Supply Function for Electricity Export "

Abstract

Canada is enriched with a lot of hydroelectricity sources. Canada is the second largest hydroelectricity producer in the world. In contrast, the main type of electricity in US is fossil-fuel produced electricity. Hydroelectricity is environmentally better and cheaper than fossil-fuel electricity. Canada is a net exporter of electricity to the United States (US). This paper will look at the electricity export supply function and different factors affecting it, in particular CAD-USD exchange rate. This paper also looks at the nature of marginal price of producing electricity. I also calculate the optimal quantity of electricity for export and compare it to the actual electricity sales at different seasons. I found local electricity demand and availability of water affect electricity export the most. Exchange rate affects electricity export supply function in British Columbia. Marginal price was found to be steady and lower than average price in most cases.