For the first time Canadian "Public Utility Companies"
will have their procurement processes, evaluation methodologies and
contract awards subject to international disciplines under the
Comprehensive Economic Trade Agreement ("CETA") between
Canada and the European Union. This is a historic change
because public utilities, such as Hydro Québec, BC Hydro,
the Ontario Power Authority, Toronto Hydro, have previously been
exempt from international standards and disciplines. The
North American Free Trade Agreement, World Trade Organization
Agreement on Government Procurement and in some cases even
the Agreement on Internal Trade exempt utilities from
their procurement disciplines.
What this means for the utilities in Canada is that they must
become much more cognizant of their procurement obligations and bid
dispute mechanisms under the CETA. A disappointed European
potential supplier will have a better opportunity to challenge a
utility contract award under the CETA. For Canadian companies
supplying those utilities, CETA will force them to face more
competition from EU suppliers who will now have better access to
the same contracts. At the same time, CETA should afford
Canadian companies better access to European utility procurements.
The scope of this opportunity for Canadian companies looking abroad
is not to be underestimated: the EU spends more than $2.7 trillion
on procurement annually.
"Public Utility Companies" is defined to include any
public entity that is responsible for the provision or operation of
fixed networks intended to provide a service to the public in
connection with the production, transportation or distribution of
electricity or the supply of electricity to such networks. This
broad definition is likely to capture both provincial power
utilities (such as Hydro- Québec) as well as municipally
owned entities (such as Hydro Ottawa). Any doubt as to the
application of CETA to municipally owned utilities can be easily
dispelled as procurements by municipalities are specifically
governed by the procurement chapter of CETA.
It appears that CETA will not apply to utilities owned by a
private entity. Presumably public energy utilities that have been
privatized should not be subject to the CETA
procurement rules. Similarly, public-private partnerships are
reported to be exempt as well. However, the devil is in the
detail, and confirmation of coverage can only be had after the
release of the negotiated text of the Agreement.
So why would a potential Canadian supplier care that
Canada's public utilities now must commit to open procurement
processes? The answer is that when a procuring entity is bound by a
trade agreement, the scope of those commitments also apply to
Canadian suppliers. As such, if BC Hydro violates a commitment in
CETA as it applies to a supplier in Vancouver, that supplier would
be able to bring a complaint using the process agreed upon in CETA
against the procuring entity. So while CETA provides for more
competition with European suppliers, it also provides for
additional opportunities and fairness for Canadian suppliers.
Watch this space over the coming weeks for further information
about precisely what CETA means to both suppliers and procuring
entities. Key topics that will be addressed include:
Scope – What Procurements Are Covered?
Obligations – What Must Utilities Do to Comply?
Violations & Remedies – When, Where, and How to
Opportunities for Canadian Suppliers in the EU
Going Beyond Power – Application of CETA to Other
Finally, we leave you with a small sampling of the utilities in
Canada that will likely be subject to these new rules:
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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