Alberta power prices poised for summer spike

By Matt McClure, Calgary Herald May 24, 2013 6:22 AM

Hit recently with higher prices at the pumps, Albertans will now need to dig deeper in their wallets to keep the lights on and the fridge running.

While a National Energy Board report released Thursday says gasoline rates should soon drop back to last year’s seasonal levels, the federal regulator predicts the province’s consumers will have to pay about 16 per cent more this summer for their electricity.

And an NEB analyst who prepared the outlook said power prices could surge even higher than forecast with the surprise announcement this week that a key TransAlta plant that was expected to be back in service by mid-June will now be out of commission until sometime in November.

“There is an expectation that those not on a fixed-rate plan are going to see their power bills rise this summer,” said Roger Creighton, a market analyst with the NEB.

“This analysis of tight supply doesn’t reflect any impact from the TransAlta announcement.”

The energy giant’s Keep­hills 1 plant would normally produce about 395 MW, or approximately four per cent of the province’s internal supply during the summer.

The coal-fired station near Wabamun has been off-line since March after a winding failure was found in its generator.

TransAlta had originally hoped to have the plant back running in April, but recent testing after initial repairs revealed the 1983-vintage device had greater wiring degradation and now requires a full rewind.

TransAlta spokeswoman Marcy McAuley said the impact of the outage on the province’s power supply will be lessened in August by the earlier-than-expected return to service of its 288 MW Sundance 1 station.

“We’re committed to being online and reliable,” McAuley said.

“This is as frustrating for TransAlta as it is for Albertans.”

While the Keephills 1 outage could magnify the hurt for Alberta consumers, a TransAlta media release reassured investors they shouldn’t suffer because of this unexpected event.

“(The company) is entitled to continue to receive its (power purchase agreement) capacity payment and is protected … from having to pay availability penalties,” the release said.

“As a result, TransAlta does not expect the outage to have a material financial impact on the corporation.”

Creighton said the recent spike in gasoline prices to more than a $1.30 a litre at some Alberta stations stemmed from a longer-than-expected outage of Petro-Canada’s refinery in Edmonton.

Now that the plant is back operating and as other facilities complete their reconfigurations to produce fuel suited for summer weather, supply should increase and price will ease.

“It won’t be necessary to incur and pass on the cost of trucking and railing gasoline into the province from the U.S. Midwest,” Creighton said.

Nationwide, the NEB is predicting the average price at the pump this summer will be between $1.20 to $1.30 per litre, similar to last summer’s average of $1.27 per litre. Creighton said prices in Alberta, as usual, are likely to be lower than elsewhere in the country.

The NEB report projects on-peak power prices during the months of May through September will rise from an average $86.26 per MW last year to $100 per MW this year because of a combination of hotter than normal temperatures and natural gas prices that are predicted to soar 50 per cent higher than last summer.

Coal is the primary source of energy used to generate Alberta’s electricity, but natural gas supplied 41 per cent of the province’s power last year.

While consumers on a fixed-rate plan won’t be immediately affected by the price rise, the 60 per cent of residential customers who have opted instead for a regulated rate will see their power bills jump.

“Consumers should consider the option of going to a contract that evens out these spikes,” said Richard Penn, senior adviser with the province’s Market Surveillance Administrator.

“The great thing about most retail contracts in Alberta is they allow people to get out of them with one month’s notice.”

While a tight power supply may cause price hikes this summer, the organization that manages Alberta’s power grid says it isn’t expecting a repeat of the rolling blackouts that plunged parts of the province into darkness for hours one afternoon last July.

Dawn Delaney, spokesman for the Alberta Electricity Supply Operator, said the not-for-profit entity is forecasting it can maintain a minimum surplus of 1000 MW plus a 500-MW reserve the entire summer unless there are unplanned outages.

“We have a contingency plan for when we have a lack of supply,” Delaney said.

“We’re in fairly good shape as far as reliability.”

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