The Electricity Market Explained
PEI is a Very Small Player in a Very Big Electricity Wholesale Market
Maritime Electric, out of necessity, buys a considerable portion of its electricity based on pricing in the New England wholesale marketplace. As shown in the table below, PEI’s electricity consumption is much less than other jurisdictions. PEI gets no special deals or considerations as Canada’s smallest province. PEI’s actions have very little impact on the overall price of electricity which is bought and sold on the open market. PEI has to take the price that the wholesale market offers.
| Region |
2005 Energy Consumption (million kWh) |
| PEI | 1,100 |
| New Brunswick | 14,770 |
| Nova Scotia | 11,770 |
| New England (ISO-NE) | 136,355 |
| Quebec | 194,510 |
| Ontario | 144,130 |
| Canada | 537,960 |
Sourced from ISO-NE 2008 Annual Report and StatsCanada Website.
The New Brunswick Market
Maritime Electric purchases electricity in the marketplace that is not under long-term contract through NB Power but pricing for this electricity is determined by the New England wholesale markets.
How the New England Market works
Over the past two decades, there has been a gradual opening of wholesale electricity markets around the world.
Buyers and sellers of electricity that have been impacted by this change have been moving away from a regulated market to an open market, where anyone who wishes to register – with sufficient qualifications - can enter a market and purchase or sell electricity.
The New England wholesale market operates as an open market and accepts any market participant that meets its qualifications. This has given New Brunswick, Quebec and the rest of the Maritimes access to the New England market. Similarly, electricity suppliers in New England now have access to Maritime Canada and Quebec markets.
The New England wholesale electricity market operates much like a stock market – buyers and sellers of electricity gather (electronically) and bid on sales and purchases of electricity. The price of electricity is set in the marketplace according to demand (how much electricity parties want to buy) and supply (how much electricity is for sale). The electricity that is available for sale in the New England wholesale marketplace is usually generated by fossil fuels - primarily natural gas.
The pricing in the New England wholesale marketplace largely determines the pricing that Maritime Electric pays for electricity it needs to purchase outside of electricity supplied by long-term contracts.
