Electricity Trade
Since 1988, Powerex Corp. — BC Hydro’s power marketing subsidiary — has made a name for itself as a leading marketer (buyer and seller) of wholesale energy products and services in Western Canada and the Western United States, and a growing niche player in other markets across North America.
Powerex’s power marketing and trade activities help optimize BC Hydro’s electric system resources, improve the security and reliability of electricity supply for the province, and provide significant economic benefits to the people of British Columbia. In fiscal years 2001 and 2002 alone, Powerex’s activities generated revenues of over $9 billion for the Province.
Electricity trade and Power Marketing are possible because BC Hydro’s bulk transmission network is interconnected with Alberta to the east, and the Bonneville Power Administration to the south. This transmission network links BC Hydro with a huge market for the purchase and sale of wholesale electricity outside the province.
The wholesale electricity marketplace is characterized by increased competition among a growing number of energy suppliers, price volatility resulting from fluctuations in energy supply and demand, and continual change as electricity markets restructure. Despite this, BC Hydro, through Powerex Corp., has become a key participant in this marketplace, earning significant revenues for BC Hydro and the Province.
The flexibility of BC Hydro’s predominantly hydroelectric generating system enables Powerex to purchase electricity from the market when prices are lower, and sell electricity to the market when prices are higher. This flexibility also enables Powerex to take advantage of differences in demand between the winter-peaking north and summer-peaking south, and between heavy use and light use hours.
General trends exist both seasonally and daily, corresponding to fluctuations in supply and demand. Seasonally, the price of electricity in the marketplace will be higher during the cold winter months with an increase in heating, and again during the warmer summer months when the use of air conditioning increases. Daily price fluctuation also exists. Prices increases during working hours and drops overnight when activity is low. The term ‘peak hours’ refers to the time period where demand (load), and thus prices, are higher. Alternatively, the term ‘off peak hours’ refers to the period where demand (load), and thus prices, are generally lower.
In the early years, Powerex relied heavily on surplus energy from the BC Hydro system to supply its trade customers. However in recent years, as Hydro’s surplus has decreased, Powerex has increasingly been purchasing low-priced electricity from outside the BC Hydro system to meet its own trade commitments and to support BC Hydro’s domestic needs. In fact, in fiscal 2001 and 2002, Powerex was a net purchaser of electricity. These purchases are made from other producers in B.C., western Canada and the United States.
In September 1997, Powerex received Power Marketing Authorization from the U.S. Federal Energy Regulatory Commission, allowing Powerex to conduct wholesale power sales and purchases directly in the U.S. This authorization enables Powerex to earn even greater revenues for BC Hydro and the province through the purchase and sale of electricity completely outside B.C., in the U.S.
Electricity trade is regulated by both the provincial and federal governments. Powerex and BC Hydro hold Energy Removal Certificates from the provincial government and Export Permits from the National Energy Board which outline the terms and conditions for Powerex’s electricity exports.
Further, BC Hydro’s operates its facilities within the parameters outlined in operating licences and permits issued by the provincial government. Within these parameters, BC Hydro tries to maximize efficiency to meet the demands of all customers and to optimize the financial, social and environmental value of BC Hydro’s electric system for British Columbians.
