Cablegate: Embassy Ottawa

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FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC 7241
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SIPDIS

SIPDIS

STATE FOR OES, EEB/ESC, WHA/CAN

DOE FOR INT'L AND POLICY AND IE-141

EPA FOR OFFICE OF THE ADMINISTRATOR AND INTERNATIONAL AFFAIRS

USDOC FOR 4320/ITA/MAC/WH/ONIA - WORD

E.O. 12958: N/A
TAGS: ENRG SENV PGOV CA
SUBJ: MANITOBA HYDRO ANNOUNCES MAJOR ELECTRICITY DEAL WITH
MINNESOTA

Ref: Ottawa 0135

1. This message originates from the U.S. Consulate in Winnipeg.

2. SUMMARY: The announcement of a major hydroelectricity purchase
agreement between Minnesota Power and the Canadian province of
Manitoba brings the development of some of the 5000 mw of
hydroelectricity generation capacity in Manitoba's north an
important step closer. Significant amounts of this hydroelectricity
will be available to U.S. markets in the upper Midwest, if the
trans-border transmission capacity exists to deliver it (reftel).
END SUMMARY.

3. The decades-old logjam preventing the development of Manitoba's
extensive hydroelectricity potential may have been broken with the
announcement on January 29 of an agreement between Minnesota Power
and Manitoba's government-owned hydroelectricity monopoly Manitoba
Hydro. The deal between Manitoba Hydro and investor-owned Minnesota
Power allows Minnesota Power to purchase surplus energy beginnii3{Cm/Qi Q>Do#!BQQ1%V8Q-QQe|%"QQQQmQQeQ4op-oyK0Qi|zQQ\ eX#]ox)`KVQx2?QQK:QU"Dm,_&oQQQQkY'$@Q,Q.ej{Q_ XzTj-Q&8S$D.Y[7QRQ\%7#d/hQ-fPQlQFXW[=-LQA~Q6l D@Afu;SfPLQ
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electricity go? Manitoba Hydro projects that increases in
in-province demand for electricity will utilize some of the
additional power, and small increases in exports to other markets in
neighboring Canadian provinces and U.S. states may take up some more
of the excess. But clearly Manitoba Hydro will have surplus
electricity in 2020, with more available if the Gull Rapids project
comes on-line with 600 mw. Manitoba Hydro would welcome an
expansion of transmission capacity: either east-west, to facilitate
more exports to other provinces, or north-south, to enhance its
export options. The electricity would be available to potential
customers either in the upper Midwest or neighboring provinces, but
there is not sufficient transmission capacity to get all of it to
either market.

8. In recent years Manitoba and Ontario have studied the possibility
of building an ambitious east-west line to get Conawapa power to

Ontario markets. Though the cost of this line would be daunting,
the persistent lack of investment in the grid in border U.S. States
has encouraged some Canadian players to advocate more east-west
infrastructure as a way to open up Canada's undeveloped generating
potential. The Manitoba-Minnesota agreement is a strong signal that
long-term trade on the established cross-border pattern can
facilitate Canadian resource development in the future as well as it
has in the past.

WILKINS

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