Friday , August 19 2022

Calgary's electric retailer urges the government to get rid of the revamping of the power market t


Jason Kenney's government faces pressure from the new to cancel a huge revamp of Alberta's power market that one player says will bear costs by hundreds of millions of dollars.

Nick Clark, who owns the electrical retailer Calgary-based Spot Power, has sent an open letter to the Alberta government urging him to walk away from the electricity model proposed by the former NDP government.

"How can you encourage new industry to open when one of their raw material costs increases so dramatically?" Clark said. "The capacity market will add more costs to the user and will be a sharp drop."

Jason Kenney's government faces new pressures to cancel a massive revamp of Alberta's power market. (Justin Tang / Canada Press)

But NDP Leader Rachel Notley, who had been given the changes by the government, said there were fears that dramatic cost increases were unfounded.

"There are some players in the current electricity system who have a keen interest in maintaining the current situation," said Notley.

Kenney's UCP has pledged during the recent election to review current electricity and proposed market options, with plans to report its findings within 90 days.

The party also promised to scrap subsidies for renewable energy, while ensuring a "market-based electricity system."

The New Democrats had chosen to abolish the existing deregulated power market – which has been in place since Klein's lifetime – after the abolition of coal production and the use of new renewable energy as part of our climate change strategy.

Rachel Notley, whose government is responsible for the changes, said fears about dramatic cost increases are unfounded. Codie McLachlan / Canadian Press)

Alberta Electric System Operator, which oversees the grid, says the province will need new electricity sources to replace closed coal and wind and solar generators, while meeting new demand. users.

Following consultation with power and investor companies, the AESO closed in late 2016 and the electricity market could not attract enough investment to build the necessary energy under the current model.

The AESO said at the time that investors were concerned that their revenues would be uncertain after new plants had run. The so-called market capacity recommended, which compensates power generators for generating electricity, even when they are not producing it.

That is, producers would collect revenue for the sale of electricity to the grid and, separately, for the ability to generate power as back-back, ensuring that the lights stay on. Power generators would use this second source of income to help cover plant construction costs.

Clark said that the complex system presented unnecessary costs, which he believed would end up hurting consumers. He said that what is stopping investment in the power market is uncertainty about how the market will be structured in the future.

"What investors need to see in this market is the security of prices, ease of regulation, and where the money they put in the market is not at risk," he said.

"They can venture their own money, but if the government comes in and changes the policy as it was doing, then money was staying away from the province."

Notley said a capacity market would not increase power bills but would avoid large price swings, bringing greener energy sources to the Alberta grid.

"Move back to the [deregulated] the energy market alone would make a lot of money for a few people, and put consumers, both industrial and residential, at great risk. "

Clark disagrees, noting the recent Enmax submissions to the Alberta Utility Commission, where the utility argues that the proposed market capacity design is flawed.

In his presentations to the commission, which considers the future of the Alberta power market, Enmax says that the proposed system would overestimate the amount of production capacity the province will need in the future. He says the census could lead to Alberta's acquisition of too much capacity.

Enmax states that the proposed system would overestimate how much production capacity the province will need in the future. (Evelyne Asselin / CBC)

A utility owned by Calgary City says this could increase costs from anywhere from $ 147 million to $ 849 million a year. It says that a more conservative calculation of future electricity demand could avoid the extra cost.

Analysis by Calgary energy consulting firm suggests that a different feature of the proposed work to revamp the power market could also lead to a huge increase in costs.

EDC Associates, logged by Alberta Consumer Coalition, argues that the proposal to launch the new system in November 2021 could be premature, as it could bring in additional supplies of electricity before they are needed. .

The consultant's report, which has also been filed with Alberta Utilities Commission, estimates that the early launch date might require customers to pay 40 per cent more for electricity – possibly $ 1.4 billion t additional – in 2021/22.

"The target implementation date is driven politically by the previous government," said Duane Reid-Carlson, president of EDC Associates.

Reid-Carlson recommends delaying the launch date of several years and making another turn: reducing the planned target reliability of the system, and reducing the amount of power generation needed to resist sources renewable.

"You could have a result in the capacity market and would give consumers a similar cost. T [deregulated] energy market design alone would have done otherwise, "he said.

"You could have a better risk profile that is linked to the capacity market and would serve consumers better through lower cost, lower price volatility, and would serve better generators." by giving them better access to capital at lower costs. "

The UCP government did not respond to a request for comments.

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