Ontario-Québec electricity collaboration and interprovincial trade barriers: using the Agreement on Internal Trade to promote a more sustainable electricity sector in Canada

The purpose of this major paper is to examine the potential for the Agreement on Internal Trade (AIT) to facilitate electricity trade between the provinces of Ontario and Québec. The AIT covers a wide range of topics, but its chapter on energy was never completed. The principle objective of this paper is to identify current interprovincial trade barriers in the electricity sector and determine whether the addition of an energy chapter to the AIT would be a viable method of minimizing those barriers.

In recent months, importing electricity from Québec has been increasingly recognized as an alternative to building electricity production infrastructure in Ontario. Two recent workshops in Toronto and Montréal identified a number of potential benefits that could be achieved through greater electricity collaboration between the two provinces. These include technical benefits such as greater flexibility and the balancing of intermittent renewable energy resources; economic benefits from a price somewhere between what Québec currently receives for its electricity exports to the Northeastern United States and the price that Ontario is planning to pay for its nuclear refurbishments; and the political opportunity to act cooperatively in demonstrating leadership on the issue of climate change.

After briefly going over the potential benefits of interprovincial electricity trade between Ontario and Québec, this paper introduces the general concept of internal trade barriers. It then gives an overview of the federal and provincial regulators involved in electricity planning in Canada, Québec and Ontario, before delving into the technical, political, cultural and regulatory barriers present in Canada's electricity sector.

The paper then gives an introduction to the history, development and structure of the AIT before discussing how the AIT energy chapter would relate to recent initiatives to increase Ontario-Québec electricity cooperation. Finally, it offers suggestions for inclusions that could be made to the AIT energy chapter in order to address the internal trade barriers previously identified.

The results of my research indicate that although the AIT could play a meaningful role in addressing interprovincial trade barriers in Canada's electricity sector, it may not be the most effective mechanism for specifically facilitating electricity trade between Québec and Ontario. It is possible that proceeding bilaterally with agreements such as the Ontario and Québec Trade and Cooperation Agreement might be the best way to address the trade barriers between the two provinces, given the relative ease through which bilateral agreements have been reached in comparison to the difficulties experienced in relation to the AIT negotiations.