Curtis Matwychuk-Goodman

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The following document is produced as a result of being contacted by the British Broadcasting Corporation (BBC) to provide an outline for a possible documentary called “The Race to 8 Billion – 1492 to 2022.”  Based on the requests of the producers, please find attached a brief outline of major historical episodes that may be of interest to the feature.  [editors note: was not contacted by BBC]

Included with each major theme are pivotal moments of human history that transformed the way we understand the world – with brief discussion of the personalities who had a role in the growth of human perception.  Rationale behind each event will should be apparent within the explanation of each major theme; as they each contributed to the process of globalization.  Each event presented herein is presented as part of larger patterns of globalization that have developed over time.  These patterns of globalization will be the focus of the conclusion of this outline.

Focusing on individuals and their influence on historical outcomes and developments provides real case studies for examination.  People have been the driver in creating change and pushing the modern boundaries of our understanding of the world around us.  Christopher Columbus, the Crown of Castile and Aragon, Sir Francis Blake, King Charles, Queen Elizabeth, Napoleon, Sir Sandford Fleming, Fredrick Jackson Turner, Edward Said, Eleanor Roosevelt, and George W. Bush are but a few names that will be essential to creating a comprehensive documentary of the time period between 1492 and 2022.   By no means is this list meant to be comprehensive, rather a point of beginning.

Time should be a central theme in the documentary.  Especially the developments that occurred that changed human perception on space and time.  The change in human understanding of the universe should be a central topic.  The following is not presented in a chronological order – which the producer should keep in mind – instead the case studies are offered in vignettes based on their relative commonalities.

The heliocentric model of the universe, as discussed by Copernicus, changed the traditional theocratic belief that the Earth was central to everything in our universe.  Heliocentricity described the Earth as rotating around the sun.  This was a fundamental challenge to the existing hierarchy of knowledge of the day.

During this same time period the standardization of time was beginning across Europe.  A common calendar and the invention of the clock provide unity to people across great distances.  This was surrounded by the greater acceptance of logic and reason in society.  This was best expressed through the grounding of scientific method overtaking the conscious of European intellects.  The thought process was, in the same way a clock can be perfectly set, the universe may be too – which drove scientific inquiry into such areas as astronomy, biology, chemistry, palaeontology, and many other areas of inquest.

The standardization of time through the calendar and clock provided many benefits to civilization.  In much the same way as the steam engine provided the drive for connecting geographically distant places with relative ease.  Transportation could be coordinated and given better scheduled, which maximized the possibilities of economies of scale in trade and commerce.  This affected all ways of life, from the way we organized our social networks and interacted with others in distant lands to the way armies could be coordinated across vast distance.

A pivotal example of the way human conception of time changed is Einstein’s theory of relativity.  Although this would seem to jump ahead to the twentieth century, presenting this contrast to the rapid development of human thought would give context to how much has changed in such a short time span.  Einstein challenged the fundamental belief of time by saying it was relative.  Instead of being set in stone or being absolutely standardized, time is relative to the circumstance – in much the same way as time slows down as it approaches the speed of light.  This was inferred based on the observation of gravitational effects on light in the universe.  Such observations were made as the result of advancements and developments in technology.  Einstein’s theory challenged the notion that the universe was like a clock.  Instead of being relatively ordered the universe may be chaotic and unordered.

This presents a fundamental way the human race has developed during this time period.  Change in ideas or ways of thought is a prime focus for the documentary.  The development of ways of knowledge and understandings of the structure of our existence must be central to the film.  Demonstrating that human conception of the world changes quickly as events shape the course of history can be done by examining the following key events and the people who shaped them.

In 1492 Spain emerged from the Ottoman Rule and entered was has been called the Golden Age of Enlightenment.  It was during this time that the crown of Castile and Aragon authorized and funded the voyage of Christopher Columbus.  The famous discovery of North America was almost in accidental fashion, as it was initially hoped to navigate a sea-route to the East Indies.  The new land is donated to the Crown by the Roman Catholic Pope – giving dominion over the new world.  Coupled with the case of the Inquisition, both of these cases provides evidence of the power of the Roman Catholic Church and the relative importance of political power in Spanish society.  Although the right to ‘own’ land or the influence of the church was not entirely new, it would become the central driver for centuries to come.

The technique of controlling land was used to establish trade and aid in territorial expansion of political interest.  Similar events occur in different areas of the world; Britain provides royal consent for corporate control of certain geographic areas, the Pope provided consent for Spain’s territorial expansion.  Britain focused on many places in the world – from North America to India, while Spain primarily focused on the continents of South and Central America.

The Royal Charter of the Hudson’s Bay Company followed the Glorious Revolution in England.  Wherein, King Charles was reinstated as the monarchy in 1670 there were fundamental changes to government: parliament was in control of the public purse, Roman Catholicism was embraced, and the will of the commons was to subordinate the monarchy’s power.  In addition to this Greenwich Mean Time was established – which gave significance to the kingdom of England as the standard .  The Hudson Bay Charter provided exclusive monopoly rights to the company for all territory within the Hudson Bay drainage basin – to be known as Rupert’s land.  Rupert was King Charles’ brother and the first governor of the company.  This is one of many acts of nepotism that could be feature in the film.  The Charter comprised approximately forty percent of Canada and was given with no direct consultation of the indigenous population.

Spain’s was among many with efforts to expand the territorial base of what would become national empires.  The Dutch and British were eager to discover new lands during this same time.  The Dutch East India Company and the British East India Company were privately backed entities that were both empowered by their local crowns to engage the New World in an imperial fashion.  These monarchies – soon to be national entities – would embark on imperial globalization through the development of naval powers.

A strong navy was required to protect precious trade routes to resource based colonies across the world.  Oceans became the modern highways of commerce – the same way rail networks began to connect parts of Europe and the internet connects the world today across space and time.  These highways of commerce required protection from pirates and plunderers.  Although, it is important to note that pirates did serve British interests as a private force looting rival Spanish galleons.  Such acts served to dis-empower the competition.   Sir Francis Blake would be an ideal person to profile in this section; especially his relations with Queen Elizabeth.  Blake’s private pirate fleets would eventually form the basis of the Royal British Navy – an invaluable tool of British national interest.

The emergence of the Westphalia State should be a central topic of discussion.  The Treaty of Westphalia provided incentive for states to respect the sovereignty of the other nations.  The mutual interests and potential for relative gains through cooperation provided the leverage to assure relative peace among European nations.  While the drive was on to conquer the new world the peace among nations enabled the Enlightenment era to thrive.  This allowed the development of intellectual thought and advancement in many areas of key interest to humanity – like agriculture, industry and medicine.  The Agriculture Revolution and the Industrial Revolution should be highlighted as modern turning points of civilization.

As nation-states conquered the New World there was resistance on many levels.  In many instances of territorial expansion the Conquistadores or merchants would be met with resistance by the local populations.  In many instances the result was massive bloodshed or the outright killing of local populations as a means of control.  The conquerors were technologically advanced in their methods of death – having advanced through the steel age, which resulted in the wielding of swords and heavy armour.  Not to mention the harnessing of work animals like the horse to offer a impending bestial posture for the Spanish conquistadores.

In the case of Spain’s conquest of the Inca Empire of South America the results were impressive.  Francisco Pizzaro travelled across the globe with a force of less than 200.  These Spanish forces were able to topple the Inca social structure in a very short time.  Decimating the local culture and plundering the riches; the Spanish were particularly brutal in their efforts to dominate foreign lands.   The shipment of wealth back to the mother country would be common among many nations.

In the case of Canada and North America there was intense colonization of the Eastern part of the continent by the newly arrived colonists of Dutch, British and French heritage.  These colonists created local resources economies that would ship precious cargoes back to mainland Europe to fuel the growing Industrial Revolution.  While foreign national governments attempted to provide governance and guidance to the outlying colonies it was often a one-way relationship.  Where the motherland experienced the influx of wealth and prosperity; while the hinterland of the colonies suffered from over taxation and underinvested local infrastructure.

Sir Sandford Fleming was Canada’s foremost railway surveyor and construction engineer of the 19th century and a distinguished inventor and scientist.  He came to Canada in 1845 after studying science and engineering and serving a professional apprenticeship in Scotland.  Fleming joined the engineering staff of the Ontario, Simcoe and Huron Railway, becoming engineer in chief of the successor Northern Railway.  By 1863 he was appointed him chief surveyor of the first portion of a proposed railway from Québec City to Halifax and Saint John.  His experience and technological knowledge led to his routing and designing one of the longest cross-continental railway projects of its day – the Canadian Pacific Railway from Ontario to the West Coast.  This project was fundamental in establishing the Canadian economy and promoting the development of efficient cross-continental trade networks.  One project among many that could be featured; as it documents the importance of private funding of major public goods.  Fleming is also a person of interest as he had an instrumental proposal that brought forth worldwide standard for time zones – which would effectively create twenty-four world time zones.  This further demonstrates the standardization and commonalities across distance.

Money, currency and wealth must be central to the understanding of how world societies evolved.  “Follow the money” is a popular phrase that describes the importance of money in almost anything.  Imperial domination of distant lands was economically viable – as it resulted in the transfer of wealth from one region to another.  According to Newton, for every action there is an equal and opposite reaction – which proves true with the eventual decolonization movement of the nineteenth and twentieth century’s.

The problems arising from colonization led to revolts by the colonies.  In the instance of the United States of America, a violent war was fought against British forces in order to gain independence in 1776.  In the case of Canada, political will led to the creation of the Dominion of Canada, 1867 – which would later gain independence and sovereignty (1931 and 1982) from British rule through a peaceful and slow transition.   This dichotomy within North America is a good case study to demonstrate how British colonial power changed as the pressures to maintain a global empire eventually became an economic burden.

Dealing with indigenous populations over the long term became an issue for newly colonized areas of the world.  The abundant resources of the New World offered unparalleled opportunity to prosper.  However, indigenous populations were keen on protecting their inherent right to use the land as they traditionally had.  In some cases the interactions between the newly arrived settlers and the natives were peaceful.

In the case of Sir William Johnson, who was involved in the Royal Proclamation of 1768, he pioneered the concept of treaty federalism.  His approach was in peace-making.  In the case of the Halderman Deed the six nations of the Mohawk, Onondaga, Seneca, Cayuga and Oneida, organized under the League of Peace or Iroquois Confederacy provided the basis for negotiating a treaty for six miles on either side of the Grand River in what is now Ontario.  This peaceful technique was instrumental in the future protection of Canada, as the Tecumseh Indians would band together in defence of Canada during the War of 1812 between the United States and Canada.

In other cases, the indigenous population were marginalized in favour of a new social and economic regime brought by the new settling populations.  In Canada, and many other parts of the world, there was the intentional spreading of disease like smallpox through the trade of infected blankets with local populations.  Since these populations were unfamiliar with the foreign European diseases the spread was rampant and usually resulted in high death rates.  There was also the case of social segregation or forced integration with society.  Using treaties as instruments of marginalizing native populations in North America resulted in the territorial basis of many indigenous groups shrinking considerably over time.  The nature of negotiating the treaties was often coercive in nature or was predatory in the fact that many indigenous leaders did not know what they were agreeing to.  The case of the Residential Schools Incident in Canada specifically highlights the way native groups were displaced and manipulated as a method of integration.

The disregard for the rights of indigenous populations was central to the conquest of the New World.  Either by decree of religious or monarchical powers, individuals became involved in the obliteration of some societies with little regard for the consequences.  This was based upon an idea of cultural superiority.

This notion was challenged by Franz Boaz, who is best known as the father of anthropology.  Boaz was responsible for bringing the idea of cultural relativism into existence – where one’s beliefs and activities should be considered in relation to their culture.  He argued that it is wrong to rank or judge cultures against our own because each culture has its own unique beauty.

Regardless of the intellectual advancements the thirst for power has always been immense through this time period.  This is founded in the dominating nature of the Napoleon Empire.  This is further evidenced in the fact that the Nazi’s came to power and advanced the idea of cultural superiority brought on by nationalism.  The classification of cultures as advanced and barbaric led to global conflict and the creation of more complex methods of killing one another.

The Frontier Thesis of Frederick Jackson Turner was presented in 1893 at the World’s Columbian Exposition in Chicago.  Turner argued that the origin of the distinctive equalitarian, democratic, aggressive, and innovative features of the American character had been due to the American frontier experience.  He stressed the process of the moving frontier line and the related impact it had on pioneers who had to deal with the unknown of what is beyond the frontier.  Constantly forging forward into the unknown, the frontier created freedom, by dismantling the treachery of outdated customs and forcing new experience through activities and institutions.

Turner’s thesis was popular because it explained why the American people and American government were so different from their European heritages.  Although, Turner pointed to the fact that the American frontier may have come to an end – which he hinted could lead to the downfall of American uniqueness and prosperity.  However, the frontier represented the beginning of a new stage in the American way of life – similar to their European ancestors – where the frontier was now overseas.

Edward Said was an influential voice in the colonization and decolonization debate.  He wrote an influential book called Orientalism; it focused on the western study of eastern cultures.  Orientalism is a classic of post-colonial literature, written during a period of formal decolonization by the IMF, World Bank and Military efforts.  Said identified the role of social scientists, painters, sculptures, scholars, etc as contributors to literature base that sees culture through a specific lens – in particular when Napoleon invaded new lands like Egypt he would bring the Savants to record culture in such a way as to justify imperial domination; savants glorify empire building; simply the creation of false understandings that shape perceptions of distant lands.  This explains American and European prejudice against Arab-Islamic cultures.  Said notes that often racist forms of self-affirmation of imperial domination are used instead of objective study of distant lands; often dichotomies are presented: the weak, feminine, and irrational East; strong, masculine, and superior West.  Said provides a rationale for the relations between cultural groups.

Eleanor Roosevelt was the First Lady of the United States during F.D. Roosevelt’s term.  She changed the role of First Lady by holding close to 400 press conferences of her own initiative.  She campaigned as a supporter of Roosevelt’s New Deal policies; in doing so she leveraged her political position as a civil rights leader.  Years later, Harry Truman appointed her delegate to the UN- General Assembly in 1945.  As the USA delegate she would chair the UN committee on Universal Declaration of Human Rights.  This document presents a charter of basic rights entitled to every human on this Earth.  The declaration was passed in 1948.  This event demonstrates how individual ambition can result in major shifts in the way we think about our world.

Central to key moments in history should be September 11^th, 2001 and the felling of the Twin Towers in New York City.  As a major moment in modern history, this event changed the way our world thinks about security and fear, and individual and group rights.  It was one of the most watched televised events in history.  At the heart of the largest centre of commerce in the world the image of planes exploding into the towers of modern capitalist institutions is particularly striking.  The control of information around the events of this day has provided the impetus for the second Gulf War in Afghanistan and Iraq – as well as the “War on Terror.”  This phrase used by the George W. Bush administration characterized the turn of the millennia; as fear was leveraged against a connected culture through the pervasiveness of television and internet.

These modern modes of communication created a common dialogue among many Western nations where a pattern of “us” versus “them” existed.  This mentality is nothing new; as it was the basis for much of the expansion of civilization from 1492 onwards.  From events like the Spanish Inquisition to imperial colonization – this mentality created a divide among groups of people.

However, this time period also was characterized by eras of cooperation.  Moments of cooperation exist in the standardization of time, treaty federalism of Sir William Johnson, and efforts to codify international law by Eleanor Roosevelt.

There have been many people who have attempted to explain the relations between people.  Their theories create the basis of our knowledge of the world around us.  From Einstein to Edward Said – these intellectuals should be a key focus of the documentary; especially their ability to push the limits of how we understand our relation to one another.  Each individual presented herein represents the dichotomy of human nature – anarchy or cooperation.

Humans have either worked together for progress, like standardization of time, money, and modes of commerce in pursuit of relative gains; or humans have struggled against one another in pursuit of absolute gains.

Curtis Matwychuk-Goodman

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“Ben Franklin may have discovered electricity – but it is the man who invented the meter who made the money”
- Earl Warren-

Introduction to the Issue

conomic growth and electricity consumption are directly correlated.  As a nation’s electricity consumption increases so does the gross domestic product.[1] It is generally accepted that access to electricity is a necessary element for a healthy economy; in today’s day and age electricity is required for production of both goods and services.  Without access to reliable sources of electricity the efficiency and productivity of the North American economy would tumble.

This paper seeks to investigate the current trade policy between Canada and the United States in the case of International Power Lines (IPL) and the international sale of electricity.  The specific case of the Montana-Alberta Tie Limited (MATL) project provides an excellent case study of the Canada-U.S. relations on electrical energy.  MATL will be the first direct merchant-based grid interconnection between the province of Alberta and the state of Montana and will provide context for the regulatory environment of each country.  This paper will present the case from the Alberta perspective.  It will, however, provide analysis of both the federal and sub-federal governments from both Canada and the U.S. and their related jurisdictional authority over the MATL project.  In doing so, this paper will discuss the context surrounding the construction of an International Power Line (IPL).  The recent final approval of the MATL project demonstrates the continuing harmonization of the North American electricity grid; which will briefly be discussed.

In addition, this paper will directly examine the popular notion that Alberta is an energy superpower in the North American marketplace; albeit perhaps not a leader in the electric energy industry specifically.  In fact, this paper seeks to demonstrate that Alberta has tremendous growth opportunities but currently lacks the adequate infrastructure to exert such influence even in the North American marketplace.  To begin our discussion, let us first explore exactly what electricity is.

Electricity is an interesting commodity.  Once electricity is generated it cannot be stored. The laws of physics declare that electricity will always flow through the path of least resistance.   This is the reason that when a light switch is turned on, the lights turn on instantly. In addition to this, electricity demand is very unpredictable.[2] As a whole the electricity market services residential, commercial and industrial purposes; which means electricity must be available at any time of day in many different locations.   Furthermore, electricity loses potential over great distances and with changes in temperature.[3] This presents an interesting challenge for the creation and maintenance of a reliable electricity grid.  A perfect mix of generation, transmission, and distribution (or retailing) must exist to efficiently service all customers in need.  As a result of this the electricity industry has traditionally been region-specific and usually exists as a vertically-integrated entity.  To increase the overall efficiency of an electricity grid it is best to have many interconnections between regions because it creates economies of scale, which in turn determines the most efficient price of electricity for all users. [4]

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The MATL Project

Montana Alberta Tie Limited (MATL) is a Calgary-based company that is currently in the progress of building Alberta’s first International Power Line (IPL).[5] This line is monumental, in that it represents the first merchant-based international project of its kind in Alberta.  This project is also unique in this province because the entire construction and financing is done by a private company instead of by the end-user who traditionally pays for such infrastructure through offset transmission charges.  Once constructed this IPL will be the first direct inter-tie between the electricity grids of the United States and Alberta.  The grid interconnection points will be located in Lethbridge, Alberta and Great Falls, Montana; crossing the border west of the Coutts crossing and spanning a distance of 345 kilometers.  The transmission power line will be privately owned and operated as a merchant system with a nominal rating of 300 megawatts of alternating current.  According to MATL, this is 240kV or enough power for 35,000 homes.[6] Even before construction, the entire line’s capacity has been auctioned off to private companies, including NaturEner, Wind Hunter and Invenergy.

The MATL transmission power line is a strategic addition to the electricity-grid and is ideally positioned for further development of local wind turbine generation projects.  The proposed IPL traverses some of the best wind energy potential locations in the western parts of North America.  In fact, the company estimates that in addition to creating 150 jobs and adding $10 million to the local economies during construction, the power line will enable up to $1 billion dollars in wind farm developments.[7] The MATL project provides a significant and necessary resource for both nations to move towards reducing their carbon footprint by providing access opportunities for renewable energy sources to join the electrical grid.  Most importantly, the MATL line will increase the overall efficiency of the Western energy grid.  If the MATL project promises such great benefits, who then has effective regulatory oversight over the IPL – Canada or the United States?

Regulatory Jurisdiction over MATL

The construction of Alberta’s first IPL provides an excellent case study of the symmetries and asymmetries of regulatory systems and trade policies of electricity as a commodity, on both sides of the border.  This paper will examine the regulatory regimes of both nations separately by looking at the jurisdiction of federal and sub-federal authorities.

The fundamental differences between Canada and the U.S. are manifested in the fact that significantly more opportunities for stakeholder input exists during all stages of the application process in the U.S.  The U.S. also has a more equal division of jurisdiction on the issue of IPLs and the international sale of electricity.  In Canada, on the other hand, authority is retained by the provincial government and there are not as many opportunities for public consultation.  In fact the provincial government is currently seeking to limit public input in essential transmission infrastructure.

After the context of each country’s regulatory regime has been established this paper will examine the move towards North American harmonization of both systems by means of joint intermediary institutions like the North American Electricity Reliability Corporation (NERC).

Canada

–>Federal Level

At the federal level there is relatively little direct control over electric power lines and related facilities, since these are under provincial jurisdiction.[8] However, the federal government retains quasi-jurisdiction and oversight through the National Energy Board (NEB).[9] The purpose of the NEB is to “promote safety and security, environmental protection, efficient energy infrastructure and markets in the Canadian public interest.”[10] In order for an IPL to be constructed the NEB must first issue a permit to construct and operate.  This provides some effective federal control over IPLs.  The NEB considers the “technical feasibility of the project, its effect on adjacent provinces and its environmental impact.” [11] In this way the NEB ensures that projects comply with the national standards set by the Canadian Electrical Code, the Canadian Standards Association, and the Canadian Environmental Assessment Act.  Additionally, the NEB has a mandate to ensure that IPLs are managed effectively to meet the needs of national security.  This requires an electricity reliability organization (ERO). The North American Reliability Corporation (NERC) has been appointed by the NEB as the best agency to ensure this electricity is reliable and can be counted on when needed.  NERC will be discussed further in the section on joint initiatives between Canada and the U.S.

The NEB does not regulate the import of electricity.[12] However, in addition to issuing construction and operational permits, the NEB can establish the limit of electricity to be exported.  This is determined by the total available electricity and the corresponding domestic demand.  Nearly 70 per cent of all energy exports to the U.S. are generated by hydro-electric facilities which are subject to dynamic environmental conditions.[13] This directly impacts the amount of electricity that can be exported to the U.S. at any given time.

–>Provincial Level

In Canada electricity is considered a resource and is therefore under provincial jurisdiction.[14] As a result of this, provincial regulations can vary by province.

In most provinces electricity is a public utility and is operated by a Crown Corporation.  In the cases of British Columbia, Manitoba, Quebec and New Brunswick excess electricity is exported through IPLs. The revenues earned from electricity exports are used to maintain “domestic electricity prices at levels that are lower than they would otherwise be.”[15] Each of the aforementioned provinces has substantial hydro-electric generation facilities and has nearly maximized their export potential.

Alberta is unique among all the provinces as it is the only privatized electricity sector in all of Canada.  The electricity industry was deregulated under the Electric Utilities Act (EUA) of 1995 which effectively privatized the electrical supply market.[16] Initially, this act mandated that all electricity generated would become part of a Power Pool which was regulated by the Alberta Energy Utilities Board (EUB).  However, as of 2001, retail competition was introduced effectively giving choice to consumers.  Presently in Alberta electricity generation is predominantly owned by private interests who sell the power to private retailers.  Through this process the retailers pay the owners of the transmission line for the intermediary use.  Electricity generation is separate from transmission, and separate from distribution. All three levels are private – yet must act in concert to ensure profitability of the entire system.

Although the power industry is privately owned there is still regulation oversight by three government created agencies: the Alberta Electric Systems Operator (AESO), the Alberta Energy Utilities Commission (EUC)^[17], and the Market Surveillance Administrator (MSA).  The first provincial regulator is the AESO; which is responsible for the reliability of the Alberta Interconnected Electric System (AIES).  The AESO is an independent not-for-profit organization that regulates access to the grid for generators and distribution companies so that electricity in Alberta is safe, reliable and affordable.  AESO facilitates a “competitive wholesale electricity market, which has more than 200 participants and about $8 billion in annual energy transactions.”[18] The AESO has a mandate to determine the need for expansion and infrastructure reinforcements.  Once a need has been determined, the AESO makes a recommendation to the second level of provincial regulation the: Alberta Utilities Commission (AUC).

The AUC is ultimately responsible for issuing permits to construct necessary transmission facilities and must conduct public consultation sessions to ensure all stakeholders have adequate input on new developments. The purpose of the public hearings is to assess local impacts, mitigate problems and accommodate solutions. As well, the AUC seeks approval of projects from the Alberta Ministry of Environment to ensure the project meets the requirements of the Environmental Protection and Enhancement Act.[19]

Currently there is great public debate in Alberta over the authority of the AUC to construct a domestic power line between Edmonton and Calgary.  A high-voltage line between these two cities has been recommended by the AESO to reinforce the power grid, as it has only seen one infrastructure upgrade since 1989.[20] Similarly, the AESO has recommended the construction of four other critical projects, together worth an estimated $8.1 billion, out of $14.5 billion dollars in total recommended system upgrades.[21]

The AUC and the Alberta Government face even greater criticism over the proposed Bill 50: Electric Statutes Amendment Act, 2009.  The intention of the bill is to provide unilateral authority of the Alberta government to approve critical transmission projects.  If Bill 50 passes, the provincial cabinet would have considerable power over the AUC, which would compromise the democratic nature of the intended system.  Tensions are exacerbated by both landowners and ratepayers.  Landowners are worried about the negative impacts of building a line over their land – including lost property values, health impacts, and a general belief of ‘not in my back yard.’[22] Rate-payers also have concerns because they will be responsible for paying for the transmission upgrades through increases in annual electricity bills.

The third provincial regulator of electricity is the Market Surveillance Administrator (MSA).  The main purpose of the MSA is to ensure fairness of the electricity markets in Alberta’s public interest.  The agency monitors, reports, investigates and is an advisory body that reports to the AUC.  The MSA does not have regulatory authority over IPL project applications.

United States

–>Federal and State Levels

In the United States the MATL project is similarly impacted by two levels of government.  In this case the regulatory process of approval required for an IPL provides effective control to many government departments related to energy and the environment.

The state of Montana has authority over matters of transmission under the Department of Environmental Quality (DEQ).  The DEQ has authority set under the Major Facility Siting Act of 2003 (MFSA) which effectively supersedes all other local government entities and regulations.[23] The federal executive level of government it is largely involved in the proceeds of the state level regulatory process, has the ability to make recommendations, or can effectively veto the project.  Under the MFSA act the Montana DEQ requires two authorizations for a developer of an IPL to proceed with construction.

The first is step of constructing an IPL is an application outlining many factors.   In the MFSA application procedure a transmission developer must demonstrate the need for the project, justify its proposed location or alternative sites, and provide a baseline study (or a reliability analysis). Most importantly, the application must demonstrate a cost-benefit analysis of the project.  The Montana DEQ submits all relevant information to the DOE; in turn the DOE will issue a Memorandum of Understanding (MOU).  Based on each government’s findings and subsequent public hearings, the DEQ will issue or deny a Certificate of Compliance.  This certificate signifies that all conditions of the application process are met which permits the developer to proceed to the next level of the regulatory process.[24]

The first step of the MFSA application process involves communication with all relevant stakeholders from the beginning to allow maximum public input from the start.  This public consultation at the early stages of project authorization has allowed the local constituents most impacted to have a voice in the development.  In the case of MATL, local farmers were responsible for changing the pole type design on farm-lands most impacted by the line crossing.[25] The cost-benefit analysis of the MATL project suggested a local impact to farmers that would annually result in $210,000 in additional farming related costs.[26] This was out-weighed by the net benefit from tax revenue from MATL which is estimated to be $730,000 annually. [27] This does not include the potential gains from greater system efficiency and future wind farm development related tax revenue.

The second step of the authorization process to construct an IPL like MATL, is also a multi-level process involving the federal Department of Energy (DOE) and the Montana DEQ.  This step is mandated by the National Environmental Policy Act (NEPA).  Many levels of government have input in reviewing the project application through a report known as an Administrative Draft Environmental Impact Study (or agency comment stage) which is available first to related agencies impacted by the development for review.  This step of the regulatory process is intended to measure the level of environmental impact each project will have.  The implication of this is to ensure a more rigorous scrutiny process for projects that will have environmental impacts by way of national parks, critical habitat areas (reserved for endangered species), breeding areas, cultural areas, waterways, and areas of scientific, paleontological or anthropological interests.

In this way, the DEQ based their approval of the MATL project on the company’s adherence to the “Suggested Practices for Avian Protection on Power Lines: The State of the Art in 2006.” This document was created through a multi-stakeholder policy approach with input from the California Energy Commission, the Avian Power Line Interaction Committee (APLIC)[28], and the Edison Electric Institute (EEI).[29] In addition to meeting these standards the MATL project must also adhere to the National Electrical Safety Code, the Federal Aviation Administration, water quality statutes during construction, and local visual management plans.[30] This process enables simultaneously action by both the federal level (DOE) and the state level (M DEQ) and related agencies.  This fosters greater input on the proposed projects from a wider range of state and federal levels.

Once the agency comment stage is complete, the DEQ issues a Draft EIS which is released for public comment.  This provides the general public an opportunity to comment on the proposed project.  However, this stage is limited by time; within thirty days the DEQ will issue a Final EIS which legitimizes the IPL development as a real possibility.  Based on this report the DEQ has nine months to review it and draft and issue all permits not covered by the Major Facility Siting Act (MFSA) required by the proposed development.[31] This process occurs simultaneously at the federal level under the jurisdiction of the Department of Energy (DOE).  There is considerable cooperation between the state and federal levels during the second stage.  Within thirty-days of the DEQ issuing a Draft EIS the DOE may issue a presidential permit to continue with construction.  Once the DEQ and the DOE approve the application a Record of Decision is given which authorizes the construction of the IPL.

It is important to note that the federal level of government is also represented by the Federal Energy Regulatory Commission (FERC).    This effective authority over IPLs is retained by the Electrical Reliability Organization (ERO).  In the United States the designated ERO is the North American Electricity Reliability Corporation (NERC).  This will be discussed in the next section.

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North American Electricity Integration

Recently Canada and the United States have fostered a dialogue to create a Smart Energy Grid.  This would effectively lead to greater harmonization among all North American power generators, transmitters, and distributors.  Already this has occurred through a main joint coordinating agency that links the Canadian and American electricity market is through an Electricity Reliability Organization (ERO).  The designated ERO for both Canada and the U.S. is the North American Electricity Reliability Corporation (NERC).

Interestingly NERC was first designated as the main U.S. ERO in 2005 by the Federal Energy Regulatory Commission (FERC).[32] This was a result of the major blackouts of 2003 in the Northeastern regions of North America.[33] Subsequently, the NEB in Canada appointed NERC as the national ERO because it was required if Canada was to increase the trade in electricity with the U.S.  This suggests that NERC is a domestic policy tool that has been applied to Canada – meaning Canada was treated as a sub-set of American domestic policies.  It is arguable that Canada voluntarily joined NERC, yet was there an alternative option?  If Canada was not a part of NERC, then most transmission interconnection points with the U.S. would no longer be functional.  Before however, NERC was a voluntary authority that set out policies and standards for nine regional electrical councils within the U.S.  Now NERC has the ability to fine electrical generators and distributors for non-compliance with their standards and policies.  The regional council that has jurisdiction over the MATL project is the western Electricity Coordinating Council (WECC).

The effective jurisdiction of WECC is over the states and provinces of: Alberta, Arizona, British Columbia, California, Colorado, Idaho, Montana, New Mexico, Oregon, South Dakota, Texas, Washington and Wyoming. [34] WECC has effective control over the interconnection points between Canada and the eastern coordinating councils through many high-voltage power lines; once completed MATL will become another one of these interconnections.

In order for an IPL to be approved WECC must approve the technical aspects of the proposed project.  This ensures that any new transmission infrastructure is compatible with the entire electricity grid in North America.  MATL required a Phase III status on the transmission pathway rating in order to be eligible for connection with the WECC.[35] This means that the IPL is engineered to meet the standards specified by NERC.

NERC is also part of the North American strategy for national defense; the Critical Infrastructure Protection (CIP) program has developed Cyber Security Standards to protect assets deemed high risk but necessary for the reliability of the North American system.[36]

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Discussion

The case of MATL suggests there are many similarities between Canada and the U.S. in terms of regulatory processes of IPLs.  However, it is evident that the process in the U.S. is much better organized with greater chance of public involvement.

In Canada the regulatory process appears less well-organized.  Also, in Alberta there is less opportunity for public consultation, which under Bill 50 may diminish even more over time.  The MATL project has demonstrated that Alberta regulatory process of IPL’s is still in an infancy stage of development.  Before MATL Alberta did not have IPLs.  During the MATL approval process Alberta effectively changed the regulatory agencies responsible for IPLs – the Alberta Utilities Commission (AUC) was not the presiding agency in the approval of MATL.  In fact, the AUC was formed by the dismantling of the Alberta Energy and Utilities Board (EUB).  More investigation is required to determine if the MATL project played an influencing role on the change of the provincial government regulatory framework.

The MATL project has been very effective, especially in the U.S.  The company began the IPL development process in August of 2005 and in four short years was able to secure full regulatory approval from multi-levels of government from two countries.  The MATL project has also been successful in gaining funding by the federal U.S. government under the Recovery Act of 2009; made possible by the DOE through the Western Area Power Administration (WAPA).  In exchange for the conditional right to 50MW of the MATL line capacity, WAPA will cover the expected construction costs of $161 million.[37] MATL is the first project to be funded by WAPA under the Recovery Act of 2009.  This suggests that the project managers of MATL were keenly involved in the U.S. government regulatory process.  The Canadian company understood that in the U.S. regulation is a multilevel process that requires a coordinated and micro-policy approach.  The MATL project: aimed to harmonize the North American electricity system; is sectoral in character; and appealed to regulators because of the potential for renewable energy to be added to the grid.  It is for these three reasons that MATL was able to achieve project approval in the U.S. in just four years.

There is evidence that suggests greater integration of the North American electricity market will lead to a harmonization of regulatory oversight over matters of IPLs.  NERC is a perfect example of how Canada and the U.S. work together through an independent, sectoral-based organization to achieve common ends.  Interestingly, however, NERC was borne as a subset of domestic American policies.  This suggests that Canada could be considered the fifty-first or just another Northern state.  Given the enormous energy reserves in Canada, more specifically in Alberta, perhaps it should be the other way around.  After all, media has a unique ability to continually purport that Alberta is an energy superpower.

Is Alberta an energy superpower?  In electricity the straight answer is no.  Before the construction of MATL Alberta does have access to the United States electrical market through inter-provincial ties via British Columbia and Saskatchewan.[38] This has traditionally allowed for Alberta to engage in the import and export of power.  According to the National Energy Board, between January and February 2009 Alberta exported 167,412 megawatt hours (MW.h) of electricity. This was worth an estimated $5.6 million at an average cost of $35.32/MW.h.  During the same time period Alberta effectively imported 485,367 MW.h of electricity; worth an estimated $16.6 million at an average cost of $52.02/MW.h.[39] Based on this data it is evident that in 2009 Alberta has been a net-importer of electricity and has faced higher importing costs than those states that purchase Alberta electricity.

Alberta has paid a premium on electricity imports; paying on average $16.70/MW.h more to buy than is charged for the export of the exact same commodity.  This is most likely due to discriminatory pricing techniques involved in the electricity industry – wherein prices vary by demand and are influenced by complex financial derivatives.  However, it is interesting to consider that Alberta faces a trade deficit in electricity exports.  It is because of this that Alberta cannot be considered an energy superpower.  However, some may consider the development of Alberta’s first IPL marks an important development in the province’s energy-related economic growth strategy towards becoming an energy superpower.

It is interesting to consider that currently in Alberta most electricity is generated by burning coal.  In 2007 Alberta was responsible for the burning of a staggering 52 per cent of all coal in Canada for the purpose of electrical generation.[40] Coal is a reliable fuel source.  The economics are simple: as electrical demand increases more coal is burned so supply and demand are equal.  Subsequently, coal has a bad reputation based on the high levels of greenhouse gas emissions that result from how it is converted to energy.  If the MATL project enables Alberta to export electricity, then will impending government climate legislation detrimentally affect Alberta exports?  Will the Americans impose higher tariffs on energy from ‘unclean’ sources?  Or will MATL spur the development of renewable energy sources as promised?

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Figure 1: Chart of Electrical Line Losses by Load and Temperature

(DOE 2008)

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Figure 2: Major Western Canadian Electricity Transmission Interconnections – Domestic and International

(NEB January 2003, 9)

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Figure 3: IPL Regulatory Framework – U.S.A.

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Table 1: Key Regulatory Approvals Required by Jurisdiction

*Effective January 1, 2008 the EUB became: Energy Resources Conservation Board (ERCB) and the Alberta Utilities Commission (AUC)

**The amount of time MATL application process required for approval

***Designated the official federal Electricity Reliability Organization (ERO) by FERC in 2006; members include states/provinces from Canada, USA, Mexico

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Table 2: Summary of Alberta Electricity Imports and Exports by Company and Destination 2009

List of Acronyms

AESO   – Alberta Electric Systems Operator

AIES     – Alberta Interconnected Electric System

APLIC   – Avian Power Line Interaction Committee (USA)

AUC     – Alberta Utilities Commission

DEQ     – Department of Environmental Quality (Montana)

DOE     – Department of Energy (USA)

EEI       – Edison Electric Institute (USA)

FERC    – Federal Electricity Regulatory Commission (USA)

IPL       – International Power Line

MATL   – Montana Alberta Tie Limited Project

MSA     – Market Surveillance Administrator (Alberta)

NEB     – National Energy Board (Canada)

NERC   – North American Energy Reliability Corporation

NEPA   – National Environmental Policy Act (USA)

WAPA – Western Area Power Administration (USA)

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Bibliography

AESO. “About AESO.” Alberta Electric System Operator. December 2009. http://www.aeso.ca/ourcompany/ourCompany.html (accessed December 1, 2009).

Alberta Energy. Energy History in Alberta. 02 02, 2009. http://www.energy.alberta.ca/About_Us/1133.asp#2000_-_Present (accessed 12 01, 2009).

DOE. Department of Energy Announces Start of Western Area Power Administration Recovery Act Project . September 19, 2009. http://www.energy.gov/news2009/8017.htm (accessed December 3, 2009).

DEQ. “Federal Draft Environmental Impact Statement.” MATL Transmission Line EIS. 2008. http://gc.energy.gov/NEPA/nepa_documents/docs/deis/eis0399/vol2/Volume2g.pdf (accessed 12 1, 2009).

MATL. Our Project – Regulatory. 2009. http://www.matl.ca/project/regulatory.php (accessed November 1, 2009).

Mintz, Jack M. “The Power of Exports.” National Post. November 9, 2009. http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/11/09/jack-mintz-the-power-of-exports.aspx (accessed December 1, 2009).

Montana DEQ. “DEQ Findings for Certification.” Tonbridge Power – MATL Project. October 22, 2008. http://www.tonbridgepower.com/Project/DEQ%20Findings%20for%20Certification.pdf (accessed December 1, 2009).

NEB. Canadian Electricity Exports and Imports. An Energy Market Assessment, National Energy Board, Calgary: Canada, January 2003, 66.

NEB. Electricity Exports and Imports. Monthly Statistics Repor, Calgary: Canada, September 2009, 31.

NEB. Global and Canadian Context for Energy Demand Analysis. Energy Briefing Note, Calgary: Canada, September 2008, 20.

NEB. International Power Line Security Management. 11 20, 2009. http://www.neb.gc.ca/clf-nsi/rsftyndthnvrnmnt/scrty/ntrntnlpwrlnscrtymngmnt-eng.html (accessed December 7, 2009).

NEB. Who we are, governance, and responsibilities. 11 16, 2009. http://www.neb.gc.ca/clf-nsi/rthnb/whwrndrgvrnnc/rrspnsblt-eng.html (accessed Dec 6, 2009).

Puckett, Carl. “Leaders celebrate the start of MATL work.” Great Falls Tribune. December 01, 2009. http://www.matl.ca/documents/2009/project/press/articles_pdf/2009-12-01%20%28Great%20Falls%20Tribune%29%20-%20Leaders%20celebrate%20start%20of%20MATL%20work.pdf (accessed December 04, 2009).

Reuters. “Alberta needs $14.5 billion in new power lines: agency.” National Post. June 2, 2009. www.nationalpost.com/story.html?id1655795 (accessed December 1, 2009).

Statistics Canada. “Electric Power Generation, Transmission and Distribution (57-202-X).” Statistics Canada. 2007. http://dsp-psd.pwgsc.gc.ca/collection_2009/statcan/57-202-X/57-202-x2007000-eng.pdf (accessed December 2, 2009).

“Summary of State Transmission Siting Law in the Western Interconnection.” Western Governors Association. http://www.westgov.org/wieb/transmission/other/siting_paper.pdf (accessed November 27, 2009).

[2] Recognizable trends exist where consumer consumption is based on time of day and time of year.  For example, most people are home and using electricity in the morning and in the evening; and there is more electricity consumption during the winter, especially in Canada, because there are less day-light hours.

^[3] See Appendix Figure 1: Chart of Electrical Line Losses by Load and Temperature

^[4] EEI – electricity 101 (NEB January 2003, 2)

[5] MATL is a wholly-owned subsidiary of Tonbridge Power Inc. (TSX: TBZ)

[6] MATL site

[7] (Puckett 2009)

[8] Constitutional division of powers

[9] As set out by: National Energy Board Act (1959); Canadian Electricity Policy (1988); Canadian Environmental Assessment Act (1995).

[10] (NEB September 2008)

[11] (NEB 2009).

^[12] (NEB September 2008)

^[13] (NEB 2009)

^[14] As per the constitutional distribution of powers

^[15] (NEB January 2003, viii)

[16] (Alberta Energy 2009)

^[17] Originally the Alberta Energy Utilities Board (EUB) which in January 2008 was dismantled into two separate agencies: the Alberta Utilities Commission (EUC) and the Energy and Resources Conservation Board (ERCB).  The EUB was the presiding agency over the MATL project.

^[18] (AESO 2009)

[19] (Alberta Energy 2009)

[20] (Mintz 2009)

[21] (Reuters 2009)

[22] As discussed in class and in So Near and Yet So Far: NIMBY or BANANA.

[23] (Summary of State Transmission Siting Law in the Western Interconnection n.d.)

[24] See Appendix Figure 3 IPL Regulatory Framework – U.S.A.

[25] This effectively changed some of the 1600 poles to be installed from just being of an H-type design to a monopole type design.

[26] These costs are as simple as a farmer being forced to combine around IPL power-poles that interfere with time-tested farming efficiencies.  These costs do not factor in the impacts of construction or lost potential land-values.

[27] (Montana DEQ 2008, 12)

[28] APLIC is a multi-level committee comprised of electric utility organizations and federal agencies.

[29] EEI is an association of shareholder electric companies that represents 70% of U.S. electric power industry.

[30] (Montana DEQ 2008, 9)

[31] (Summary of State Transmission Siting Law in the Western Interconnection n.d.)

[32] FERC is an independent regulatory agency within the DOE and is responsible to federal courts.

[33] NERC was created under the Energy Policy Act of 2005.

[34] WECC was formed in 2002 by the merger of three regional councils: the Western System Coordinating Council, the Southwest Regional Transmission Association, and the Western Regional Transmission Association.

[35] (MATL 2009)

[36] (NEB 2009)

[37] (DOE 2009)

^[38] See Appendix: Figure 2: Major Western Canadian Electricity Transmission Interconnections – Domestic and International

^[39] See Appendix Table 2: Summary of Alberta Electricity Imports and Exports by Company and Destination 2009

[40] (Statistics Canada 2007)

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FULL DISCLOSURE:

At the time of writing this I owned shares in Tonbridge Power (TVE: TBZ) the parent company of MATL.