National Energy Board Coat of Arms
Symbol of the Government of Canada

National Energy Board

www.neb-one.gc.ca

Breadcrumb

Home > Energy Pricing Information for Canadian Consumers > Electricity - The Canadian Industry

Electricity - The Canadian Industry

The development of electrical generation facilities largely depends on the natural resources available to a particular region. Figure 1 summarizes generation in Canada in 2008. In 2008, Canada generated over 619 000 GW.h of electricity. Hydroelectricity production is concentrated in British Columbia, Manitoba, Québec and Newfoundland and Labrador. Generation in Alberta, Saskatchewan, Ontario, the Maritime Provinces and the Territories is largely thermal-based (for example, coal, natural gas or oil-fired). There is nuclear generation in Ontario, Québec and New Brunswick, while natural gas-fired generation, as stand alone facilities or part of a cogeneration process, is becoming more common in most regions.

Figure 1 - Canada Generation by Fuel - 2008

Figure 1 - Canada Generation by Fuel - 2008

Source: NEB, Statistics Canada

Most alternative generation sources, such as wind, biomass and small hydro are more costly than conventional generation sources, although in some jurisdictions certain technologies, such as wind, can compete with higher cost generation. Alternative generation technologies are becoming more attractive because of technology advances and continued uncertainty over environmental costs related to conventional generation technologies. The establishment of renewable portfolio standards, targets and guaranteed rates in most provinces has supported the growth of these alternative energy sources (See Figure 2).

Figure 2 - Standards and Targets for Renewable Energy
Capacity (MW) or Generation (% of total)

Figure 1 - Canada Generation by Fuel - 2008

There is increasing recognition by governments, the public and the electric industry that managing consumers' use of electricity is part of addressing electricity supply issues. Many entities have developed, or are developing, energy strategies that will effectively reduce or defer the need to construct new generation facilities.

Although electricity supply is adequate today, the Canadian electricity sector needs significant investment over the next two decades to build new generation and transmission facilities, and to upgrade or replace ageing infrastructure. The additional infrastructure is important for ensuring system reliability. Industry, governments and transmission providers are moving toward a framework to resolve these concerns.

Consumer prices are mainly set by the provinces and territories. Figure 3 shows that electricity prices are mainly made up of the costs of electricity generation, transmission and distribution.

Figure 3 - Components of Electricity Price
Generation + Transmission + Distribution = Price

Figure 3 - Components of Electricity Price

Generation Costs

A large portion of the electricity in Canada is generated by public utilities whose rates for the costs of providing services are subject to government regulation. Consumer prices vary between provinces and territories, largely because of differences in generation costs. Hydroelectricity, approximately 60 percent of the total electricity produced in Canada, is the least expensive source, followed by nuclear and coal-fired generation. Conventional gas-fired generation tends to be relatively expensive, especially with the high natural gas prices that have been prevalent in the last few years. Electricity prices can be affected by changes in generation sources and by changing fuel costs.

In recent years, non-utility generating companies (these are companies that do not directly serve the public, rather they generate electricity for their own end-use or for sale in wholesale markets) have added new generation to provincial power grids. In competitive markets, prices charged by non-utility generators are not regulated and they tend to reflect market conditions.

Transmission Costs

These are the costs to send electricity from generating stations over high-voltage transmission lines to local transformers that reduce the voltage for local distribution. Transmission costs are regulated by provincial regulatory boards.

Distribution Costs

These are the costs to transmit electricity over local, low-voltage power lines to residential and other consumers. Generally, distribution costs are regulated by the municipality in those provinces and territories that have municipal utilities, and by the provincial or territorial regulatory boards in other regions.

 

Footer

Date Modified:
2011-10-28