percent of its power, but 32 percent of profits.
The market obviously fluctuates, but Quebec’s costs (rain and snow) and generating capacity (installed hydro dams) are fixed, and it can ride out highs and lows easily. It can do even better if it can make its transmission infrastructure more flexible, and so it has tried for a decade to push another line through New England. New Hampshire rejected it in 2010, and now it is trying Maine. Electricity is all about completing circuits, but the new corridor would create another profit circuit in the market. That is why it is so important.
I have travelled Quebec’s hydroelectric geography for decades, and the environmental and cultural costs of that infrastructure have been and continue to be vast. The climate implications of flooding and cutting the boreal forest are beyond what I can write here, but they are as damaging as burning the Brazilian rainforest. Like the Amazon too, indigenous people have been most impacted, so by any measure, there is nothing clean about this energy corridor.
The environmental and cultural costs in Canada and here in Maine are enough for me to oppose the corridor, but if we are going to sacrifice the beauty and heritage of the North Woods for Quebec’s profit margin, why do it for what amounts to a pittance? I cannot understand why we would sell at any price, but why we would sell cheap escapes me completely. We can and must do better.
Hans Carlson is executive director of Blue Hill Heritage Trust and author of Home is the Hunter: The James Bay Cree and Their Land. He holds a PhD. from the University of Maine, where he was affiliated with the Canadian-American Center in Orono and has spent 30 years researching and documenting the economic, environmental, and cultural impacts of Quebec hydro power.