Summary: In response to a congressional request, GAO examined the effects of imported power from Canada on domestic utilities to determine the: (1) extent of Canadian governmental subsidies to its electric power industry; (2) level and costs to Canadian and U.S. utilities of environmental standards applicable to fossil-fueled power plants; (3) impact of electricity imports on domestic coal producers; and (4) potential effects of proposed legislation.
GAO found that: (1) a study indicated that Canadian hydropower would remain competitive with U.S. electricity even if subjected to U.S. taxes; (2) because Canadian utilities and the provincial governments have not taken sufficient environmental actions to control sulfur dioxide emissions from their fossil-fueled power plants, Canadian utilities have an economic advantage in competition with U.S. utilities; (3) the importation of electricity from Canada has reduced the amount of coal which U.S. utilities would have otherwise consumed; (4) the amount of coal displacement would increase in the future based on the projected increases of electricity imports; and (5) although the proposed legislation would ensure that Canadian utilities which export electricity to the United States incur environmental control costs similar to those that domestic utilities incur, it could reduce Canadian electricity imports and increase oil imports and consumer costs.
