By: Nick Clark
Alberta has a great electricity market today with amazingly low energy rates. There's zero debt on the provincial books, too. As the province plans for the future, maybe it's time to consider hiring an “Electricity Czar” to help stick-handle our way through the economic minefields ahead.
Over the Family Day long weekend, I was online in a Facebook discussion with Dallas, a typical consumer frustrated over his electricity utility bill. He had done everything to reduce monthly costs...bought energy efficient appliances…changed to LED lights…practiced conservation. But he still faced an unreasonably high bill.
We helped by evaluating his EasyMax bill based on an old 8 cents per kWh rate. There was an easy solution: Switch over to a Variable Rate from the Fixed Rate he was on. We showed Dallas how to save over $40 per month. By switching over to Spot Power he saved over 50% on the cost of energy consumed.
Dallas later said to me, "I like to support true entrepreneurs versus the large companies that have been virtually granted a monopoly. Energy is a commodity and if I can receive it at a lower rate, why wouldn’t I.”
Why, indeed?
Albertans enjoy among the lowest energy purchase rates in Canada today because of a plan designed in 2000 to encourage new generation to be built. The plan worked.
Maybe it's time to get over past criticisms. Now is the right time to take advantage of the low rates being offered and pocket the savings.
Current retail prices for electricity in 2016 are under 3.5 cents. Consider switching over to a Variable Rate plan, indexed to the real Market Price of energy.
For a list of 24 Energy Marketers in Alberta offering low rates: www.GreenAlbertaEnergy.ca.
Let’s understand why retail prices are so low. Here are the facts:
As a province, we are fortunate to have over 16,000 MW of installed capacity, more than 9,000 MW added in recent years. As a province, we currently have approximately 40% surplus in supply, outstripping consumer demand.
It’s fundamental economics. When supply is greater than demand, retail prices fall and remain stable. That is why retail prices today are down in the 3.5 cent range. It's just that simple.
The good news: Zero debt on the public books where investment in new power plants was funded by the private sector. Is this about to change?
Climate Change also is a hot topic and undoubtedly our industry is on the threshold of going through a major transformation. What are the costs and who is going to pay the bill? Will low prices last into the next decade? Or will new NDP policies spell an end to low retail prices that cause an increase in the volatility of electricity rates?
Here are 5 key issues in front of Albertans and all have a price tag attached that eventually will end up increasing the cost of electricity.
In a market that already has a 40% in surplus capacity, the numbers are going to be difficult to manage. Think about a market disrupted by closures of production facilities and replacement of base loads with generation constructed in higher cost facilities. As consumers, we risk seeing the dreaded aspect of a volatile return to the market. On the other hand, volatility and higher energy costs is an economic signal to industry to continue to invest in building new facilities. It will be a tricky balancing act and one that can be managed, if well planned.
The industry went through the building process with periods of instability which, in turn, was driven by unprecedented economic growth in Alberta. Consumers likely remember the pain of utility bills jumping up to 12 cents per kWh. Retail prices today are under 4 cents; let’s not repeat history.
Maybe what Alberta needs is the appointment of a new “Electricity Czar” to oversee the economic and climate change balancing act.
Today, we are faced with the oil and gas sector in free-fall and increasing unemployment rates as companies continue to lay off workers and outsource jobs offshore. Possibly the best recommendation we can offer: Manage the growth and changes in product mix with caution.
Here’s how I see our government rolling out Climate Change initiatives:
This immediately benefits the province. It would be easy to install and could be done with zero administration overhead costs added to the Alberta marketplace. (All existing electricity retailers in Alberta have systems already in place to manage this process in concert with AESO.) This is natural to fund out of the Carbon Tax income stream and it would pay positive dividends by encouraging new installation of residential and small business micro generation units. Most important, if the program is a success, it would help put some unemployed workers back to work in Alberta’s Solar Patch industry.
Prudent regulations are required. Invest in greening the grid is the right thing to do for all the right reasons - with caution. Please don’t destroy an economy that is already very fragile.
For more information, visit www.GreenAlbertaEnergy.ca
Over the Family Day long weekend, I was online in a Facebook discussion with Dallas, a typical consumer frustrated over his electricity utility bill. He had done everything to reduce monthly costs...bought energy efficient appliances…changed to LED lights…practiced conservation. But he still faced an unreasonably high bill.
"Here is the billion-dollar question: How much does it cost to add 1 MW of Wind or Solar to Alberta’s market capacity in generation?"
We helped by evaluating his EasyMax bill based on an old 8 cents per kWh rate. There was an easy solution: Switch over to a Variable Rate from the Fixed Rate he was on. We showed Dallas how to save over $40 per month. By switching over to Spot Power he saved over 50% on the cost of energy consumed.
Dallas later said to me, "I like to support true entrepreneurs versus the large companies that have been virtually granted a monopoly. Energy is a commodity and if I can receive it at a lower rate, why wouldn’t I.”
Why, indeed?
Albertans enjoy among the lowest energy purchase rates in Canada today because of a plan designed in 2000 to encourage new generation to be built. The plan worked.
How did Alberta achieve low electricity rates?
Many argue that it took too long to get to this point of a stable market. Others are upset over the issue of volatility in power pool prices. Yet, market opportunities saw power producers continue to invest in building new generation which led to low energy rates for Albertans.Maybe it's time to get over past criticisms. Now is the right time to take advantage of the low rates being offered and pocket the savings.
Current retail prices for electricity in 2016 are under 3.5 cents. Consider switching over to a Variable Rate plan, indexed to the real Market Price of energy.
For a list of 24 Energy Marketers in Alberta offering low rates: www.GreenAlbertaEnergy.ca.
Let’s understand why retail prices are so low. Here are the facts:
As a province, we are fortunate to have over 16,000 MW of installed capacity, more than 9,000 MW added in recent years. As a province, we currently have approximately 40% surplus in supply, outstripping consumer demand.
It’s fundamental economics. When supply is greater than demand, retail prices fall and remain stable. That is why retail prices today are down in the 3.5 cent range. It's just that simple.
The good news: Zero debt on the public books where investment in new power plants was funded by the private sector. Is this about to change?
2015 in Review
Gas replaced coal as the #1 generation resource in Alberta.
Market Capacity of Installed Generation:
44% Gas - 39% Coal - 9 % Wind - 8% Other
How do we keep electricity rates stable?
The market is moving in the right direction – albeit not as fast as many environmentalists might like to see. However, it is worth noting that Alberta now ranks third in Canada with an installed wind energy capacity of over 1,400 MW. The mix in generation has moved towards the reduction of our dependency on coal and shifted to natural gas which now ranks #1 generation resource.Climate Change also is a hot topic and undoubtedly our industry is on the threshold of going through a major transformation. What are the costs and who is going to pay the bill? Will low prices last into the next decade? Or will new NDP policies spell an end to low retail prices that cause an increase in the volatility of electricity rates?
Here are 5 key issues in front of Albertans and all have a price tag attached that eventually will end up increasing the cost of electricity.
- Which coal plants will be retired prior to their normal end-of-life production schedule and how much will the compensation package cost consumers? It's possible to close down old coal plant production facilities that were funded by the private sector (which, in turn, have long-term business and financial commitments to supply energy at a guaranteed forward price). Understand that there is a price tag to this decision.
- The addition of new renewables will be based on the concept of an auction. The government encourages new generators to build while committing to buying renewable energy credits from the generators. At what cost?
- We are starting to see the sprinkling of subsidies ($5 million gifted this month) to support municipalities and a few farmers. The subsidy was designed to support Solar. Are subsidies given to a few parties the right strategy? Possibly a “Value of Solar” program would cost less and do more.
- Energy efficiency programs for consumers and small business need to be designed and implemented. How many dollars are going to be invested in new programs? One obvious initiative to consider implementing is the concept of smart “time-of-use” meters. Do consumers have the appetite for a mega million-dollar investment in re-tooling the metering systems in Alberta?
- The province has signaled that it will invest in Bio-Energy. This is a low cost of renewable energy, and actively pursued in many regions around the world. The cost of bio-energy is definitely less than solar. It's wise to invest into a blend of all renewable energy sources as we move forward.
In a market that already has a 40% in surplus capacity, the numbers are going to be difficult to manage. Think about a market disrupted by closures of production facilities and replacement of base loads with generation constructed in higher cost facilities. As consumers, we risk seeing the dreaded aspect of a volatile return to the market. On the other hand, volatility and higher energy costs is an economic signal to industry to continue to invest in building new facilities. It will be a tricky balancing act and one that can be managed, if well planned.
The industry went through the building process with periods of instability which, in turn, was driven by unprecedented economic growth in Alberta. Consumers likely remember the pain of utility bills jumping up to 12 cents per kWh. Retail prices today are under 4 cents; let’s not repeat history.
Maybe what Alberta needs is the appointment of a new “Electricity Czar” to oversee the economic and climate change balancing act.
Today, we are faced with the oil and gas sector in free-fall and increasing unemployment rates as companies continue to lay off workers and outsource jobs offshore. Possibly the best recommendation we can offer: Manage the growth and changes in product mix with caution.
Prediction
Here’s how I see our government rolling out Climate Change initiatives:- A new level of government, within the mandate of the NDP, will be created to manage the process. This is overdue and a step in the right direction.
- The new carbon tax on industry will simply ‘‘waterfall down” and be passed onto consumers in terms of cost of living price increases.
- The new tax dollars will be used to fund (a) closure of coal plants, (b) financially support renewables, and (c) promote energy efficiency initiatives.
- In addition, surplus carbon tax dollars will also need to be collected to fund social payment programs designed to help offset the inevitable increase in the cost of living which will negatively impact all Albertans.
- There is a real danger that today’s low electricity prices we enjoy may never return. So take advantage of the savings today. Like Dallas said to me on the weekend: “Energy is a commodity, and if I can buy it at a lower rate, why wouldn’t I.”
This immediately benefits the province. It would be easy to install and could be done with zero administration overhead costs added to the Alberta marketplace. (All existing electricity retailers in Alberta have systems already in place to manage this process in concert with AESO.) This is natural to fund out of the Carbon Tax income stream and it would pay positive dividends by encouraging new installation of residential and small business micro generation units. Most important, if the program is a success, it would help put some unemployed workers back to work in Alberta’s Solar Patch industry.
Prudent regulations are required. Invest in greening the grid is the right thing to do for all the right reasons - with caution. Please don’t destroy an economy that is already very fragile.
For more information, visit www.GreenAlbertaEnergy.ca