Electric Power in the United States, Canada, and Mexico: Opportunities for Transboundary Regulatory and Planning Harmonization

A special RFF workshop series, sponsored by the US Department of Energy (DOE) in collaboration with the Center for Advanced Energy Studies’ Energy Policy Institute at Boise State University and the Utton Transboundary Resource Center at the University of New Mexico.

The DOE’s first Quadrennial Energy Review (QER), released in April 2015, included focus on “Integrating North American Energy Markets,” reflecting the large potential gains in harmonizing fossil energy and electricity markets across the United State, Canada, and Mexico. Reaping full economic benefits, while protecting the local and global environment, will require revisions to policies and regulatory structures throughout the continent. This issue was highlighted in the QER, with a recommendation that specifically called for the establishment of “collaborative programs in each country . . . to develop legal, regulatory, and policy roadmaps for harmonizing regulations across borders.” These RFF workshops represent the initial steps toward achieving that recommendation.

The two workshops focused on the electric power sector, where lessons from the close US–Canada relationship may feed into improved US–Mexico grid interactions. The goal of these workshops was to discuss North American cross-border policies, regulations, and planning issues associated with the electricity sector and identify gaps and opportunities within existing frameworks—in essence, to identify a potential path toward regulatory harmonization across borders. Each workshop gathered around 30 representatives from federal, provincial, and state governments; academic institutions; nongovernmental organizations; and the private sector.

Discussions at the US–Canada workshop (presentation available) and the US–Mexico workshop (presentation available) explored the following questions:

• Where and how can the timing and amounts of US–Canada cross-border power sales be made more economically efficient, in both deregulated and vertically integrated areas? What are the barriers to making US–Mexico cross-border flows more efficient, and how can those barriers be overcome?
• What are the worthwhile opportunities for improving coordination on reliability, and how can they be better realized (especially ones that go beyond current North American Electric Reliability Corporation activities for the United States and Canada)?
• Are changes needed to attract adequate investment for US–Mexico activities, and to attract it to where it is most needed?
• Could agreements between US and Canadian governments or control area operators reduce electricity trade duties or transmission charges that are currently in excess of those justified by congestion and losses?
• How can the United States and Canada, locally and nationally, build on their already strong coordination to achieve better harmonization in power system planning (including siting and approvals) that has cross-border effects? How can planning, siting, and approval of projects with cross-border effects in both the United States and Mexico be more thoroughly imbued with desirable characteristics (low-cost natural gas, low-cost renewable energy opportunities on both sides of the border, increased openness to electrical interconnectedness, and so on)? What important lessons apply from relationships across the US–Canada border and elsewhere?
• All three countries have or are developing policies to mitigate conventional air pollutants and carbon dioxide emissions from the electricity utility sector, and encourage renewables. What are the benefits of harmonizing these policies and the processes that give rise to them? What opportunities exist?