Alberta Power Reforms: A $6 Billion Price Tag?

March 24, 2017

Alberta’s planned phase-out of coal-fired power plants, an influx of new renewable electricity, a shift to a new capacity market, a cap on consumer prices, and an ongoing dispute over power purchase arrangements (PPA) could cost between $6.8 billion and $12.4 billion by 2030, said a consultant speaking at the Independent Power Producers Society of Alberta’s recent annual conference in Banff.

Many of the changes are intended to reduce greenhouse gas emissions, introduce more renewable power, and fine-tune the market structure to ensure future reliability.

As reported by Calgary Herald columnist Chris Varcoe, independent electricity consultant EDC Associates estimates that the province’s transition to a cleaner power grid will cost between $486 million and $883 million annually until 2030 — for a total bill of $6.8 billion to $12.4 billion. This price tag includes $1.36 billion in government compensation to coal plant owners to shut their plants early, and between $1 billion and $1.6 billion to settle PPA disputes.

Some costs, such as the coal compensation bill, will come out of revenues from industrial carbon emissions. Others may end up as a charge on consumers’ monthly power bills, wrote Varcoe.

In a panel of power industry executives, Scott Thon, President of Berkshire Hathaway Energy Canada noted the public supports decarbonization, but the cost can’t be ignored. It’s a challenge facing jurisdictions across Canada.

Varcoe quoted EDC chief executive Duane Reid-Carlson, who said in an interview, “We can itemize all the costs… but it’s how they get paid for that we don’t know. “Do they end up in the consumers’ bills? Do they end up in a transmission tariff? Do they end up as an Alberta global adjustment charge like Ontario has? We don’t have the answer to those yet.”

Alberta power prices are near all-time lows, averaging about $23 per megawatt-hour this year.

Read the entire article: http://calgaryherald.com/business/energy/varcoe-as-alberta-power-reforms-could-top-6b-consumers-will-be-watching-bills.