My name is Niall O'Dea and I'm the director general of the electricity resources branch at Natural Resources Canada. I'm joined today by two members of my team, André Bernier and Darcy Blais.
Thank you for the opportunity to speak about this matter. I'll start by providing some context. I'll then share some thoughts on the need to establish strategic interconnections and on what Natural Resources Canada is doing to support this priority.
I'll move on to the second slide.
The pan-Canadian framework on clean growth and climate change defines electricity as the cornerstone of a modern, clean growth economy.
The federal government's goal is to put Canada on a path to move from 80 to 90% non-emitting sources by 2030 and to phase out the conventional coal-fired electricity generation. Along with addressing these challenges, the electricity sector must provide an additional clean supply to support electrification in other sectors.
The pan-Canadian framework proposes an approach that includes four elements. Today's presentation concerns the second element, which consists of connecting clean power with places that need it.
The pan-Canadian framework aligns well with the Council of the Federation's Canadian energy strategy, in particular with areas of focus six and seven. These areas concern the development of clean energy sources and the enhancement of transportation networks.
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Since 2005, Canada's electricity sector has made significant progress in reversing the upward trend in greenhouse gas emissions. Ontario and Manitoba have phased out coal-fired electricity generation, and Alberta and New Brunswick have seen some shutdown of coal capacity. All provinces have put in place policies or programs that have supported a significant increase in wind and solar energy. New hydroelectric generating capacity has been built, or is being built, in B.C., Manitoba, Ontario, Quebec, and Newfoundland and Labrador. The 2012 federal GHG regulations for coal-fired electricity set the stage for a nationwide conventional coal phase-out, and the Government of Alberta's 2015 announcement and Environment and Climate Change Canada's 2016 announcement of accelerated coal phase-out will help expedite that phase-out by 2030.
In addition to having to continue to make emission reduction progress, the electricity sector will have to increase electricity generation to supply other sectors electrifying their processes to reduce emissions.
Another challenge we face is aging infrastructure. Back in 2012, The Conference Board of Canada estimated that the electricity sector would have to invest up to $347 billion between 2012 and 2030. This translates into an annual average investment of more than $15 billion simply to replace the existing infrastructure. Actual investments since 2012 have averaged over $20 billion. This investment level will need to be maintained, and decisions that we make now will affect the sector for the next 30 to 40 years, given the lifetime of those infrastructures.
The challenge we look to is great, but fortunately Canada's electricity sector is starting, we think, from a position of strength. Our electricity supply mix is among the cleanest in the world, with about 80% of electricity supply coming from non-emitting sources, about 60% of which comes from hydro. That said, certain regions rely significantly, even heavily, on fossil fuels for their electricity supply, notably Alberta, Saskatchewan, New Brunswick, and Nova Scotia. In many cases, these regions are bounded by provinces with abundant hydroelectric resources.
[Translation]
Let's move on to slide six.
The improvement of interconnections between the provinces can help fossil fuel-reliant provinces transition to clean electricity. Other interconnections can also help manage the variability of wind and solar resources.
At the same time, we must mention the importance of our trading relationships with the United States in terms of electricity. In general, the interconnections with the United States are stronger than the interconnections between the provinces. New interconnections with the United States are being considered, and these will create trade opportunities. However, from the federal government's perspective, our main priority should still be to reduce emissions here.
On slide seven, the chart shows the existing electricity transfer capability between the provinces and the United States. It illustrates the north-south predominance of our existing connections. In particular, the map shows the six major power lines being constructed in Canada and the United States. This north-south relationship has developed for historic reasons.
Many major hydroelectric plants were initially built and funded partly to meet the American demand. In many cases, the load centres in the United States are closer to the plants than the Canadian cities. However, when we look to the future, we can see that the arguments in favour of increasing transportation between the Canadian provinces have become more prevalent given the phase out of coal-fired electricity and the need to reduce greenhouse gas emissions in this sector.
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In budget 2016, the Government of Canada announced the two-year, $2.5-million regional electricity co-operation and strategic infrastructure initiative to identify promising electricity infrastructure projects with the greatest potential for greenhouse gas emission reductions. Two dialogues were formed, one in the west and one in the Atlantic. Results are expected by the end of this year, and final reports are due in early 2018.
The results will include some important economic aspects, particularly costs of various options to electricity consumers. More project-specific analysis will then be required to examine broader economic impacts on things like jobs. The results will help inform discussions between neighbouring provinces and the federal government, potentially leading to infrastructure investment decisions by provinces, and decisions by the federal government or federal agencies to lend support.
In the near term there is an opportunity for focus on well-advanced foundational projects. The communiqué that was issued after the 2017 Energy and Mines Ministers' Conference identified the reinforcement of the Nova Scotia-New Brunswick intertie or interconnection as an example of a project to advance in the near term. Such projects we believe will be foundational to Atlantic Canada's longer-term transition to clean electricity.
[Translation]
Let's move on to slide 10.
Ultimately, the provinces determine the pace and scale of the development of new electricity generation and transportation assets in Canada. That's why the collaboration with the provinces and territories is the key to success. The federal government can play a productive role in this process by inviting the provinces to review the regional options for reducing greenhouse gases.
All projects being considered for implementation must undergo an environmental assessment. The projects must also be subject to a robust review and consultation with the indigenous peoples concerned.
In some cases, the electricity transportation projects will have a positive impact in remote communities and will connect the communities to the system. As a result, less diesel fuel will be used for electricity generation and home heating.
The Pikangikum project in northern Ontario, which was announced recently, illustrates the benefits that can result from this type of project.
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Finally, to sum up, electric utilities across the country face a challenge. While meeting growing demand, they have to constantly invest in replacing aging infrastructure and, in some cases, shut down coal-fired plants. This is exacerbated by the interest of other industries in using electricity as a means to reduce their sectors' emissions. This challenge presents an opportunity to establish a robust foundation that will form the basis of the country's electricity system of the future. Interties can contribute to that foundation by connecting clean energy to the places that need it. They can also help in integrating variable renewable energy.
Speaking of the future of the sector, I would like to take this opportunity to mention the generation energy event that will be taking place in Winnipeg this October. At this event, stakeholders and experts will have a full debate on the potential pathways to an affordable, low-carbon energy future for the country. Interested participants should visit www.generationenergy.ca for that one.
To conclude my opening remarks I would like to thank you, on behalf of the department, for allowing us to contribute and open your discussion on this important topic. I wish you well in your study of electricity interties, and I look forward to answering any questions that you may have.
Thank you.
:
Thank you all for spending your time with us this afternoon. I appreciated your comments about Canada's strength being the diversity of our energy sources.
Just before I start with my questions, I want to thank my Liberal colleagues for inserting into this study specific references to the Canadian energy strategy. I want to note on the record that it was an initiative launched by an Alberta premier at the time and adapted and accepted by all premiers precisely because it voices its support for diverse natural resources and energy development within Canada, from every region and from all sources.
In hindsight, I somewhat regret that we didn't include the Canadian energy strategy in our previous study on oil and gas, since it talks about the importance of regulatory certainty in critical energy infrastructure and the importance of diversifying export markets. It speaks to what is Canada's long track record, which you have already touched upon, in everything from our regulatory system to our investments in innovation and our long-standing commitment to balancing environmental stewardship with energy and economic development, with all of the prosperity and jobs such development provides to every Canadian and every community across the country.
I note at the outset—I have colleagues opposite who feel strongly about this as well—that I hope that throughout this study we can continue to talk about supporting responsible natural resources development and enhancing investment opportunities for responsible natural resources development in every sector, in every province in the country, and that we aren't in a scenario in which we are pitting sectors against sectors, as that might have disproportionate impacts in some regions or provinces.
I would note, of course, that this discussion around the development and investment of low-carbon and alternative and renewable energies goes hand in hand with a thriving oil and gas sector. The biggest private investors in alternative and renewable energy, such as wind and solar, are indeed conventional oil and gas companies and pipeline companies, such, for example, as Enbridge.
I want to thank you for your comments at the outset. Perhaps one day we can talk again about the goals and the recommendations in the Canadian energy strategy also, in the context of ensuring the sustainability and long-term prosperity of oil and gas development in Alberta, or in Canada as well.
Could you expand a little concerning these regional dialogues and give us, just for our knowledge, any specifics that you'd like to highlight about past challenges you see involving federal, provincial, and regional co-operation and any specifics you'd like to highlight about gaps you've identified or things that need to improve?
Connected to that, has this been or is it going to be part of the four major regulatory reviews? Will there be any impact on regulatory changes or adjustments stemming from those dialogues? If you could, just illuminate some of that for us.
:
That's a very good question, and I will seek to unpack it.
I'm certainly happy to provide further context on the studies that are currently ongoing. I didn't cover it in my presentation, because I wanted to cleave to our 10-minute time limit, but on slide 14 of the deck we have provided a bit of a snapshot on the regional dialogues and on the specific questions that they are each addressing and that we are addressing in partnership with the provinces and territories and their utilities.
To turn to the west first, the main challenge in the west relates to the need to phase out coal in Alberta and Saskatchewan. That will require a combination of new wind and solar generation as well as dispatchable resources such as hydro, natural gas, or imports from neighbouring provinces. Natural gas is currently the lowest cost dispatchable option, but it is likely to become more costly as carbon pricing is phased in.
The main options under consideration for that western dialogue include transmission between Saskatchewan and Manitoba, as well as between B.C. and Alberta. The second is new hydroelectric developments in Alberta, Saskatchewan, and the Northwest Territories. Third is the electrification of natural gas processing and the potential for future LNG terminals. All these things are on the table in that western dialogue, and that's to address some of these gaps you spoke to.
In the Atlantic region, Nova Scotia and New Brunswick face a supply gap due to the coal phase-out, and they are constrained in that area by the limited current existing natural gas infrastructure for distribution. There is not the similar network we have elsewhere in Canada. Renewable resources such as wind and solar will be able to contribute in that space, but dispatchable capacities—so, again, firm capacity like hydro and nuclear—will be required to back up those variable resources. The main options being considered there are new hydro, be it Gull Island or some other smaller hydro opportunities; potentially new nuclear in New Brunswick, which is on the table as well in terms of this modelling study; and long-term electricity supply contracts with Quebec. Again, we're trying to take as broad a base as we can in order to work through that.
In terms of the history, I think Canada has traditionally developed most of its resources and connections north-south primarily—as I spoke to—because that's where the load centres and markets were for that electricity. I think the acceleration of the coal phase-out has created an incentive for co-operation. We see a great
[Translation]
open-mindedness
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in the conversations among the provinces and utilities around exploring that. However, there is not a tradition of doing it, so a bit of it is information gaps around what that form of co-operation could be and also resolving very real market differentiation challenges. For instance, in Alberta you have a fully privatized electricity market, whereas in neighbouring provinces you may have vertically integrated, crown-owned utilities. The ability to co-operate across those borders, then, requires some pretty precise negotiations, ones that the federal government is happy to facilitate but ones that, clearly, we wouldn't be determinative in.
Then, in terms of the four reviews you mentioned, clearly those are a critical priority of the government currently. Our hope would be that they, once completed, would only strengthen the basis on which these projects, once identified, would move through. Clearly, each project that would be undertaken would need to undergo a thorough environmental assessment, thorough consultation, and engagement with indigenous peoples. That process, once the architecture following from those four reviews is established, should help greatly in moving those projects forward.
On the first page, the pan-Canadian framework, I find it interesting. I don't know anywhere where a definition is low-emitting sources, a definition of clean power...and then the goal is to have non-emitting sources. To me, that sounds like a good political realm, where we don't have to actually close in on anything in particular. It gives us a bit of room.
Actually, I don't know how you get non-emitting. Wind energy cannot be non-emitting. Anything that turns emits something.
I think we're using words that are used in a place to help convince our public that, my gosh, we're doing a really great thing. When I say that, I don't know what the definition is, but I think you should consider cleaning that up and being specific about what we mean in terms of production.
It was brought up that in terms of regional electricity, Canada-United States trade, we're a net exporter. I'm from Ontario. I would like to understand, if you would help me a little, what the cost-revenue balance is from Ontario to our exports to the United States. If you don't have that today, I would like to get it, because you know and I know that under the policies we actually give it away at times. Help me understand a little, then, in terms of the policy of generation of electricity.
In my area, in part of Ontario, we have a lot of green energy under the Green Energy Act.
What kind of duplication is needed in production of electricity for windmills and solar where in the winter we have 10 hours of sunlight and we have intermittent wind? What sort of duplication do we have to have with natural gas, or coal, which we don't have? We haven't built...for 30 years in Ontario.
I wonder if you could give me the cost analysis of what the revenue generation is as compared to the cost of the electricity in Ontario that we ship to the States as a net exporter?
:
I would like to sincerely thank you, Mr. Chair and the members of the committee, for inviting me here today.
Nova Scotia Power is a subsidiary of Emera, which is the 16th largest utility in North America and both are headquartered in Halifax. Nova Scotia Power serves approximately half a million customers and owns and maintains more than 25,000 kilometres of transmission and distribution lines in Nova Scotia. Our goal is to provide clean, affordable, and “always on” energy to our customers, but we face challenges.
Nova Scotia has no access to large-scale hydro assets within the province. Our natural gas supply is limited and local offshore gas supplies continue to dwindle. Unlike other provinces such as Ontario and Alberta, using natural gas as a bridge to transition to low carbon is not an affordable option for us.
Over the past decade Nova Scotians have invested more than $5 billion in new wind and renewable electricity generation and contracts in Nova Scotia. Nova Scotia Power has tripled our use of renewable energy generation from 9% in 2007 to 28% in 2016. We have reduced greenhouse gas emissions by 34% from our 2005 levels, already exceeding Canada's national target. We expect to nearly double those reductions by 2030 to a targeted reduction of 58% in the electricity sector.
We have also reduced by one-third the amount of coal that we've used in electricity generation, which is equivalent to reducing three coal units or closing the emissions from those coal units. However, we haven't been able to put a lock in the door of those units because we require the capacity from those units to meet reliability. Transforming to cleaner electricity isn't as simple as replacing energy from one type, such as coal, or energy with another type like wind or solar because our renewable energy is intermittent. We need firm sources of clean energy that can quickly ramp up to compensate when the wind isn't blowing or the sun isn't shining. Our customers don't consume energy intermittently. We must match their lifestyle by providing a total energy package every minute of every day.
Strong electricity interconnections with our neighbours are essential to our energy future. Transmission that provides Nova Scotia with access to clean energy gives us the opportunity, not only to address renewable energy deficits but, potentially to share with our neighbours the new clean energy infrastructure that has been built in Nova Scotia.
Our vision for electrification of our economy and stronger interconnections is directly aligned with our national and regional climate action plans. Opportunities include new cross-border transmission connections, adding even more renewables to the whole North American power grid and the promotion of clean and efficient electricity transportation.
For Atlantic Canada, new and stronger interconnections will leverage large-scale hydro assets from both Quebec and Newfoundland and Labrador, creating long-term energy sustainability for all of eastern Canada, contributing to stability in electricity prices for customers here in Canada and in the U.S. and enabling significant carbon reduction. Incremental jobs would also be created for the new infrastructure.
Emera and Nova Scotia Power recognize the value of strategic electricity interconnections and regional collaboration and we have invested in developing expertise in that area. We have connected Nova Scotia to New Brunswick, New Brunswick to Maine, and now Newfoundland and Labrador to the rest of North America for the first time in history.
Emera Energy is an active trading and marketing presence in eastern Canada and New England, and Nova Scotia Power is actively engaged with New Brunswick Power to dispatch electricity generation regionally and find efficiencies together.
Recently, Emera has proposed a 500- to 600-kilometre submarine transmission link to carry clean energy from Atlantic Canada to Massachusetts, known as the Atlantic link, in collaboration with New Brunswick Power and independent power producers.
Building infrastructure takes time, and the cost is significant. Infrastructure lasts many decades, and it should be maintained for the long term and used for its full life to extract the best value for customers from the investment.
What helps developers is a clear view about the ultimate objective and some certainty that there is a commitment to stay on that path. Whether it's through legislative, regulatory, or funding mechanisms, all of these can contribute to the feasibility of large electricity interconnection projects.
Planning on a regional basis, whether for transmission infrastructure or even emission reduction, presents an opportunity to reduce or eliminate in-region transmission tariffs. The tariffs create trade barriers for clean energy to move to market.
We see great opportunity in Atlantic Canada, as well as the neighbouring provinces and states. We see alignment and opportunity between our vision, efforts, and government priorities.
We are aligned on the priority to reduce carbon emissions from the electricity sector. We see alignment in terms of our country's relationship with the United States on the need for regional solutions and export opportunities that reduce carbon emissions, both in clean energy generation and in the transmission infrastructure to move that clean energy where it is needed. Looking forward, we see the possibility of moving Atlantic Canada towards a regional self-sufficiency with zero-carbon energy.
Our strategy is straightforward. We want to see cleaner electricity generation used for more purposes: more renewable generation, better regional transmission interconnections, and electrification of home heating and transportation. This will lead to permanent economy-wide emission reductions and regional collaboration and sharing of resources, such as clean generation and transmission infrastructure, and it will create new clean energy jobs.
Thank you.
:
Good afternoon, Mr. Chair, and committee members.
It's a pleasure to appear before you today. I am video conferencing from my office in Winnipeg this afternoon. I appreciate the opportunity to provide input for your study on the value of electricity interties.
My qualifications in this area are that I am a practising, registered, professional engineer in Manitoba, and I am employed at Manitoba Hydro in the position of director of wholesale power and operations. I've held that position for the last 17 years. I've been involved in the operation of the Manitoba hydro system for the last 38 years.
My main responsibilities at Manitoba Hydro include directing the activities of Manitoba Hydro in the wholesale electricity markets, including marketing, sales, and training activities outside of Manitoba, both in Canada and in the United States. I'm involved in Manitoba Hydro's wind procurement program in contracts in Manitoba, and I am involved in the day-to-day management of our electricity supply, including the production and planning that involves the regulation of the Manitoba hydro system of rivers and reservoirs for hydro power purposes.
I have participated as an expert witness in many rate, environmental, and regulatory hearings in Manitoba, where I have provided evidence on matters under my responsibility.
My involvement in Manitoba Hydro's transmission and development plans includes the responsibility for the commercial arrangements that underpin our new 500,000-volt interconnection to the United States, and the proposed new 230-kilovolt interconnection between Manitoba and Saskatchewan.
In addition, I am involved in discussions with SaskPower on exports of surplus hydroelectricity, and I provide oversight to Manitoba Hydro's contribution to the NRCan regional electricity cooperation and strategic infrastructure initiative.
By nature, large Canadian hydro utilities like Manitoba Hydro have the potential to produce surplus electricity beyond that required by their customers, and routinely do so. The amount of surplus varies depending on the water supply and the amount of available reservoir storage. In high rainfall years, the hydro surplus can be very large. In drought years, there may be no surplus, and other generation sources must be used to meet the power demand.
In Manitoba, over the past few years, our surplus supply has been about 30% of our production, or about 10 billion to 11 billion kilowatt hours. Manitoba Hydro has been able to create value from this surplus by selling the electricity in the wholesale electricity markets in Canada and the United States. Revenue from these out-of-province sales reduces the cost of supplying Manitobans with electricity and is the major factor in Manitoba Hydro having some of the lowest electricity rates in North America.
However, none of these economic benefits or other benefits such as increased grid reliability and energy security would be possible without the interties that were built by Manitoba Hydro and its neighbours over the past 50 years. These interties connect us to those utilities and to the wholesale electricity markets of North America.
With that introduction, I want to provide a few comments today that address the following questions: regional electricity independence, low-carbon energy distribution, opportunities for alignment with the Canadian energy strategy, Canada-U.S. energy trade and relations, and employment and economic impacts.
On the first topic of regional electricity independence, to date, generation and transmission planning, and development across Canada has been largely focused within provincial boundaries. This is a consequence of geographic and political barriers. The exception to this is provinces with large hydro utilities such as Manitoba Hydro, BC Hydro, Hydro-Québec, and—in the past—Ontario Hydro. These utilities, which usually have large hydro surpluses to market, have optimized the development of their systems in conjunction with investments in large interconnections to the United States. Because of cost and small market size, it has not been economically viable to build, on a similar scale, east-west transmission in western Canada.
Transmission projects to interconnect Calgary with Winnipeg, or Winnipeg with Sudbury have been studied but haven't proceeded. To date, other lower cost alternatives have been found. That's not to say that no transmission has been built, but the existing interconnections between the western prairie provinces are, at most, modest when compared to the existing north-south capability we have with the United States. Utility benefits from large east-west interties just haven't been sufficient, to date, to justify the huge cost of building long-distance transmission lines.
Generation portfolios of utilities across Canada usually have had a low-cost, dominant fuel that's been exploited. The exception is Ontario, which has a diversified portfolio of hydro, nuclear, wind, natural gas, and—previously—coal. In Manitoba, B.C., and Quebec, the dominant supply source remains hydroelectricity. In Alberta, Saskatchewan, and the Maritimes, historically it's been low-cost coal.
A barrier to coordinated cross-jurisdictional resource development is time. Cross-jurisdictional co-operation involving major infrastructure investments like transmission interconnections require long-term planning and commitment on time frames measured in decades. These commitment times exceed the lifetimes of most provincial governments and potentially their policy priorities. As such, generation portfolios, with the exception of Ontario, lack diversity, and this makes them vulnerable to economic and political change, commodity price fluctuations, fuel availability, and technological and climate change risks.
For those jurisdictions that have relied on carbon-based fuels, transitioning to a low-carbon economy and renewable-energy technologies has additional challenges. The most widely available new, renewable-generation resource, such as wind generation, is intermittent and variable, whereas customers require a continuous, reliable supply of electricity. As a result, widespread use of wind and solar technologies is only feasible in conjunction with dispatchable resources such as hydro turbines, natural gas turbines, or battery technology that can adjust output quickly so that the supply and demand always remain in balance.
The questions we have in western Canada are, firstly, are there opportunities for jurisdictions like Saskatchewan and Alberta, which have to transform their generation fleets to work with their hydro-rich neighbours? Secondly, what are the benefits of improved and expanded interconnections, specifically a stronger interconnection between Manitoba and Saskatchewan, or a stronger interconnection between B.C. and Alberta? What is the value of a stronger, complete connection across the west? Do these interties help achieve the Canadian goal of the low-carbon economy at a lower cost?
To investigate these questions, NRCan is conducting the regional electricity cooperation and strategic infrastructure initiative, working with the western utilities and market operators.
With regard to the low-carbon electricity distribution, in western Canada low-carbon, renewable-resource options are not equally distributed. Alberta does have a good wind resource, but so do other western provinces. Saskatchewan has a good solar resource, but the other western prairie provinces share that same resource. All the western provinces have undeveloped hydro power potential. Thus, all western provinces have the potential of developing local, low-carbon electricity sources. However, the cost, variability, flexibility, and energy storage potential of the potential resources can vary dramatically. Developing new, low-carbon electricity supplies at least cost will require more intertie capacity so that the specific benefits of each potential energy source can be optimally utilized.
As for opportunities for alignment with the Canadian energy strategy, the strategy is a macro view of energy production, transmission, and use in Canada and in an international context. In western Canada, significantly increasing intertie capacity aligns with several of the strategy priority areas such as improving electrical interconnections, increasing connectedness, and addressing transmission constraints. Large new interconnections would facilitate the development of new, renewable-generation technologies, which would in turn help in the transition to a new low-carbon economy, another focus of the strategy.
With regard to Canada-U.S. energy trade and relationships, as I mentioned at the beginning, Manitoba Hydro has a long history of exporting its surplus electricity to the U.S. These exports occur over a large interconnection that has been developed incrementally over the last half century as Manitoba has developed its hydro potential. To put the size and significance of that interconnection in perspective, we have the capability to export approximately 50% of our hydro production into the United States. In contrast, our capability to export either east or west is only 5% of our production capability.
Given the importance of the U.S. market to Manitoba Hydro, both from an export and an import perspective, Manitoba Hydro is a coordinating member of the huge, mid-continent independent system operator, which we refer to as MISO for short. MISO is a regional transmission organization and a market operator that guides the secure and economic operation of the large portion of the North American electric grid. Its span reaches all the way from Hudson Bay in the north, to the Gulf of Mexico, across 15 states, and includes Manitoba. Access to the MISO electricity market in the United States is important to Manitoba Hydro. It is a deep, high-value, sophisticated, and open market. Manitoba Hydro, in co-operation with our neighbouring utility, Minnesota Power, is expanding our intertie capacity with MISO.
The existing Manitoba-U.S. interconnection capability will increase 50%, from 2,000 megawatts to about 3,000 megawatts in the export direction and 700 megawatts to 1,400 megawatts or a 100% increase in the import direction. This project is being done in conjunction with the development of the new hydro resources we're building in northern Manitoba.
This intertie expansion is still subject to regulatory approval in Canada, but the plan is to bring the second 500,000-volt intertie into service in 2020. It will be one of the most significant transmission developments across the Canada-U.S. border between Quebec and British Columbia.
Manitoba Hydro is just one of the Canadian utilities that are significant participants in the U.S. electricity supply. In 2014 Canadian electricity supplied 12% of retail load in Minnesota and North Dakota and 12% to 16% of electricity sales in New York and New England. In total, 30 states transact with Canada for electricity, with Michigan, California, Oregon, Washington, Montana, and Vermont being the major purchasers.
Initially, electricity trade with the U.S. developed to be largely north-south and seasonal, but in recent years Manitoba Hydro has been expanding its service offerings in the United States electricity markets. Now when the U.S. Midwest has a sudden surge or shortage of electricity due to wind power changes, electricity from Manitoba can be injected into or withdrawn from reservoir storage in Manitoba within five minutes to counteract changes in wind generation and help bring the grid back into balance. This is all done automatically, consistent with Manitoba Hydro's price and energy offers in the MISO market.
A landmark 2013 MISO study looked at the value of our proposed 500,000-volt intertie to the United States and at the way market-responsive new hydro generation in Manitoba could bring value to the MISO region. In addition to helping smooth out fluctuations in wind power in the northern midwestern states, this study showed that high-cost generators in MISO would run less often and use less fuel, resulting in emission reductions and production cost savings in the MISO footprint estimated to approach half a billion dollars per year in the 2027 study year.
The U.S. approach is to strongly encourage regional transmission planning, consistent with public policy goals. The approach exerts pressure to resolve cost allocation issues and remove barriers to the development of beneficial regional transmission.
This approach is not applicable in Canada; however, targeted federal government support to facilitate the development of expanded interties would be an appropriate made-in-Canada approach and would be consistent with optimum cross-jurisdictional transmission planning and public policy goals.