A MODEL OF THE ELECTRICITY MARKET IN THE PROVINCE OF QUEBEC - OVERVIEW AND RESULTS

This paper presents an overview of the CANREM simulation model which i ncludes a description of its main components and their interrelationsh ips. This description serves to describe the advantages and limitation s of the model's use. It also illustrates the model's applicability by presenting the results of two simulations conducted to analyse the Hy dro-Quebec development plan of March 1989. The first one accepts Hydro -Quebec's electricity demand forecast and derives over time financial implications of this demand. This simulation yields an electricity dem and forecast of 1.9% and an average annual price increase of 5.2%. The second simulation takes into account the interaction between electric ity price, as determined in the financial submodel, and electricity de mand. Despite having the same underlying macroeconomic assumptions, th e endogenous demand simulation yields an average annual growth in elec tricity demand of 2.3% and an average price increase of 5.6% over the simulation period. This translates by 2010 into an increased demand of 18 TWh or 8.8% more than forecasted. To satisfy this demand, energy g eneration would have to be increased by 21 TWh while peak production c apacity would have to be increased by 3893 MW. Finally, for several ye ars, Hydro-Quebec would have difficulties in reaching the 25% capitali zation ratio target.