By Nick Clark
Alberta: Zero.
Since deregulation of the energy market in Alberta, there has been $16 billion investment in new generation in our province to meet the growing consumer demand. It was funded by the private sector. The debt is carried by those in the generation business, not the government. This is the big difference between the Made in Alberta Solution and the Alberta Advantage compared to the rest of Canada. And while some consumers complained about the volatility in the market, during the early years of deregulation, you need to look at the market today and learn how to take advantages of the benefits.
The good news. Today, consumers can lock into 2 or 3- year guaranteed retail priced contracts, at rates under 6 cents per kWh. How about those who are willing to buy electricity based on the index of the Variable Rate (Floating Rate) which, in turn, is linked to the Spot Market? They scored! Retail prices during February fell to below 3 cents per kWh. The wholesale market prices for electricity posted by Alberta Electric Systems Operator (AESO) are lower than they were 20 years ago.
Deregulation evaluated. Here’s what you see if you measure the success of deregulation based on debt and retail prices for electricity: Alberta has zero debt and consumers are buy electricity for under 3 cents per kWh.
The assets were turned back to the Balancing Pool (aka the government). At the same time, the NDP is rushing forward and getting ready to implement subsidy programs to encourage investment in wind and solar production: This will be new debt for subsidies taken on by the province which all consumers will be saddled with.
Given these massive government policy changes, consumers need to get ready to pay higher utility bills.
Why are we about to shoot ourselves in the foot? The government wants to project the province as being socially responsible and “going green” for environmental reasons.
Yes, as a society we need to move in this direction. We also need to go slowly and understand the consequences.
Do they think such a new social license clears the way for an energy pipeline to the south – or to the east or west? Doubt it. It is a major gamble if the NDP thinks that, by going greener than everyone else in the world, this decision will convince impacted governments to allow pipelines to cross their frontiers
Last, and prior to sinking Alberta into new debt, we ask the government a simple question: Why are we ignoring the issue of carbon sequestration? Of the billions of tonnes of CO2 emissions, here’s the evidence-based estimates:
- 36% stays in the atmosphere;
- 27% is absorbed by water;
- 37% is absorbed by land.
Logic tells us that not all CO2 emitted stays in the atmosphere. Much of it returns to the earth, mainly through the carbon absorption by plants, soil, and trees. Isn’t it logical to include this reality on the balance sheet. In a time when the Petro Dollar/US Dollar is at rock bottom and 100,000+ people have been laid off in Alberta (which is linked to the slump in the world price of oil), why is our government going to take action that will increase consumers’ monthly utility bill and add new debt to the provincial treasury that will be carried forward for future generations?
Caution. Investments in creating a non-energy dependent economy is a good strategy but it is a long-term process within context of sound and stable government policies to measure investment risk.
In the next budget, the government undoubtedly will focus on attempting to foster new jobs in Alberta. What type of jobs are we going to attract? Public sector jobs? Service related jobs? The question that needs to be asked, prior to investing into Alberta, if the NDP is replaced in 3 years: What’s next? If the NDP ends up as our government of record for the next decade or so, how much debt will Albertan’s be expected to fund to achieve the 2030 Green Plan?
Key Performance Indicators. Our province debt today is zero, and consumers can buy electricity for under 3 cents a kWh. Moving away from this baseline will be an indication of the future cost of government policies.