By: Nick Clark
Massive changes to the supply mix of energy in Alberta will benefit gas production facilities and renewable energy producers--existing and new. Read higher energy prices for you and me.
Let me explain.
We all know that higher prices are needed to support the growth of a green economy. By removing low-cost coal production from the mix, two inevitable cause-and-effect laws of economics play out:
We regularly hear from consumers upset with the high cost of electricity. Yet, today, it isn’t the cost of energy that is the cause of the anger but rather the D & T charges. D & T charges refer to consumption data, charge adjustment, and energy charge adjustment.
Let’s remember that energy is deregulated and the cost of energy is at rock bottom prices. The costs that have increased are regulated. And for those who want more regulation: Get ready for higher prices.
Consumers need to be prepared to be kicked in the head when the full impact of past regulatory decisions on the topic of Provincial Transmission rate riders hit them.
In 2014 and 2015, when the industry closed a few coal plants for annual maintenance, we know that wholesale prices jumped up. It automatically happens every year. (June 2014 prices jumped to $122/MM and in July 2015 to $97.)
Given the ND push to close coal plants, price hikes will become the new norm. Will consumers want to support climate change initiatives—if they know that the cost of energy on their electricity bill possibly is increased by 300% to 400% more than what they are paying today?
Will the new transmission tariffs increase the cost by 25% above the numbers below which have already rocketed up by 100% over the last decade? The following is an example of the price that a residential consumer using 600 kWh per month is actually paying, as expressed in cents per kWh.
Let's consider the D&T tariffs for customers in ATCO territory (including the new transmission riders):
Message to our regulators:
Ensure ND MLAs understand what is going to happen to the price of electricity.
Now compare what other jurisdictions are paying for electricity. You will find residents of Ontario, Quebec and BC are paying a fraction (when compared to the new rates that more than likely balloon to +30 cents per kWh). If consumers pay 2 or 3 times more for electricity compared to other parts of the country, industries that require the use of electricity for production purposes might consider leaving – or think twice about relocating to Alberta.
The goal of diversifying Alberta goes out the window. These projections need to be factored into the ND’s economic forecast.
Next blog: Our recommendations for supporting renewable resource in Alberta –without ruining our economy.
Let me explain.
We all know that higher prices are needed to support the growth of a green economy. By removing low-cost coal production from the mix, two inevitable cause-and-effect laws of economics play out:
- Companies heavily invested in gas production and existing renewable facilities benefit financially - big time;
- Consumers pay more for the electricity they consume.
We regularly hear from consumers upset with the high cost of electricity. Yet, today, it isn’t the cost of energy that is the cause of the anger but rather the D & T charges. D & T charges refer to consumption data, charge adjustment, and energy charge adjustment.
Let’s remember that energy is deregulated and the cost of energy is at rock bottom prices. The costs that have increased are regulated. And for those who want more regulation: Get ready for higher prices.
Consumers need to be prepared to be kicked in the head when the full impact of past regulatory decisions on the topic of Provincial Transmission rate riders hit them.
In 2014 and 2015, when the industry closed a few coal plants for annual maintenance, we know that wholesale prices jumped up. It automatically happens every year. (June 2014 prices jumped to $122/MM and in July 2015 to $97.)
"Energy is deregulated in Alberta and the cost of energy is at rock bottom prices. The costs that have increased are regulated."
Given the ND push to close coal plants, price hikes will become the new norm. Will consumers want to support climate change initiatives—if they know that the cost of energy on their electricity bill possibly is increased by 300% to 400% more than what they are paying today?
Will the new transmission tariffs increase the cost by 25% above the numbers below which have already rocketed up by 100% over the last decade? The following is an example of the price that a residential consumer using 600 kWh per month is actually paying, as expressed in cents per kWh.
Let's consider the D&T tariffs for customers in ATCO territory (including the new transmission riders):
- Once coal is removed from the mix, the cost of energy goes up to 11 to 15 cents per kWh;
- A surcharge is paid to the municipalities as their franchise tax plus administration fees are paid to the retailer plus GST
Message to our regulators:
Ensure ND MLAs understand what is going to happen to the price of electricity.
Now compare what other jurisdictions are paying for electricity. You will find residents of Ontario, Quebec and BC are paying a fraction (when compared to the new rates that more than likely balloon to +30 cents per kWh). If consumers pay 2 or 3 times more for electricity compared to other parts of the country, industries that require the use of electricity for production purposes might consider leaving – or think twice about relocating to Alberta.
The goal of diversifying Alberta goes out the window. These projections need to be factored into the ND’s economic forecast.
Next blog: Our recommendations for supporting renewable resource in Alberta –without ruining our economy.