By: Nick Clark
Your comments are welcome following this blog. You can also find out more about how we're playing our part in building a fossil-free Alberta here Green Alberta Energy.
As an Albertan, we want to help curb CO2 emissions that release into the atmosphere. Canada today shocked the world by supporting the restriction of planetary warming to 1.5 Celsius warming – not two degrees. From a socially responsible perspective, it is the right thing to do.
It’s also a good idea to understand 3 fundamentals of climate change and how Alberta, within context of Canada, conforms to the global market.
We know the NDP in Alberta wants to be a leader on the world stage.
But such vigorous aspirations could cause long-term hardships on the economy. If our political leaders do not understand the consequences (and bull-headedly push forward because of an ill-conceived election promise), the result could be devastating.
Are Albertans ok with this?
You can see the speech on Climate Change here by Premier Rachel Notley to which we ask another basic question. How much more are consumers willing to pay on their monthly utility bill?
You might be surprised.
At the same time, please remember that consumers have not yet seen the full impact of the higher regulated transmission fees. They have yet to be fully hit in the pocket book.
Finally, remember it is not just the “base cost of energy” that will hit the consumer. Everyone else in the feeding chain will add their profit margins on top of the new-and-higher priced cost of generation. Municipalities such as Calgary are a good example: You need to understand they peg the Local Access Franchised fee to the regulated cost of electricity. So, when it doubles or triples, the municipality profits incrementally by 11.1% surcharge on each increase.
We’re asking politicians to show consumers what their electricity bill might look like in 2020. Don’t hide any of the costs. Then ask this question: “How much are you willing to pay for a greener grid.”
The climate change proposal in Alberta is borrowed, in part, from the designs implemented in Quebec and proposed for Ontario. However, our markets are significantly different. Under Alberta’s deregulated market structure, the costs are continuing to trend downward. In Ontario, they implemented the Global Adjustment as a payment to generators to encourage a greener grid. This was an ill-conceived policy and the trend is costing those living in Ontario more and more each year.
Please look at a couple of numbers. Fundamentally, everyone understands that retail electricity prices are indexed to the cost of generation measured in dollars per Mega Watt hour ($/MWh). In Ontario, the cost has doubled in 10 years. Under $50 in 2006 compared to almost $100, today, which is the sum of the blue and orange bars in the chart.
Given Alberta’s deregulated market structure, consumers benefit from the cost of electricity in freefall. During the month of November, the base cost in Alberta had fallen to $21.17/MWh and, at the same time in Ontario, residential consumers are paying almost 5 times for the cost for the electricity they consume.
Today, consumers in Alberta can buy electricity for as low as 3.5 cents per kWh if they shop around. It is an amazing retail price. But it will go up under the new Alberta NDP policies. This is ok to some degree but we do not have to follow the path of other provinces just to save the world from Global Warming. We need to do what we can, but let’s not push the pendulum too far to the right.
As the province moves away from coal-fired generation and adds more renewable energy, there is a real risk to consumers including Alberta businesses. Think price spikes, long term higher prices, and volatility. In Ontario, price increases are “largely” due to an aggressive program to retire coal generation and subsidize rapid renewable energy growth: It is affectionately called the Global Adjustment Charge that consumers see added to their monthly utility bill.
Here are 4 important requests:
As an Albertan, we want to help curb CO2 emissions that release into the atmosphere. Canada today shocked the world by supporting the restriction of planetary warming to 1.5 Celsius warming – not two degrees. From a socially responsible perspective, it is the right thing to do.
It’s also a good idea to understand 3 fundamentals of climate change and how Alberta, within context of Canada, conforms to the global market.
- China, United States, India, Russia, Japan, Germany and South Korea account for almost 60% of the tonnage of CO2 poured into the atmosphere annually.
- Alberta probably can be held accountable for about 30% of the CO2 tonnage in Canada. We represent about ½ of 1% of the problem in relationship to the World Total CO2 issue.
- By aggressively cutting emissions here in Alberta, our efforts will have virtually little impact on the Global Market.
"We do need to champion climate change efforts because every little bit helps. It is the right thing to do."
Doing the right thing also means finding balance between the economic reality of our province’s core industrial base, health care issues and the financial needs of its citizens. It is a bit motherhood and apple pie to ask, “Are you in favour of reducing emissions?” The simple answer is easy: “Sure! Yes! Of Course!” But, what is needed is a more insightful perspective. In the same question, it should be asked: “How much additional on your monthly electricity bill are you willing to pay?”We know the NDP in Alberta wants to be a leader on the world stage.
But such vigorous aspirations could cause long-term hardships on the economy. If our political leaders do not understand the consequences (and bull-headedly push forward because of an ill-conceived election promise), the result could be devastating.
Are Albertans ok with this?
You can see the speech on Climate Change here by Premier Rachel Notley to which we ask another basic question. How much more are consumers willing to pay on their monthly utility bill?
You might be surprised.
At the same time, please remember that consumers have not yet seen the full impact of the higher regulated transmission fees. They have yet to be fully hit in the pocket book.
"In Ontario, the cost doubled in 10 years. Energy prices in Alberta dropped in half over the same period of time."
Finally, remember it is not just the “base cost of energy” that will hit the consumer. Everyone else in the feeding chain will add their profit margins on top of the new-and-higher priced cost of generation. Municipalities such as Calgary are a good example: You need to understand they peg the Local Access Franchised fee to the regulated cost of electricity. So, when it doubles or triples, the municipality profits incrementally by 11.1% surcharge on each increase.
We’re asking politicians to show consumers what their electricity bill might look like in 2020. Don’t hide any of the costs. Then ask this question: “How much are you willing to pay for a greener grid.”
The climate change proposal in Alberta is borrowed, in part, from the designs implemented in Quebec and proposed for Ontario. However, our markets are significantly different. Under Alberta’s deregulated market structure, the costs are continuing to trend downward. In Ontario, they implemented the Global Adjustment as a payment to generators to encourage a greener grid. This was an ill-conceived policy and the trend is costing those living in Ontario more and more each year.
Please look at a couple of numbers. Fundamentally, everyone understands that retail electricity prices are indexed to the cost of generation measured in dollars per Mega Watt hour ($/MWh). In Ontario, the cost has doubled in 10 years. Under $50 in 2006 compared to almost $100, today, which is the sum of the blue and orange bars in the chart.
"In the same period, energy prices in Alberta have dropped in half. From a peak of $90/MWh in 2008 to $36 / MWh during 2015. The spread between the two has widened."
Given Alberta’s deregulated market structure, consumers benefit from the cost of electricity in freefall. During the month of November, the base cost in Alberta had fallen to $21.17/MWh and, at the same time in Ontario, residential consumers are paying almost 5 times for the cost for the electricity they consume.
Today, consumers in Alberta can buy electricity for as low as 3.5 cents per kWh if they shop around. It is an amazing retail price. But it will go up under the new Alberta NDP policies. This is ok to some degree but we do not have to follow the path of other provinces just to save the world from Global Warming. We need to do what we can, but let’s not push the pendulum too far to the right.
As the province moves away from coal-fired generation and adds more renewable energy, there is a real risk to consumers including Alberta businesses. Think price spikes, long term higher prices, and volatility. In Ontario, price increases are “largely” due to an aggressive program to retire coal generation and subsidize rapid renewable energy growth: It is affectionately called the Global Adjustment Charge that consumers see added to their monthly utility bill.
Here are 4 important requests:
- Please stop talking in generalities and motherhood statements.
- Stop promoting that you will charge more to the rich andgive back to the 60% of low income Albertans.
- Remember many of our customers today are paying 3.5 cents for electricity. Wholesale costs in 2015 will end the year in the range of $35/MWh. These are the two numbers as a base line key performance measurement index that you will be measured against.