360 Portage Ave (18) • Winnipeg Manitoba Canada • R3C 0G8

Telephone / No de téléphone : 204 360-3692 • Fax / No de télécopieur : 204 360-4103

wjhamlin@hydro.mb.ca

2013 12 11

Reid P. Harvey

Environmental Protection Agency

Director, Clean Air Markets Division

1200 Pennsylvania Avenue, N.W.

Mail Stop 62041

Washington, D.C. 20460

Dear Mr. Harvey:

MANITOBA HYDRO'S COMMENTS ON NEW SOURCE PERFORMANCE STANDARDS FOR CO2

EMISSIONS FROM EXISTING POWER PLANTS

I. INTRODUCTION

President Obama’s June, 2013 Presidential Memorandum to the Environmental Protection 

Agency (“EPA”, the “Agency”) called for the development of carbon pollution standards that 

ensure continued provision of reliable and affordable electric power for consumers and 

businesses as well as the continued development and deployment of cleaner technologies.

Manitoba Hydro is providing these comments to assist the EPA in its consideration of New 

Source Performance Standards (“NSPS”) for existing power plants.

Manitoba Hydro is a Canadian Provincial Crown Corporation with $2 billion in annual revenue 

and $15 billion in assets. We are a fully integrated part of the North American electricity grid

with long-term power purchase agreements with utilities in Minnesota and Wisconsin. Our 

existing generating capacity is 5,685 megawatts (MW) and 98% of our energy production comes 

from renewable, low-emitting hydropower.

Canadian hydropower imports reduce American utilities' greenhouse gas (“GHG”) emissions and 

cross-border electricity trade supports a reliable and secure United States (“US”) electricity 

market.

Manitoba Hydro advocates that the EPA's performance standards should allow states and utilities 

the flexibility to meet their compliance obligations through the purchase of Canadian 

hydropower that is consumed in the US. Further, to the extent that states are given credit for 

early action on climate change, EPA should fully recognize US utilities' efforts to reduce their 

CO2 emissions through the purchase of Canadian hydropower.

Page 1 of 6
Many states rely on imports of Canadian hydropower to meet a portion of their load. These 

imports not only reduce emissions, but also deliver many other benefits to American utilities and 

consumers. Failure to recognize the important role that Canadian hydropower plays would 

penalize existing purchasers of this electricity and preclude the potential to expand the benefits 

through additional resources and sales.

The remainder of this submission will explore the following benefits associated with imports of 

Canadian hydropower: 

• reliability benefits; 

• enhancing US energy security; 

• supporting the development of U.S, renewables; and

• affordable CO2 emission reductions.

II. INTEGRATED MARKETS AND RELIABILITY BENEFITS

The integrated nature of our mutual electrical grids, reliability regulation, and market rules 

delivers many benefits. It is critical that new regulations reflect this reality and do not introduce 

obstacles to the free flow of electrons but rather enhance and support it. Regulations should 

strive to treat resources the same on both sides of the border.

The electrical grids of the US and Canada are highly interconnected. Indeed, they are more 

accurately thought of as a single North American electrical grid, composed of over 200,000 

miles of high-voltage transmission lines and 35 interconnections between the US and Canada. In 

2012, approximately 70 TWh flowed across the US-Canada border through this system of power 

lines – from Canada to the US and vice-versa.

These interconnections allow electricity networks to better withstand sudden disturbances caused 

by weather or unexpected issues with system components. Because of its flexibility and very fast 

response times, interconnecting with hydropower enhances regional reliability. Hydropower 

almost instantaneously responds to fluctuations in supply and demand, helping to avoid system 

failures during emergencies and rapidly re-establishing system operation in the event of a 

blackout.

This electricity trade help utilities on both sides of the border to balance generation and demand, 

and helps ensure that needs are met as efficiently as possible. The sharing of electricity resources 

also enables both countries to maximize the efficiency of their generation resources during peak 

load periods. Where US demand is generally highest in the summer, Canada's is generally 

highest in the winter. The result is that our systems can support each other and that Canada has 

an ample supply of virtually emission-free energy available to meet US peak (and ongoing) 

needs. 

Cross border trade between our two countries is made possible by adherence to a common set of 

operational and commercial rules. This includes mandatory electric reliability standards 

developed by the North American Electric Reliability Corporation (“NERC”) for purposes of 

ensuring reliable operation of the integrated grid. All Canadian provinces with a footprint in the 

Page 2 of 6
larger North American bulk power system have crafted legislative, regulatory or other 

mechanisms to ensure NERC standards are adopted and enforced within their borders. 

Market coordination is also essential to ensuring a seamless, uninterrupted flow of electrons 

across our shared border. Canadian utilities follow a common set of practices and protocols in 

order to transact with Independent System Operators, Regional Transmission Organizations and

other market participants in the US. In fact, the province of Manitoba is located within the 

footprint of the US-based Midcontinent Independent System Operator (“MISO”). Compliance 

with these terms ensures greater liquidity in wholesale and bilateral markets, and a greater 

diversity of cost competitive supply options for customers throughout North America.

Canadian utilities may also participate in renewable energy tracking systems across the US. 

These state and regional tracking systems provide a transparent and verifiable process for 

identifying hydropower electricity imports from Canada. The Province of Manitoba is a 

participating jurisdiction in the Midwest Renewable Energy Trading System (MRETS).

Manitoba Hydro registers its renewable generation within this system and transfers renewable 

attributes to American counterparties. 

III. ENHANCING US ENERGY SECURITY 

Canada plays an important role in the overall energy security of the US. Unlike overseas 

resources, Canadian hydropower is a secure North American resource. The two countries are 

each others’ largest trading partners. In 2012, Canada exported approximately 58 TWh of 

electricity to the US. The vast majority of that electricity (~80%) was from hydropower. These 

imports to the US represent 10% of the hydro currently consumed in the US, equivalent to 

powering 3.5 million US homes.

Cross-border interconnections offer customers on either side of the border more options to 

maintain sufficient resources for delivery and to withstand sudden disturbances or unanticipated 

losses in system equipment. In some border states, Canadian imports provide an important 

portion of the electricity necessary to meet the state’s needs. For example, Manitoba Hydro

typically provides the Upper Midwest with about 10,000 GWh of electricity per year. This is 

enough to power nearly 1 million homes, and accounts for over 30% of the region’s supply of 

renewable generation. Manitoba Hydro currently delivers electricity into the Midwest that is 

approximately equivalent to 11% of Minnesota’s total electricity demand.

In Minnesota, Manitoba Hydro maintains long-standing partnerships with a number of utilities.

Minnesota Power currently purchases hydroelectricity from Manitoba Hydro, and the 

relationship supports Minnesota Power's North Dakota wind farms. These two companies 

reached a long-term power purchase agreement in 2011, under which Manitoba Hydro will sell 

250 MW of electricity to Minnesota Power for 15 years beginning in 2020. Xcel Energy and 

Manitoba Hydro also recently extended and enhanced a power purchase agreement for 850 MW.

These two companies have been partners since the early 1970s. Finally, Manitoba Hydro 

recently extended a 200 MW seasonal diversity exchange arrangement with Great River Energy 

of Minnesota, which will run until 2030.

Page 3 of 6
In Wisconsin, Manitoba Hydro recently entered into a power purchase agreement with 

Wisconsin Public Service for the sale of 100 MW of electricity from 2021-2027. The parties are 

negotiating to expand the sale to up to 500 MW.

IV. SUPPORTING THE DEVELOPMENT OF US RENEWABLES

In many border states, Canadian hydroelectricity can help to support the development of 

intermittent renewable energy sources (e.g., wind, solar). Hydropower is unique in providing 

large scale energy storage. When excess US wind enters the market, Canadian hydropower 

operators can store water behind dams and absorb that wind power. When less US wind blows, 

they can release water and send clean power to the grid. 

In September, MISO released its draft "Wind Synergy Study" that examined this relationship.

This study explored the benefits of incorporating new and existing hydroelectric facilities located 

in Manitoba with the current and planned wind generation in the remaining MISO footprint. For 

the first time, this study used five-minute intervals to examine market interactions, and the 

results clearly demonstrated hydropower's ability to quickly ramp up or down to adjust to 

variability in wind generation. According to the report, these synergies have the potential to 

provide weighted average load cost savings in the US Midwest of $430 million annually1.

Hydro increases when MISO wind drops off and decreases when wind generates strongly

1 https://www.misoenergy.org/_layouts/MISO/ECM/Download.aspx?ID=160821

Page 4 of 6

 
V. AFFORDABLE CO2 EMISSION REDUCTIONS

Cross-border interconnections also offer US customers expanded access to low-carbon and 

competitively-priced resources. For years, clean electricity from Canada has competed with a 

diverse set of supply options in both bilateral and wholesale power markets across the US. And 

from 2006 - 2012, Manitoba Hydro’s net annual 9.1 TWh of power exports to the US have 

reduced global GHG emissions by approximately 48 million tonnes through the displacement of 

fossil fuel generation in neighboring Midwest jurisdictions.

A lifecycle analysis of Manitoba Hydro's recently constructed Wuskwatim Generating Station

conducted by the independent, non-profit Pembina Institute, shows GHG emissions from 

Wuskwatim are comparable to other renewable power generation such as wind and insignificant 

relative to those of conventional thermal generating stations. Lifecycle analyses such as these 

consider not just the emissions associated with the direct fuel use but also the emissions 

associated with such things as the manufacture and transportation of materials/components, fuel 

use during construction, land-use change and the eventual decommissioning. 

Comparison of Life-Cycle Greenhouse Gas Emissions from Electricity Generation

As existing coal units retire and electricity demand in North America increases, it is important to 

note that Canada still has large undeveloped hydropower potential. The total technical potential

Page 5 of 6
of 163 GW in Canada is more than double the capacity currently in service.2 Manitoba Hydro's 

resources provide the potential for another 5 GW of low-carbon hydropower to come online over 

the coming years, with more than 2 GW in the regulatory approval process.

However, to harness this undeveloped potential, US policymakers must provide the framework 

that allows for the benefits of this low-carbon resource to be realized. New hydropower projects 

involve large capital costs and long lead times which are offset by subsequently low, predictable 

operating costs and long operating lives (50 to 100 years). Without US customers for new 

Canadian hydropower, that hydropower would be developed at a later date for use by domestic 

Canadian customers and without the transmission infrastructure necessary to enhance the US

with energy storage, wind-hydro synergy and energy cost savings.

Failure to recognize Canadian hydropower under EPA's NSPS could result in perverse incentives 

for US utilities that would undermine the Agency's goal of cost-effectively reducing CO2 

emissions in the power sector. For example, in 2012, Minnesota Power estimated that using 

natural gas instead of Canadian hydropower to provide back-up energy support for its North 

Dakota wind power projects would result in an increase of 560,000 metric tonnes of CO2 per 

year by 2025. Furthermore, exclusion of Canadian hydropower could penalize US regions and 

utilities that have arranged purchases of Canadian hydropower as part of their strategies to 

pursue cost effective emission management strategies. 

VI. CONCLUSION

Assuming the EPA allows the states flexibility over the design of their NSPS program for 

existing plants under Section 111(d), existing and new renewable energy resources, including 

Canadian hydropower, can play a significant role in cost-effectively reducing US CO2 emissions.

In addition, if EPA provides credit for states and utilities that have taken early action on reducing 

CO2 emissions, then utilities should be recognized for their efforts to reduce their CO2 emissions 

through the purchase of Canadian hydropower.

Thank you for the opportunity to make this submission.

Yours truly,

Bill Hamlin

Manager, Energy Policy & Analysis

Manitoba Hydro

2 Study of the Hydropower Potential in Canada: Final Report. Canadian Hydropower 

Association, 2006. 

Page 6 of 6