I am pleased to participate in today’s forum which concerns such an important and far-reaching subject.  And I particularly want to thank Jon and all the staff here at the Embassy for their work in helping to organize this meeting, and for hosting us today.

           

Before I speak to the issue of the electricity grid specifically, I do want to say a word about relations between the U.S. and Canada.

 

My career in business, and my service in two other Cabinet Agencies, have given me a special appreciation for the unique, historic relationship that has always existed between our two nations. 

           

As President Bush said during his trip to Canada in 2004, the U.S. and Canada have “always agreed on the great principles of liberty derived from our common heritage… We believe in free markets, humanized by compassion and fairness.  We believe a diverse society can also be united by principles of justice and equality.  The values we hold have made us good neighbors for centuries, and they will keep us as strong allies and good friends for the centuries to come.”

           

One example of this friendship is the quiet, steady, day-to-day interaction that goes almost unnoticed because it is so common, so woven into all that we do.  Consider the great commercial bond our nations share.  No two countries anywhere in the world engage in more trade with each other than we do.  And energy is a significant part of that bilateral trade relationship.  Not only is the U.S. the largest customer of Canada’s very substantial energy exports, but our nations are literally joined--physically and economically--by our shared electricity grid.

             

Our Administration recognizes and appreciates that the North American electricity system is indeed one system – that is, it needs to be planned, built, and operated as if our common border did not exist.  Having one fully integrated system is essential to obtaining the economic, social, and reliability benefits we all want from the electricity grid.

The importance of maintaining the “one-system perspective” was underscored by the blackout of August 2003, and confirmed in the ensuing joint investigation and the report of the Power System Outage Task Force. 

             

The blackout also served to remind us that we need to strengthen and modernize the physical elements of our power system.  If we are to maintain our prosperity in the 21 ^st century, we cannot rely indefinitely on an electricity grid from another era.  Our modern, high-powered digital economies require an electricity infrastructure to match.

           

So our Administration believes strongly in the need to expand and upgrade all parts of the supply infrastructure--including generation, transmission, and distribution--in order to maintain a system that will meet the future needs of both Canada and the U.S. 

           

Now, we recognize that this is a long-term effort.  Many of the projects we need to undertake will require years of planning and regulatory review before construction can begin, some will have lead times of 10 to 15 years, or longer.  What that means, however, is that we must get started now, if these facilities are to be in place when we will need them. 

           

Moreover, modernizing and expanding the infrastructure will require focused and sustained collaboration among planners, regulators, other government officials, and industry, which why I commend you on having this conference, which brings together so many of the stakeholders who will have to be involved in these decisions.

           

Our Department recognizes this need for communication and cooperation as well.  Just two weeks ago, DOE and the National Association of Regulatory Utility Commissioners jointly hosted an Electricity Delivery Forum, aimed at identifying critical steps that need to be taken in the next few years.  I think Kevin Kolevar from our Department spoke to you about this a bit earlier today.

           

Kevin and his team did an outstanding job putting that Forum together.  And while the discussion was vigorous, it was also very supportive.  I was particularly pleased that several Canadian participants were actively involved.  Our Department and the Utility Commissioners’ association intend to hold such meetings every 12-18 months, and we invite Canadian groups and organizations to help us plan these sessions. 

           

While these discussions have produced--and will continue to produce--many useful suggestions for future action, let me mention some of the critical steps we are already taking.

           

First, the Energy Policy Act of 2005 requires DOE to conduct a transmission congestion study by August 2006.  After the study is completed and comments are received, I am authorized to designate “national interest electric transmission corridors” in areas where congestion or a lack of transmission capacity are having significant adverse effects on consumers. 

           

After designating these corridors, our Department will work with planners, regulators, industry, the financial community, and others to facilitate projects for addressing consumers’ needs in these areas.  Under certain conditions, FERC is authorized by the Energy Policy Act to exercise preemptive “backstop” authority to approve the siting of such facilities. 

           

I want to emphasize that we are well aware that some of these corridors may affect transmission development projects that would cross our common border, and so we are conscious of the need to conduct this congestion study with Canadian input.  In particular, the study will draw substantially on existing trans-border planning studies that have already been done through the regional reliability councils. 

           

In addition, we are beginning a dialogue with the Canadian Electricity Association to ensure that its members understand the nature and purposes of the congestion study.  We look forward to further discussion with Canadian regulators and industry on how to ensure that the designation of these corridors on the U.S. side of the border will contribute to the stability of the overall, integrated system.

The Energy Policy Act of 2005 also authorized the Federal Energy Regulatory Commission to certify an Electric Reliability Organization--which will develop and help to enforce mandatory reliability standards for the power system.  We appreciate the dialogue that Canada’s Provincial regulatory authorities have already had with FERC, the North American Electric Reliability Council, and the regional reliability councils about how to manage the transition to an Energy Reliability Organization that will function as a North American organization. 

           

Before I close, let me just say a few words about how all these efforts are helping to promote the Security and Prosperity Partnership, or SPP, that President Bush, President Fox, and former Prime Minister Martin announced in March of last year.  This Partnership recognizes that a reliable North American electricity grid is critical to the safety and economic well-being of the citizens of North America. 

           

So, just a few weeks from now, on March 22 and 23, the governments of Canada, Mexico, and the United States will host a workshop on the “Prospects for Cross-Border Electricity Infrastructure and Trade.”  The workshop will bring together representatives from each of the three countries to discuss electricity infrastructure and trade.   

           

On this topic, I also want to mention that the SPP’s North American Energy Working Group has just issued a new report, “The Energy Picture II”--which contains very useful energy data, economic overviews, and other reference information about North American energy use, for use by government, industry and the public.

           

The past year has been a challenging time for all of us involved with energy, both in government and in the private sector.  We have seen energy supply constraints and price volatility--exacerbated in the U.S. by two terrible hurricanes--as well as political uncertainty in some parts of the world.  In such times, it is reassuring to know that the United States and Canada can count on one another to build a more stable and reliable electricity system, and indeed to cooperate to promote energy security more broadly. 

 

In closing, let me offer a special word of thanks to our Canadian colleagues, not simply for hosting this meeting today, but for everything you do to help foster the very special relationship between our nations and our people.

 

Thank you.