America's Canadian Problem

U.S.-Canada electricity trade is shrinking, and some American companies may be left without their megawatts for the summer.

The megawatt flow to the United States from Canada is winding downward despite the continuing U.S. requirement for substantial peak demand, energy experts say. This downward trend in cross-border electricity trade is due in large part to rising demand from Canada's economic growth. And with more natural gas-fired generation starting up on both sides of the border, signs also indicate that during the rest of the decade, the United States and Canada increasingly will become less dependent on one another for peak demand electricity needs.

Traditionally, as U.S. summer peak demand drives the market to attractive, if not volatile, pricing levels, Canada exports between 6 percent and 8 percent of its total electricity generation to a host of U.S. states. Then, during the winter (Canada's peak demand period, except for heavily air-conditioned Ontario), U.S. generators export electricity across the well-connected border to the north, in a natural complement of seasonal trade.