FINAL REPORT - International Joint Commission

ANNEX 2
E. Hydroelectric Power Generation Technical Work Group Summary
Objectives
The Hydropower Technical Work Group was charged with evaluating the potential impact of changes to
water level and flow regulation on electricity production, the economic impacts of changes in electricity
production and other issues that would affect production or maintenance at five affected generating
stations.
Data Collection and Evaluation Methodology
There are five different generating stations that can be affected by levels and flows regulation in Lake Ontario
and the St Lawrence River—the Moses and Beck generating stations on the Niagara River; the
St. Lawrence–Franklin D. Roosevelt (Moses Dam) and Saunders generating stations on the St Lawrence
River near Cornwall, Ontario; and the Beauharnois-Cedars complex just upstream of Lake St Louis. Each
station is unique in its production characteristics and each is affected by water levels and flows differently.
Therefore, the effects of flow regulation on electricity production were evaluated separately for each station.
Representatives of the three companies that operate the generating stations served on the Hydropower
Technical Work Group and worked with the Plan Formulation and Evaluation Group (PFEG) to develop
quantitative algorithms for evaluating how electricity production might change under different regulation
plans. Each algorithm was based on existing models already developed by each of the companies. The
new algorithms relate Lake Ontario levels and St. Lawrence River flows to megawatt-hour electricity
production at each generation station.
In order to assess the economic impact of electricity production, some prediction of likely market prices
for electricity was needed.6 Two initial sets of market price forecasts were used in early plan evaluation
exercises. These two initial forecasts highlighted the importance of seasonal variations in electricity
prices—large seasonal variations could result in significant differences in the economic impacts of
different regulation plans. Therefore, to ensure the evaluation was based on a reliable forecast of market
prices, the Plan Formulation and Evaluation Group and the Technical Work Group contracted with Synapse
Energy Economics Inc. to conduct a short study of market data. Synapse analyzed hourly price data from
the New York market and the Ontario market in combination with futures market prices to produce shortterm
and long-term forecasts of electricity prices (Synapse Energy Economics, Inc, 2005). The short-term
price forecast was used in the Shared Vision Model (SVM) for plan evaluation. Those prices are shown in
Figure E-1. Because of the nature of the regulated electricity market in Quebec, a constant price for
electricity was used for evaluating the economic impact of regulation plans on the Beauharnois-Cedars
generating station. The price used for Beauharnois-Cedars was US$70.47.
Performance Indicators
The New York Power Authority (NYPA) and Ontario Power Generation (OPG) together operate and market
the power from the Moses-Beck and Moses-Saunders generating stations. Hydro Québec owns and
markets the power produced at the Beauharnois-Cedars generating station. The performance indicators for
each company were similar but were modeled separately. The New York price forecast shown above was
used for NYPA, while the Ontario price forecast was used for OPG. The flat price for Quebec was used for
Hydro Québec.
6 Pursuant to federal and state requirements, most energy produced at the Power Authority St. Lawrence-FDR and Moses power
projects is sold pursuant to bilateral contracts at less than market prices. Market price is relevant to energy loss or surplus
impacted by alternative regulation plans.
106 Options for Managing Lake Ontario and St. Lawrence River Water Levels and Flows