By Nick Clark
SpotPower.net is an independent retailer in Alberta. We sit between the generator and consumer to buy energy off the grid and resell it to consumer, one kWh at a time.
Please understand the dynamics of the retail market today: Consumers are paying the lowest price for energy in 16 years. The Floating Rate for electricity is below 3 cents per kWh.
Deregulation is working the way it was designed and consumers are pocketing major savings today.
Industry invested $16 Billion
New generation over the last couple of decades in our province was funded by the private sector, not the government. The industry invested $16 Billion in building facilities to meet growing consumer demand for energy.
With the collapse of our provincial economy there is a surplus of available generation. The result: Wholesale prices paid to the generators and the retail price charged to consumers fell dramatically over the last few years. There’s more:
- the 16 year average is $65 per MWh;
- in 2013, the wholesale cost of energy was $80/MWh;
- energy fell to $49/MWh in 2014;
- declined again to $33/MWh in 2015; and
- during the first half of 2016, wholesale prices are running at $17MWh.
Given these numbers...please don’t paint the picture showing consumers as being hoodwinked by the generators in the province.
The Government of Alberta Owns Power Purchase Agreements
We are a small independent retailer of electricity to customers in over 300 Alberta communities. The Floating and Fixed Rate products are offered.
The new carbon tax is being imposed by the Alberta Government – and it is going to have unintended consequences.
So, don’t blame industry for the possibility that electricity prices are going up in 2017 and in the years ahead. Don’t expect industry to simply absorb your new increased tax. Your new tax isn’t a tax on the industry – it is a tax that is going to be passed onto the consumer – regardless how you package the present. It is the consumer who is ultimately going to pay.
The new tax plan is yours – and so is the ownership of the PPAs that have been cancelled.
Just because you want to push the tax back onto the generators doesn’t mean that it will not waterfall down to the consumer. The consumer always pays.
The bottom line is simple. Your government implemented a new tax scheduled to go into effect in 2017. You now own (through the Balancing Pool) 4,655 MW of PPAs which you are going to have to pay the Carbon Tax on. This represents 29% of the total market capacity.
For more information on our perspective, here is a blog we published last June 17th.
And for customers who are worried about uncertainty and volatility in the market, we also offer fixed guaranteed energy rates to the end of 2020. This helps give peace of mind during the next few years of turbulence.
It is our belief that it is fundamentally wrong to change the regulations upon which the industry is built, because it doesn’t fit with your perception of what should have been done 16 years ago.
When you are asking the private sector to invest in new generation and support greening the grid, isn’t the message you are sending a bit dangerous. If you are successful in rolling back regulations which was implemented 16 years ago, are you creating an atmosphere of lack of trust in the stability of policies. Consider this: What happens if you encourage new green generation to be built in Alberta – offer to pay a Feed In Tariff of $35 per MWh and only for future governments to take the golden plumb away some day in the future?