Alberta power rates among highest in country; deregulated market blamed for price spikes

By Darcy Henton, Calgary Herald October 15, 2012 6:37 AM

EDMONTON — Residents of Calgary and Edmonton still pay among the highest prices for electricity in the country, according to the annual Hydro Quebec power pricing survey.

The good news for consumers is the price, calculated on April 1, is a few cents lower than it was last year at the same time.

The bad news is the electricity price in Calgary and Edmonton has climbed two to three cents since April.

Calgary, which recorded the highest price in the nation last year, dropped to third highest and Edmonton dropped from second to fifth highest, in Hydro Quebec’s assessment.

The survey of 12 Canadian cities pegged electricity in Calgary at 14.5 cents per kilowatt-hour for the average household, down from 18 cents in 2011. Edmonton came in at 13.6 cents, down from 17 cents in 2011.

The price includes rate riders and local access fees that add to the kilowatt-hour cost in Alberta’s deregulated electricity market.

Halifax and Charlottetown, P.E.I., had the highest-priced residential electricity in the country on April 1 at 15 cents per kWh, according to the survey.

By comparison, the cost in the three cities with the lowest-priced electricity — Montreal, Winnipeg and Vancouver — ranged from seven to eight cents per kWh for an average home. Those cities are served by relatively inexpensive hydro power while the bulk of Alberta electricity is generated from coal or more expensive natural-gas-fired plants.

The survey also included 10 U.S. cities, where the cost of electricity ranged from a low of 7.6 cents in Seattle to highs of more than 23 cents in San Francisco and New York. When the U.S. cities are included, Alberta cities placed in the middle of the pack, with Calgary having the seventh-highest prices and Edmonton the ninth highest of the 22 cities in North America.

Alberta is the only jurisdiction in Canada with a fully deregulated market that sets the price hourly. Electricity is supplied from power plants constructed and financed by private investors.

Electricity consultant Sheldon Fulton said electricity costs for residential consumers are high in Alberta because of market volatility that can rocket the megawatt-hour price of electricity to as high as $999 per mWh when plants shut down unexpectedly.

“It’s either $40 or $300 depending on whether the wind is blowing or not,” he added.

He said the regulated rate that consumers pay if they haven’t signed a fixed-price contract is affected by that volatility to such a degree that one regulated rate provider has applied to the Alberta Utilities Commission for a larger profit margin to offset the risk.

If approved, that could boost residential electricity prices even higher, he said.

Alberta Energy commissioned a task force to review the retail electricity market prior to most recent provincial election to stem public outcry over spiking prices but has yet to release the 390-page report or act on any of its 41 recommendations.

“My guess is the committee has made recommendations that may be contradictory to current government policy, so I think what they are trying to do is figure out how do they make some changes,” Fulton said. “Quebec Hydro’s comparisons are correct. We do have the highest rates in the country, but what is the underlying root cause and how do you fix it?”

Alberta Energy spokesman Mike Deising said the retail market report is still being reviewed by Energy Minister Ken Hughes and his staff.“Once the department and the minister have thoroughly gone through it, he will be responding and releasing the report,” Deising said. “Why it is taking time is there is 41 recommendations for the electricity system and this is important for the province, it is important to Albertans, and we want to take time and ensure we do our due diligence.”

“If there are improvements to be made we will make them, but we’re going to take our time and make sure we do this right.”

Deising said Edmonton’s electricity prices are cheaper than Toronto’s and Calgary’s are only marginally more expensive.

“I think it shows that Alberta is competitive,” he said. “Certain jurisdictions have hydro electricity and those jurisdictions are always going to have a rate that is lower.”

He noted Albertans haven’t had to go into debt to pay for their electricity system like other jurisdictions.

“Quebec Hydro is pushing $37 billion in taxpayer debt,” he said. “You can say that your rate is lower, but there’s still $37 billion of debt that the Quebec taxpayer is going to be on the hook for.”

Evan Bahry, executive director of the Independent Power Producers Society of Alberta, dismissed the Hydro Quebec survey as an apples to oranges comparison.

“None of the jurisdictions compared have had the same economic growth that Alberta has had,” he responded in an e-mail. “We needed to build generation and transmission to meet our enviable economic growth.”

Bahry noted Alberta has added 7000 MW worth of supply to meet demand growth since 1995 — a 100 per cent increase in the province’s generation capacity.

“We have had some of the highest costs of living, of parking, of whatever else in the country, too, and that doesn’t seem to get headlines.”

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Electricity Price Survey:

Residential rates*

1. Halifax — 15.37 cents/kWh

2. Charlottetown — 15.33

3. Calgary — 14.51

4. Toronto — 14.08

5. Edmonton — 13.63

6. Regina — 13.18

7. Ottawa — 13.16

8. Moncton — 12.48

9. St. John’s NL — 12.31

10. Vancouver — 8.14

11. Winnipeg — 7.68

12. Montreal — 6.95

*includes rate riders, fees

Source: Hydro Quebec

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