Québec and Ontario reach agreement for electricity capacity exchange

Ontario-Que9bec Energy MOU enables a seasonal electricity capacity exchange, aligning peak demand, improving grid reliability and affordability, expanding operating reserves, and fostering cross-border energy trade, conservation, and cap-and-trade collaboration to reduce emissions.

The Ontario and Québec cabinets recently reached several agreements that will strengthen Ontario and Québec's partnership to build up Central Canada's economy, create jobs and make a difference in people's lives.

Ontario and Québec have signed a Memorandum of Understanding MOU to exchange electricity capacity, and projects like the Romaine hydro complex help ensure sufficient supply, to help make power more affordable and reliable in each province.

The Seasonal Capacity Exchange -- the first agreement of its kind between the two provinces -- takes advantage of the fact that electricity demand peaks in the winter in Québec and in the summer in Ontario. Starting in late 2015, Ontario will make 500 megawatts MW of electricity capacity available to Québec in the winter, and Québec will make 500 MW available to Ontario in summer 2014.

This agreement comes at no additional cost to Ontario and Québec electricity ratepayers. It will help Ontario reduce future costs, by reducing the need to build new electricity generating stations after 2020, and it will help Québec meet its seasonal capacity needs, even as exports to New York expand in 2025.

The two provinces also agreed to increase the amount of electricity that Ontario can call on Québec to supply within 10 minutes' notice, similar to NYISO-Québec transactions that enhance reliability, from 50 MW to 100 MW. This operating reserve provides stand-by power in the event of an emergency, such as a power-plant shutdown or the loss of a transmission line. Ontario's current operating reserve is about 1,400 MW -- or one and a half times the size of the largest generating unit in the province.

As well, the provinces have agreed to the following terms, drawing on Québec-Vermont power deals as examples.

-- Explore scheduling further electricity imports from Québec to Ontario

-- Investigate long-term opportunities to expand electricity trade

-- Collaborate on oil and gas issues, such as responding to TransCanada's Energy East pipeline application to the National Energy Board and conducting a joint study on the competitiveness of the provinces' petroleum refining and petrochemical sectors

-- Collaborate and share experiences on electricity systems options for remote First Nations communities in Ontario and off-grid communities in Québec

Climate Change

Québec and Ontario will work together to build a stronger economy in Central Canada, including initiatives like the EV charging network expansion to Ontario, while reducing greenhouse gas GHG emissions. The provinces have signed an MOU in which they have agreed to agreed to the following terms.

-- Build a stronger and more competitive low-carbon economy by promoting initiatives such as setting a price on carbon and adopting energy efficiency and conservation measures

-- Increase public awareness of climate change

-- Explore strengthening and broadening the use of market-based mechanisms to reduce greenhouse gas emissions, while promoting a sustainable and competitive economy on adaption

-- Share knowledge and cooperate on actions to fight climate change by enhancing research cooperation and exploring opportunities for joint projects on climate-change adaptations -- Harmonize how the provinces collect and report GHG emissions data to facilitate joint initiatives

Québec has also agreed to share with Ontario new information learned from its participation in California's cap-and-trade program, which works to curb greenhouse gas emissions and promote sustainable economic growth.

As well, the provinces have agreed to collaborate, through the Canadian Council of Ministers of the Environment and through the Council of the Federation, to support a continuous dialogue on climate change and to ensure the Canadian Energy Strategy being developed takes climate-change objectives into account, while considering lessons from national grid proposals during this dialogue.

Infrastructure Investments

Ontario and Québec are calling on the federal government to provide additional infrastructure funding through an unconditional block transfer that grows with the needs of the economy.

Smart investments in public infrastructure are critical to driving economic growth. Reliable and resilient infrastructure boosts productivity, helps manage congestion and enables goods to get to market faster.

Federal funding needs to be adequate and permanent to help maintain existing infrastructure and build the new infrastructure that will help us to continue to attract investment and compete globally. Currently, the federal government's contribution is significantly less than the amount of benefit it derives from provincial infrastructure investments.

Our provinces have significant infrastructure needs and are doing what they can to address the cumulative infrastructure gap. Over the next decade, Ontario plans to invest about $130 billion in infrastructure, Québec about $90 billion or, on average, about two per cent of provincial GDP annually. Over the same period, the federal government is planning on investing across Canada only less than one third of the amount that Québec and Ontario will contribute.

The federal infrastructure transfer also needs to be flexible, in order to support provinces' established infrastructure plans and priorities such as investments in public transit, in northern and maritime infrastructure. Currently, provinces are required to negotiate federal contributions on a project-by-project basis, which can often lead to unnecessary delays in project approvals.

At the same time, the federal government needs to increase its investments in its own assets and in other areas of responsibility, including First Nations infrastructure on-reserve, such as clean drinking water.

Energy East Pipeline

Ontario and Québec have agreed on joint principles and collaborative work to guide their respective decisions concerning pipeline projects, including TransCanada's Energy East project.

Ontario and Québec are both committed to jobs, prosperity, the environment, and respect for local and aboriginal communities. That is why resource development projects that could have significant economic development benefits for the whole country should proceed when they are environmentally sustainable and have local support.

The Canadian Energy Strategy being developed by Canada's Premiers is the mechanism through which shared economic and environmental goals relating to energy projects, and a cohesive national power grid vision, can be achieved.

Québec and Ontario have agreed on the following principles that must be applied by proponents with respect to pipeline projects.

-- Compliance with the highest available technical standards for public safety and environmental protection

-- Have world-leading contingency planning and emergency response programs -- Proponents and governments consult local communities and fulfill their duty to consult with Aboriginal communities

-- Take into account the contribution to greenhouse gas emissions

-- Provide demonstrable economic benefits and opportunities to the people of Ontario and Québec, in particular in the areas of job creation over both the short and long term

-- Ensure that economic and environmental risks and responsibilities, including remediation, should be borne exclusively by the pipeline companies in the event of a leak or spill on ground or water, and provide financial assurance demonstrating their capability to respond to leaks and spills

-- Interests of natural gas consumers must be taken into account

Trade and Cooperation

The two provinces have agreed to work together to examine how they can align the chapters of the Ontario-Québec Trade and Cooperation Agreement OQTCA on government procurement with those in the Canada-European Union Comprehensive Economic and Trade Agreement CETA by the end of April in 2015.

Aligning the government procurement rules in the OQTCA with those in CETA would ensure that Québec and Ontario suppliers receive similar access than EU suppliers.

Ontario and Québec have also agreed to the following terms.

-- Enhance their commitment to share information on regulations and best practices, with a view to having a tangible impact on business

-- Explore opportunities to conduct joint trade missions for industries of mutual interest and/or to countries or regions of mutual interest

-- Re-establish the OQTCA Private Sector Advisory Committee -- which was formed in 2010 and has been inactive since 2012 -- to provide strategic insights to the ministers and identify areas for further collaboration -- Have Ontario's Ministry of Tourism, Culture and Sport and the Ministère du Tourisme du Québec work together on several tourism and cultural initiatives that would better position both provinces to compete in the global market. Ontario and Quebec will partner on an international marketing proposal, which would include an agreement to co-promote the provinces in China and France

The Francophonie

The provinces signed a declaration that recognizes the key role played by the Francophones in the founding and building of modern Canada, and their importance to Canada's future and that Francophonie is a fundamental characteristic of the Canadian identity.

Ontario and Québec are committed to work together toward the promotion, protection, longevity and vitality of the French fact.

Through the Declaration, Québec and Ontario will:

-- Promote exchanges between young Ontario Francophones, those attending French immersion classes and young Quebecois to give youth in each province experience in and greater understanding of life in the other province

-- Call on the federal government to act quickly on Francophone immigration so that the demographic weight of Francophones is maintained across Canada

-- Call on the federal government to provide support to Radio-Canada consistent with its mandate to offer radio and television services in French across Canada in order to reflect the specific needs of Francophones

-- Celebrate 400 years of French presence in Ontario

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