Reciprocity: Fair Trade of Free Trade? Challenging American Electricity Regulation under NAFTA
Restructuring in the American electricity market by the United States Federal Energy Regulatory Commission (FERC) has had a pervasive effect on Canadian utilities and their provincial regulators. This article argues that FERC’s application of Order No. 888 and its market-based rate authorization to Canadian utilities violates the doctrine of national treatment, a core tenet of the North American Free Trade Agreement (NAFTA), and supplants the principle of free trade with the principle of fair trade. Order No. 888 effectively requires Canadian utilities that export electricity across American transmission systems to provide their American trading partners with reciprocal access on comparable terms to transmission systems located in Canada. This has significant implications for both cross-border transactions and transactions wholly within Canada. This article outlines why NAFTA is the appropriate legal platform for a private party or government to challenge Order No. 888 and why NAFTA may provide a defense against future FERC initiatives that are found to restrict trade, undermine Canadian regulatory sovereignty or impede Canadian policy initiatives. The article concludes that Order No. 888: (i) is inconsistent with FERC’s national treatment obligation under NAFTA article 606(1)(a); (ii) risks violating article 606(2), which demands best efforts to ensure regulatory measures do not disrupt international contracts; and (iii) risks violating article 603(4), which prohibits regulatory measures from impacting industry arrangements within Canada
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Hugh Goodday, "Reciprocity: Fair Trade of Free Trade? Challenging American Electricity Regulation under NAFTA" (2014) 23 Dal J Leg Stud 130.