Falling demand raises doubts about power plants

Saskatchewan COVID-19 economic impact: real-time data shows drops in electricity demand, oil well licensing, traffic and tickets, plus spikes in internet usage, government site visits, remote work, and alcohol wholesale volumes.

Key Points

COVID-19 reduced energy use, drilling and traffic, while pushing activity online; jobs, rents and sales show strain.

✅ Electricity demand down 6.7%; residential usage up

✅ Oil well license applications fell 15-fold in April

✅ Internet traffic up 16%-46%; wireless LTE up 34%

We’re only just beginning to grasp how COVID-19 has upended Saskatchewan’s economy, its government and all of our lives.

The numbers that usually make headlines — job losses, economic contraction, bankruptcies — are still well behind the pace of the virus and its toll.

But other numbers change more quickly. Saskatchewan people are using less power, and the power industry is adopting on-site staffing plans to ensure reliability as conditions evolve. We’re racking up fewer speeding tickets. And as new restrictions come, we’re clicking onto Saskatchewan.ca as much as 10,000 times per minute.

Here’s some data that provides a first glimpse into how much our province has changed in just six weeks.

Electricity use tends to rise and fall in tandem with the health of the economy, and the most recent data from SaskPower suggests businesses are powering down, while regional utilities such as Manitoba Hydro seek unpaid days off to trim costs.

Peak load requirements between March 15 and April 26 were 220 MW lower than during the same period in 2019, and elsewhere BC Hydro is posting COVID-19 updates at Site C as it manages project impacts. That’s a decrease of 6.7 per cent, with total load on April 29 at 2,551 MW. A megawatt is enough electricity to power about 1,000 homes.

Separate from pandemic impacts, an external investigation at Manitoba Hydro has drawn attention to workplace conduct issues.

But it’s not homes that are turning off the lights. SaskPower spokesman Joel Cherry said commercial and industrial usage is down, while residential demand is up, with household electricity bills rising as more people stay home.

The timing of power demand has also shifted, a pattern seen as residential electricity use rises during work-from-home routines. Peak load would usually come around 8 or 9 p.m. in April. Now it’s coming earlier, typically between 5 and 6 p.m.

Oil well applications fall 15-fold
Oil prices have cratered since late February, and producers in Saskatchewan have reacted by pulling back on drilling plans, while neighbouring Alberta provides transition support for coal workers amid broader energy shifts.

Applications for well licences fell from 242 in January to 203 in February (including nine potash and one helium operations), before dropping to 84 in March. April, the month benchmark oil prices went negative for one day, producers submitted just 15 applications.

That’s 15 times fewer than the 231 applications the Ministry of Energy and Resources received in April 2019.

Well licences are needed for drilling, operating, injecting, producing or exploring an oil and gas or potash well in the province.

There has been no clear trend in well abandonment, however. There were 176 applications for abandonment in March and 155 in April, roughly in line with figures from the year before.

SGI spokesman Tyler McMurchy believes the lower numbers might stem from a combination of lower traffic volumes during part of the month, possibly combined with a shift in police priorities. The March 2020 numbers are also well below January and February figures.

Indeed, the Ministry of Highways and infrastructure reported a 16 per cent decrease in average daily traffic last month compared to March 2019, through its traffic counts at 11 different spots on highways across the province.

In Regina, traffic counts at 16 locations dropped from a high of 2.1 million in the first week of March to a low of 1.3 million during the week of March 22. That’s a 44 per cent decrease.

Counts have gradually recovered to 1.6 million in the weeks since. The data was fairly consistent at all 16 spots, which are largely major intersections, though the city cautioned they may not be representative of Regina as a whole.

Tickets for cellphone use while driving also fell, dropping from 562 in February to 314 in March. McMurchy noted that distracted driving numbers in general have been falling since November as stiffer penalties were announced. Impaired driving tickets were up, by contrast, but still within a typical range.

Internet traffic shoots up 16 per cent, far more for rural high speed
You may be spending a lot more time on Netflix and Facebook in the age of social distancing, and SaskTel has noticed.

From late February to late April, SaskTel has seen “very significant increases in provincial data traffic.” DSL and fibre optic networks have handled a 16 per cent increase in traffic, while demand on the wireless LTE network is up 34 per cent.

Usage on the Fusion network up 46 per cent. That network serves rural areas that don’t have access to other high-speed options.

The specific reference dates for comparison were February 24 and April 27.

“We attribute these changes in data usage to the pandemic and not expected seasonal or yearly shifts in usage patterns,” said spokesman Greg Jacobs.

Saskatchewan.ca was attracting just 70 page views per minute on average in February. But page views jumped over 10,000 per minute at 2:38 p.m. on March 18, as Moe was still announcing the new measures.

That’s a 14,000 per cent increase.

For all of March, visitor sessions on the site clocked in at 3,905,061, almost four times the 944,904 recorded for February.

Bureaucracy has increasingly migrated to cyberspace, with 62 per cent of civil servants now working from home. Government Skype calls, both audio and video, have tripled from 12,000 sessions per day to 35,000.Telephone conference calls increased by a factor of 14 from the first week of February to the second full week of April, with 25 times more weekly call participants. 

The Ministry of Central Services reported a 17 per cent jump in emails received by government over the past two months, excluding the Ministry of Health.

But as civil servants spend more time on their computers, the government’s fleet is spending a lot less time on the road. The ministry has purchased 40 per cent fewer litres of fuel for its vehicles over the past four weeks, compared to the same time last year.

Alcohol wholesale volumes up 22 per cent, then fall back to normal
Retailers bought more alcohol from the Saskatchewan Liquor and Gaming Authority (SLGA) last month, just as the government began tightening pandemic restrictions.

Wholesale sales volumes were up 22 per cent over March 15 to 28, compared to the same period in 2019. SLGA spokesman David Morris said the additional demand “was likely the result of retailers stocking-up as restrictions related to COVID-19 took effect.”

But the jump didn’t last. Wholesale volumes were back to normal for the first two weeks of April. SLGA did notice a very slight uptick last week, however, with volumes out of its distribution centre up three per cent. The numbers do not include Brewer’s Distributors Ltd.

It’s unclear how much more alcohol consumers actually purchased, since province-wide retail numbers were not available.

There was no discernible trend in March for anti-anxiety medication, however. The number of prescriptions filled for benzodiazepines like Valium, Xanax and Ativan see-sawed over March, according to data provided by the College of Physicians and Surgeons, but its associate registrar does not believe the trends are statistically relevant.

One-fifth of tenants miss April rent
About 20 per cent of residential rent went totally unpaid in the first six days of April, according to the Saskatchewan Landlord Association (SLA).

The precise number is 19.7 per cent, but there’s some uncertainty due to the survey method, which is based on responses from 300 residential landlords with 14,000 units. An additional 12 per cent of tenants paid a portion of their rent, but not the full amount. The figures do not include social housing.

Cameron Choquette, the association’s executive officer, partly blames the province’s decision to suspend most landlord tenant board hearings for evictions, saying it “allows more people to take advantage of landlords by not paying their rent and not facing any consequences.”

The government has defended the suspension by saying it’s needed to ensure everyone has a safe place to self-isolate if needed during the pandemic.

March’s jobs numbers were bad, with almost 21,000 fewer Saskatchewan people employed compared to February.

April’s labour force survey is expected on Friday. But new April numbers released Wednesday show that two-thirds of the province’s businesses managed to avoid laying off staff almost entirely.

According to Statistics Canada, 66.2 per cent of businesses reported laying off between zero and one per cent of their employees due to COVID-19. That was better than any other province. Just 7.6 per cent laid off all of their employees, again the best number outside the territories. The survey period was April 3 to 24.

Some businesses are even hiring. Walmart, for instance, has hired 300 people in Saskatchewan since mid-March.

Trade and Export Development Minister Jeremy Harrison chalked the data up to a relatively more optimistic business outlook in Saskatchewan, combined with “very targeted” restrictions and a support program for small and medium businesses.

That support program, which provides $5,000 grants to qualifying businesses affected by government restrictions, has only been around for three weeks. But it’s already been bombarded with 6,317 applications.

The total value of those applications would be $24,178,000, according to Harrison. Of them, 3,586 have been approved with a value of $11,755,000.

Businesses are coming to Harrison’s ministry with thousands of questions. Since it opened in March, the Business Response Team has received 4,125 calls and 1,758 emails.

The kinds of questions have changed over the course of the pandemic. Many are now asking when they can open their doors, according to Harrison, as they wonder about “grey areas” in the Re-Open Saskatchewan plan.

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U.S. Electricity Trade by State, 2013-2017 highlights EIA grid patterns, interstate imports and exports, cross-border flows with Canada and Mexico, net exporters and importers, and market regions like ISOs and RTOs shaping consumption and generation.

Key Points

Brief EIA overview of interstate and cross-border power flows, ranking top net importers and exporters.

✅ Pennsylvania was the largest net exporter, averaging 59 million MWh.

✅ California was the largest net importer, averaging 77 million MWh.

✅ Top cross-border: NY, CA, VT, MN, MI imports; WA, TX, CA, NY, MT exports.

According to the U.S. Energy Information Administration (EIA) State Electricity Profiles, from 2013 to 2017, Pennsylvania was the largest net exporter of electricity, while California was the largest net importer.

Pennsylvania exported an annual average of 59 million megawatt-hours (MWh), while California imported an average of 77 million MWh annually.

Based on the share of total consumption in each state, the District of Columbia, Maryland, Massachusetts, Idaho and Delaware were the five largest power-importing states between 2013 and 2017, highlighting how some clean states import 'dirty' electricity as consumption outpaces local generation. Wyoming, West Virginia, North Dakota, Montana and New Hampshire were the five largest power-exporting states. Wyoming and West Virginia were net power exporting states between 2013 and 2017.

New York, California, Vermont, Minnesota and Michigan imported the most electricity from Canada or Mexico on average from 2013 to 2017, reflecting the U.S. look to Canada for green power during that period. Similarly, Washington, Texas, California, New York, and Montana exported the most electricity to Canada or Mexico, on average, during the same period.

Electricity routinely flows among the Lower 48 states and, to a lesser extent, between the United States and Canada and Mexico. From 2013 to 2017, Pennsylvania was the largest net exporter of electricity, sending an annual average of 59 million megawatthours (MWh) outside the state. California was the largest net importer, receiving an average of 77 million MWh annually.

Based on the share of total consumption within each state, the District of Columbia, Maryland, Massachusetts, Idaho, and Delaware were the five largest power-importing states between 2013 and 2017. Wyoming, West Virginia, North Dakota, Montana, and New Hampshire were the five largest power-exporting states. States with major population centers and relatively less generating capacity within their state boundaries tend to have higher ratios of net electricity imports to total electricity consumption, as utilities devote more to electricity delivery than to power production in many markets.

Wyoming and West Virginia were net power exporting states (they exported more power to other states than they consumed) between 2013 and 2017. Customers residing in these two states are not necessarily at an economic disadvantage or advantage compared with customers in neighboring states when considering their electricity bills and fees and market dynamics. However, large amounts of power trading may affect a state’s revenue derived from power generation.

Some states also import and export electricity outside the United States to Canada or Mexico, even as Canada's electricity exports face trade tensions today. New York, California, Vermont, Minnesota, and Michigan are the five states that imported the most electricity from Canada or Mexico on average from 2013 through 2017. Similarly, Washington, Texas (where electricity production and consumption lead the nation), California, New York, and Montana are the five states that exported the most electricity to Canada or Mexico, on average, for the same period.

Many states within the continental United States fall within integrated market regions, referred to as independent system operators or regional transmission organizations. These integrated market regions allow electricity to flow freely between states or parts of states within their boundaries.

EIA’s State Electricity Profiles provide details about the supply and disposition of electricity for each state, including net trade with other states and international imports and exports, and help you understand where your electricity comes from more clearly.

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UK Clean Electricity Record as wind, solar, and biomass boost renewable energy output, slashing carbon emissions and wholesale power prices during lockdown, while lower demand challenges grid balancing and drives a drop to 153 g/kWh.

Key Points

A milestone where wind, solar and biomass lifted renewables, cutting carbon intensity to 153 g/kWh during lockdown.

✅ Carbon intensity averaged 153 g/kWh in Q2 2020.

✅ Renewables output rose 32% via wind, solar, biomass.

✅ Wholesale power prices slumped 42% amid lower demand.

U.K electricity has never been cleaner. As wind, solar and biomass plants produced more power than ever in the second quarter, with a new wind generation record set, carbon emissions fell by a third from a year earlier, according to Drax Electric Insight’s quarterly report. Power prices slumped 42 per cent as demand plunged during lockdown. Total renewable energy output jumped 32 per cent in the period, as wind became the main source of electricity at times.

“The past few months have given the country a glimpse into the future for our power system, with higher levels of renewable energy, as wind led the power mix, and lower demand making for a difficult balancing act,”said  Iain Staffell, from Imperial College London and lead author of the report.

The findings of the report point to the impact energy efficiency can have on reducing emissions, as coal's share fell to record lows across the electricity system. Millions of people furloughed or working from home and shuttered shops up and down the country resulted in daily electricity demand dropping about 10% and being about four gigawatts lower than expected in the three months through June.

Average carbon emissions fell to a new low of 153 grams per kWh of electricity consumed over the quarter, as coal-free generation records were extended, even though low-carbon generation stalled in 2019, according to the report.

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Global Energy Electrification drives IEA targets as smart grids, storage, EVs, and demand-side management scale. Paris Agreement-aligned policies and innovation accelerate decarbonization, enabling flexible, low-carbon power systems and net-zero pathways by 2060.

Key Points

A shift to electricity across sectors via smart grids, storage, EVs, and policy to cut CO2 and improve energy security.

✅ Smart grids, storage, DSM enable flexible, resilient power.

✅ Aligns with IEA pathways and Paris Agreement goals.

✅ Drives EV adoption, building efficiency, and net-zero by 2060.

The global energy system is changing, with European electricity market trends highlighting rapid shifts. More people are connecting to the grid as living standards improve around the world. Demand for consumer appliances and electronic devices is rising. New and innovative transportation technologies, such as electric vehicles and autonomous cars are also boosting power demand.

The International Energy Agency's latest report on energy technologies outlines how these and other trends as well as technological advances play out in the next four decades to reshape the global energy sector.

Energy Technology Perspectives 2017 (ETP) highlights that decisive policy actions and market signals will be needed to drive technological development and benefit from higher electrification around the world. Investments in stronger and smarter infrastructure, including transmission capacity, storage capacity and demand side management technologies such as demand response programs are necessary to build efficient, low-carbon, integrated, flexible and robust energy system. 

Still, current government policies are not sufficient to achieve long-term global climate goals, according to the IEA analysis, and warnings about falling global energy investment suggest potential supply risks as well. Only 3 out of 26 assessed technologies remain “on track” to meet climate objectives, according to the ETP’s Tracking Clean Energy Progress report. Where policies have provided clean signals, progress has been substantial. However, many technology areas suffer from inadequate policy support. 

"As costs decline, we will need a sustained focus on all energy technologies to reach long-term climate targets," said IEA Executive Director Dr Fatih Birol. "Some are progressing, but too few are on track, and this puts pressure on others. It is important to remember that speeding the rate of technological progress can help strengthen economies, boost energy security while also improving energy sustainability."

ETP 2017’s base case scenario, known as the Reference Technology Scenario (RTS), takes into account existing energy and climate commitments, including those made under the Paris Agreement. Another scenario, called 2DS, shows a pathway to limit the rise of global temperature to 2ºC, and finds the global power sector could reach net-zero CO2 emissions by 2060.

A second decarbonisation scenario explores how much available technologies and those in the innovation pipeline could be pushed to put the energy sector on a trajectory beyond 2DS. It shows how the energy sector could become carbon neutral by 2060 if known technology innovations were pushed to the limit. But to do so would require an unprecedented level of policy action and effort from all stakeholders.

Looking at specific sectors, ETP 2017 finds that buildings could play a major role in supporting the energy system transformation. High-efficiency lighting, cooling and appliances could save nearly three-quarters of today’s global electricity demand between now and 2030 if deployed quickly. Doing so would allow a greater electrification of the energy system that would not add burdens on the system. In the transportation system, electrification also emerges as a major low-carbon pathway, with clean grids and batteries becoming key areas to watch in deployment.

The report finds that regardless of the pathway chosen, policies to support energy technology innovation at all stages, from research to full deployment, alongside evolving utility trends that operators need to watch, will be critical to reap energy security, environmental and economic benefits of energy system transformations. It also suggests that the most important challenge for energy policy makers will be to move away from a siloed perspective towards one that enables systems integration.

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COVID-19 Impact on U.S. Power Demand shows falling electricity load, lower wholesale prices, and resilient utilities in competitive markets, with regional differences tied to weather, renewable energy, stay-at-home orders, and hedging strategies.

Key Points

It outlines reduced load and prices, while regulatory design and hedging support utility stability across regions.

✅ Load down in NY, New England, PJM; weather drives South up.

✅ Wholesale prices fall 8-10% in key markets.

✅ Decoupling, contracts, hedging support utility earnings.

On March 27, Bloomberg New Energy Finance (BNEF) released a report on electricity demand and wholesale market prices impact from COVID-19 fallout. The model compares expected load based largely on weather with actual observed electricity demand changes.

So far, the hardest hit power grid is New York, with load down 7 and prices off by 10 percent. That’s expected, given New York City is the current epicenter of the US health crisis.

Next is New England, with 5 percent lower demand and 8 percent reduced wholesale prices for the week from March 19-25. BNEF says the numbers could go higher following advisories and orders issued March 24 for some 70 percent of the region’s population to stay at home.

Demand on the biggest grid in the US, the PJM (Pennsylvania/Jersey/Maryland), is 4 percent lower, with prices dropping 8 percent, as recent capacity auction payouts fell sharply. BNEF believes there will be more impact as stay at home orders are ramped up in several states.

California’s power demand for March 19-25 was 5 percent below what BNEF’s model expects without COVID-19 impact. That reflects a full week of stay-at-home orders from Governor Newsom issued March 19.

Health officials in Los Angeles and elsewhere expect a spike in COVID-19 cases in coming weeks. But BNEF’s model now actually projects rising electricity load for the state, due to what it calls "freakishly mild weather a year ago."

Rounding out the report, power demand is up for a band of southern states stretching from Florida to the desert Southwest, with weather more than offsetting public response to COVID-19 so far. BNEF says the Northwest’s grid "has not yet been highly impacted," while the Southeast is "generally in line" with pre-virus expectations.

Clearly, all of this data can change quickly and radically. Only California and New York are currently in full shutdown mode. Following them are New England (70 percent), the Midwest (65 percent), Texas (50 percent), PJM (50 percent) and the Northwest (50 percent).

In contrast, only small parts of Florida, the Southeast and Southwest are restricting movement. That could mean a big future increase for shut-ins, with heightened risks of electricity shut-offs that burden households and a corresponding impact on power demand.

Also, weather will play a major role on what happens to actual electricity demand, just as it always does. A very hot summer, for example, could offset virus-related shut-ins, just as it apparently is now in states like Texas. And it should be pointed out that regions vary widely by exposure to recession-sensitive sources of demand, such as heavy industry.

Most important for investors, however, is the built in protection US utility earnings enjoy from declining power demand, even amid broader energy crisis pressures facing the sector. For one thing, US power grids in California, ERCOT (Texas), MISO (Midwest), New England, New York and PJM have wholesale power markets, where producers compete for sales and the lowest bidder sets the price.

In those states, most regulated utilities don’t produce power at all. In fact, companies’ revenue is decoupled entirely from demand in California, as well as much of New England. In the roughly three-dozen states where utilities still operate as integrated monopolies, demand does affect revenue, and in many regions flat electricity demand already persists. But the cost of electricity is passed through directly to customers, whether produced or purchased.

A number of US electric companies have invested in renewable energy facilities as part of broader electrification trends nationwide. These sell their output under long-term contracts primarily with other utilities and government entities.

This isn’t a risk free business: For the past year, generators selling electricity to bankrupt PG&E Corp (PCG) have had their cash trapped at the power plant level as surety for lenders. But even PG&E has honored its contracts. And with states continuing aggressive mandates for renewable energy adoption, growth doesn’t appear at risk to COVID-19 fallout either.

The wholesale price of power from natural gas, coal and many nuclear plants was already sliding before COVID-19, due to renewables adoption and low natural gas prices, even as coal and nuclear disruptions raise reliability concerns. But here too, big producers like Exelon Corp (EXC) and Vistra Energy (VST) have employed aggressive price hedging near term, with regulated utilities and retail businesses protecting long-term health, respectively.

Bottom line: It’s early days for the COVID-19 crisis and much can still change. But so far at least, the US power industry is absorbing the blow of reduced demand, just as it’s done in previous crises.

That means future selloffs in the ongoing bear market are buying opportunities for best in class electric utilities, not a reason to sell. For top candidates, see the Conrad’s Utility Investor Portfolios and Dream Buy List in the March issue. 

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Northern Pass Project faces rejection by New Hampshire regulators, halting Hydro-Quebec clean energy transmission lines to Massachusetts; Eversource vows appeal as the Site Evaluation Committee cites development concerns and alternative routes through Vermont and Maine.

Key Points

A project to transmit Hydro-Quebec power to Massachusetts via New Hampshire, recently rejected by state regulators.

✅ New Hampshire SEC denied the transmission application

✅ Up to 9.45 TWh yearly from Hydro-Quebec to Massachusetts

✅ Eversource plans appeal; alternative routes via Vermont, Maine

Regulators in the state of New Hampshire on Thursday rejected a major electricity project being piloted by Quebec’s hydro utility and its American partner, Eversource.

Members of New Hampshire’s Site Evaluation Committee unanimously denied an application for the Northern Pass project a week after the state of Massachusetts green-lit the proposal.

Both states had to accept the project, as the transmission lines were to bring up to 9.45 terawatt hours of electricity per year from Quebec’s hydroelectric plants to Massachusetts as part of Hydro-Quebec’s export bid to New England, through New Hampshire.

The 20-year proposal was to be the biggest export contract in Hydro-Quebec’s history, in a region where Connecticut is leading a market overhaul that could affect pricing, and would generate up to $500 million in annual revenues for the provincial utility.

Hydro-Quebec’s U.S. partner, Eversource, said in a new release it was “shocked and outraged” by the New Hampshire regulators’ decision and suggested it would appeal.

“This decision sends a chilling message to any energy project contemplating development in the Granite State,” said Eversource. “We will be seeking reconsideration of the SEC’s decision, as well as reviewing all options for moving this critical clean energy project forward, including lessons from electricity corridor construction in Maine.”

The New Hampshire Union Leader reported Thursday the seven members of the evaluation committee said the project’s promoters couldn’t demonstrate the proposed energy transport lines wouldn’t interfere with the region’s orderly development.

Hydro-Quebec spokesman Serge Abergel said the decision wasn’t great news but it didn’t put a end to the negotiations between the company and the state of Massachusetts.

The hydro utility had proposed alternatives routes through Vermont and Maine amid a 145-mile transmission line debate over the corridor should the original plan fall through.

“There is a provision included in the process in the advent of an impasse, which allows Massachusetts to go back and choose the next candidate on the list,” Abergel said in an interview. “There are still cards left on the table.”

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