By Nick Clark
When BC Premier Christy Clark and Alberta Premier Rachel Notley get together with their policy makers, talks undoubtedly gravitate to the ideologies of the “Green Path” and “Economic Strategies” that both provinces are dealing with in charting our future. The common thread is the quest to reduce our carbon footprint, create a new wave of employment opportunities, and dreams of potential profits from the New Green Energy Era.
The NDP's economic diversification and infrastructure building plan revealed our government is forecasting a $10.4 billion deficit in the 2016-17 budget and plans for a $57.6 billion debt by 2019. In part, it is focused on job creation. Embedded in the strategy you will find aggressive plans to promote Alberta’s Climate Leadership initiatives. Yet to be outlined is the cost for retirement of coal generation and the Feed-in-Tariff (FIT) energy riders to be paid for new green generation plus the costs associated with the increased carbon levy - over and above the provincial debt - that goes into effect in 2017.
Remember, the carbon levy doesn’t just cover electricity; heating fuels are covered, as well.
The truth about B.C.'s Site C in the Peace River Valley
Over in B.C., they already have started construction of Site C, a 1,100 megawatt capacity hydro generation facility in the Peace River Valley (pictured below), scheduled for completion in 2024. When finished, it will end up flooding 100 kilometers of the river valley in the Peace region, destroying some of B.C.’s best farmland. At the same time, opposition is being voiced by their business community expressing concern over projected electricity rate increases.
How does Alberta fit into this scenario? Alberta desires access through B.C. for a pipeline to the coast. Plus the province is committed to reducing our carbon footprint by reaching a 30% Green threshold by 2030.
Some are suggesting that Ms. Clark needs to off-load the liability of B.C.’s costly hydro project to protect her job in the next provincial election. Two other premiers were kicked out of office by miss-calculation of the cost/benefits and by taking a big gamble on big ticket infrastructure projects. Former Newfoundland and Manitoba’s premiers paid the price for pushing ahead with ill-conceived hydro projects championed by their Crown-owned utilities. Building costs spiraled upwards, natural gas prices fell, and today there is a glut of cheep electricity available on the market. This contributed to both leaders’ electoral defeats. Ms. Clark could join them next year unless she can successfully put a better economic spin on B.C. Hydro’s Site C project. Hence, her “power for pipelines” proposition to Alberta.
Yet, buying power from B.C. also requires the expense of building 600 kilometres of new transmission line to move the hydro electricity from Site C, which is in the Fort St. John area of North East B.C., and interconnecting into Alberta’s grid. Who pays? If this project were to go ahead, we hope Alberta doesn’t end up funding another very expensive transmission line project.
The cost of electricity imported from Site C was estimated by the Canadian Energy Research Institute to be between $140 to $162 per megawatt hour. Compare this price to the current Alberta Power Pool costs. During April 2016, Alberta set a new 20-year record low price of under $14 per megawatt hour. And the month of May opened with natural gas trading in Alberta at $1.13/GJ, down about 50% compared to the same time last year. Some people will suggest these prices are artificially low – but they are, in fact, the real cost of energy today. These are amazing prices that consumers should be happy with.
Over supply of generation in Alberta, exceptionally low natural gas prices, and the drop in the provincial load have pushed the cost of electricity and natural gas to record lows.
This is the measuring stick, ‘the low water mark’, to be used when you take either of these two steps:
- Adding the impact of new provincial policies on top of today’s rates (the Alberta 2017 increase in the carbon tax on electricity and natural gas);
- Entering into a deal between Alberta and B.C. which would result in an increase in the energy commodity price paid by consumers.
Last month, electricity prices paid by consumers on the Floating Rate in Alberta (indexed to the cost of energy purchased through the Power Pool) fell to below 2.5 cents per kWh.
Long-term Guaranteed Fixed Energy Rates are being offered to consumers at prices in the 5 cents per kWh range. And, most important, Alberta can actually green 30% of the energy they consume today by buying ECOLOGO Certified Renewable Energy Certificates for as little as ½ cent per kWh.
All of this is based on today’s energy rates.
What do you think your utility bill will look like if we start importing hydro power from B.C. and paying $140 per megawatt compared to today’s Power Pool prices under $14?
Governments have a tendency to think big and invest in big projects. It has cost some politicians their jobs. It may cost B.C.’s premier her job in their next provincial election.
Given the glut of cheep electricity on the market today in Alberta combined with natural gas at historic low prices below $2/GJ, we ask our government to consider this opportunity:
- leverage the lowest cost of energy in North America;
- focus on attracting new industries that require massive amounts of electricity and/or natural gas to support their manufacturing processes.
Plus, don’t forget: Greening your energy consumption is actually affordable, if you take the time to shop around. Here’s a list of Alberta retailers offering Green Energy offsets in addition to electricity and natural gas at low energy rates, www.GreenAlbertaEnergy.ca