EDMONTON – The watchdog for Alberta’s wholesale electricity market wants authorities to make a “structural fix” to the system.

Market Surveillance Administrator Harry Chandler said his team uncovered 10 examples of unusual behaviour between August 2011 and April 2013 in which the Alberta Electric System Operator (AESO) allowed “sophisticated market participants” to decode its hourly report and discern the price and volume of power that their counterparts were likely to sell at during the next round.

“In a few number of hours, when the market conditions were propitious, this historical trading report is being used to raise the wholesale price higher than we think it would otherwise be,” said Chandler. “This (AESO) report should not be produced in such a manner because it just facilitates that kind of co-ordination.”

He wants delays in the release of data, or the publishing of wide price bands rather than specific prices.

Chandler had hoped AESO would issue a decision on his team’s recommendations this week but Miranda Keating Erickson, senior adviser of market services for AESO, said nothing will be done until further study is complete.

“The hourly reports came into existence to ensure we had a level playing field where the little guys could complete with the big guys, so transparency is really important in a competitive market,” she said. “So where it is suggested we pull information out of the market, it is important to weigh that against the law of unintended consequences.”

Erickson questioned the importance of the 10 incidents over 20,000 hours of operations.

“Were their some weird things that happened over a couple of hours that were not structural? We haven’t completed reviewing the (Chandler) report.”

Chandler’s report does not allege that there was any kind of agreement among the big power producers, or even that the long-term wholesale average power price of $67 per megawatt/hour has been altered by the relatively tiny changes over the period in question.

“These price excursions that we have identified … are very small in the great scheme of things,” said Chandler. “But in a market that relies on competition to protect consumers you have to get the parameters right. And one where everyone is showing all their cards is not ideal.”

Wildrose utilities critic Joe Anglin jumped into the debate this week, saying Chandler’s report “shows consumers are getting gouged and market manipulators are getting away with it.”

Chandler did not look at the extra earnings the power producers might have gained from the bidding system, and he said while his office has the power to investigate market players, his initial task is to report problems and suggest remedies.

Anglin said the MSA’s findings require further investigation and called on government to relieve electricity consumers of unfair price fixing.

“In any other province, these findings would result in a criminal investigation.”

But Chandler, who has spent 40 years in the areas of competition, consumer and regulatory law, said such a comment is off-base.

“I think I should have a pretty good understanding of what constitutes a criminal investigation.”

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© Copyright (c) The Edmonton Journal

 CP August 13, 2013

First, Imperial Oil set fire to a field on her family’s farm, igniting a layer of peat that caused the ground to cave in. Next, a pipeline ruptured, spilling oil into the slough that had formed after the sinkhole was flooded by rain and snow. Then, the company filled in the five-acre swamp with pieces of concrete drilling pads covered with sludge, timbers stained with hydrocarbons, and other waste materials.

A good neighbour to oil industry until then, Natala Bilozer sat down with officials from Imperial 20 years ago and demanded the contamination on her 160-acre property south of Edmonton be cleaned up. The company agreed — but two decades later, her son and daughter-in-law are still battling to make that happen.

In a dispute that has outlived Natala Bilozer and encompassed eight environment ministers, Imperial has been directed to clean up the five-acre tract by Alberta officials three times. Assessments done by three firms on behalf of the company over the last decade show the contamination has spread to groundwater and adjacent soil.

Nothing has been done so far to fix it, the family says.

“Government just writes the rules, it doesn’t enforce them,” says Rick Bilozer, who is 58 and carries youthful memories of shovelling grain on the nearly century-old farm beside his late father, Joe.

In the last 10 years, environmental consultants hired by the company have used backhoes to claw through ryegrass and sweet clover, uncovering slabs of concrete stained with oil, along with steel cables, metal conduit, newspapers, plastic bags, and lengths of pipe.

Groundwater monitoring has identified excessive levels of benzene, ethyl benzene, chloride, sodium and sulphates, while soil sampling has found hydrocarbons above acceptable standards. Broken pieces from discarded pumpjacks lie hidden in nearby strands of poplars.

In the last year, the Bilozers have met several times with Imperial Oil representatives, Environment Minister Diana McQueen and members of her staff. Imperial is currently proposing to do another series of tests, and government says it won’t intervene as long as the company is working on an action plan.

“They are waiting for us to die,” says Barb Bilozer, 53. “They try to frustrate you, but they aren’t going to beat us.

“When you are telling the truth, you stick by it.”

 

Imperial Oil signed its first contract with Joe and Natala Bilozer in 1952, setting up wells on four leased sites on the grain farm Joe’s father had established in 1917.

The company operated on the property without incident until the fall of 1970, when it set fire to a pile of brush that had been cut to make way for a road and development on the parcel of land at the centre of the dispute. The family says the flames spread from a tract of land Imperial had leased into an adjoining field that was not part of the lease, then peat began burning underground. In 1982, more than 5,000 litres of oily emulsion spilled, and cleanup efforts left the site in such poor condition that Natala Bilozer demanded it be remediated. Imperial agreed to do that in 1993.

That June, the company received permission to fill in the land from a public health inspector who stipulated that only clean fill — concrete, gravel, clay or dirt — be used.

“The site is not to be used as a waste management facility,” the permission letter says.

Natala Bilozer penned a note at the time, granting Imperial access to her property and saying she expected all necessary approval permits to be acquired before remediation began.

“I understand the land will be drained and filled with clean material,” she wrote. “When it is brought back to its proper state, I will release (the company) from its responsibility.”

Imperial began work on the project, but when it wasn’t completed 10 years later, Natala Bilozer met with a company official in her home.

“We discussed the damage done on my property by Imperial Oil burning brush around September 1970,” says a hand-written note dated Aug. 21, 2003. “We discussed that (Imperial) is to fill with clean soil and it is to be done and finished as soon as possible.”

It was not until years later, when Rick Bilozer received a copy of an environmental site assessment done in 2002, that he learned the five-acre, off-lease tract that had been burned, flooded and befouled had also been filled with contaminated materials.

Ever since, he and his wife have been fighting to have the site dug up and cleaned out. Law firms have been engaged, thousands of dollars have been spent, and promises have been made and gone unkept, the family says.

“Nobody wants to take responsibility,” says Rick Bilozer, who works as a building maintenance supervisor in Edmonton and now rents out the farm off Highway 60 between Devon and Calmar, only a short drive from the Leduc No. 1 Discovery Site.

Initially, Imperial argued that Natala Bilozer, who died in 2004 from complications related to heart disease, had given permission to fill in the site in the manner it was done.

Incredulous, Barb and Rick Bilozer demanded proof.

“What farmer in their right mind would say, ‘Go ahead and bring all of your contaminated items to my place,’” he says.

Later, the company acknowledged in an email that it could find no formal agreement with Natala, but now maintains she gave them verbal permission during a 2003 visit to the farm. Rick Bilozer, who accompanied his mother to that meeting, denies it.

“It was never even mentioned,” he says.

The parties remain in a deadlock, with Imperial and the Bilozers digging in their heels, and government largely watching from the sidelines.

Company spokesman Pius Rolheizer says Imperial is willing to complete whatever remediation is necessary but first needs access to the land so more tests can be completed.

The Bilozers are denying that access because they feel ample testing has already been done, and they see the move as a stalling tactic. One consulting firm hired by the company has suggested that remediating just one small portion of the site could cost $1.5 million.

The three consulting firms previously engaged by the company drilled 101 bore holes, excavated 31 test pits and set up 18 monitoring wells while collecting soil and water samples and identifying the materials used to fill the five-acre site.

“We already have enough reports to make your head swim,” Bilozer says. “They know what they put in there. Nothing has changed. They want to keep going around in circles.”

In April, while looking for help, the Bilozers met with the inspector from the former Leduc Strathcona Health Unit, who issued the clean-fill-only permit to Imperial 20 years ago. A month later, they received a reply from a senior manager at Alberta Health Services, for whom the woman is now employed.

“It is our position that this matter does not involve Alberta Health Services,” the letter says.

Alberta Environment spokesman Trevor Gimmel says the agency will not intercede because Imperial Oil is making attempts to rectify the situation and therefore remains in compliance with provincial regulations. Gimmel says letters written to the company in 2005, 2006 and 2009 directing it to reclaim the damaged land under a provision of The Environmental Protection and Enhancement Act were warnings, but did not constitute formal demands.

“No order has ever existed,” Gimmel says. “The company has been and remains willing to do whatever is necessary. But to do that it needs access, and the landowner is unwilling.”

Karl Zajes, a local farmer and land-use advocate who serves as president of the Warburg Pembina Surface Rights Group, has helped the Bilozers wade through hundreds of pages of environmental assessments and helped arrange appointments with government officials.

Standing on their farm earlier this week, between undulating golden fields of canola dotted with pumpjacks, Zajes shakes his head.

“Government says we have the best regulations in the world, but what good are they if we don’t enforce them?”

In the last few weeks of her life back in 2004, Natala Bilozer repeatedly asked her son and daughter-in-law to continue her fight with Imperial Oil. For that last month, Rick slept on a cot in his mother’s room at the Grey Nuns Hospital in Edmonton.

“She said, ‘Rick, don’t you let them get away with this,’ and I promised I wouldn’t,” he says.

Imperial has offered to buy the farm from the Bilozers for $640,000 but they have refused. An appraisal of the property in 2012 estimated its value at $1.5 million.

The company has also offered to lease the five-acre site it contaminated, but the Bilozers declined because they fear if they lease the land it will never get remediated.

“We promised her we would get to the bottom of it,” Barb Bilozer says. “We promised we wouldn’t fall for a lot of BS. They destroyed something and should be made to fix it.”

They Bilozers complain Imperial has failed to compensate the family for the damage done to the off-lease tract, but say their battle is about more than money.

Primarily, Rick Bilozer wants the property returned to its original state. The land has belonged to his family for 96 years, and sits beside the homestead where his great-grandfather, Daniel, settled in 1896 after coming from Ukraine.

 

Over the last 40-odd years, it has been subjected to fire and flood and a 5,000-litre pipeline spill. And even if he is no longer farming himself, the land is still his family’s legacy.

“When I was seven, I shovelled grain out of a one-ton truck with my dad,” he says. “By the time I was 10, I could have gotten a driver’s licence. I could drive any piece of farm equipment, even though I was so small I had to sit on a pillow to reach the pedals.

“I worked hard as a kid, but it made a good man out of me.”

Even after they moved to Edmonton, Natala and Joe Bilozer would drive out to their farm on weekends, work all day Saturday and from early morning to noon on Sunday. Later in the afternoon they would host a barbecue for family and relatives.

“If my dad had any idea what was going to be done here, he never would have a signed a contract,” Rick Bilozer says.

After locking the chain that drapes across the driveway that leads into his property, Bilozer stops and surveys his land.

When it rains, a sheen floats on top of the water in the ditches beside the field, he says. Oil seeps out of the pores of the some of the wood from his property when it is cut and split.

“At one point we were going to build a house in there,” he says. “We thought it was a perfect spot.”

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© Copyright (c) The Edmonton Journal

Original source article: ‘They aren’t going to beat us’: Angry landowner locked in 40-year dispute with oil company

EDMONTON – When it comes to describing the accident at the Canadian Natural Resources’ oilsands operation near Cold Lake, “leak” doesn’t do it justice. Neither does “spill.”

A “leak” can be plugged. A “spill” implies a one-time event.

What’s happening at CNRL’s project is neither. For the last three months, 7,300 barrels of bitumen have uncontrollably bubbled to the surface from deep underground and seeped into muskeg and water on four sites at the company’s operations, creating an ecological mess, killing wildlife and damaging the reputation of CNRL in particular and the oilsands industry in general.

The company has cut down trees, hauled away tonnes of oily muskeg and put containment booms on a contaminated lake. But the bitumen keeps coming, seeping out of the ground through long, narrow fissures. Not only has CNRL been unable to stop it, the company doesn’t know for sure why it keeps coming.

The Pembina Institute based in Calgary disturbingly describes the leak as an “uncontrolled blowout in an oil reservoir deep underground.” On the surface, though, it is not a “geyser” as some environmental groups have dramatically described the flow. It would be more accurate to say the ground is suppurating bitumen or maybe festering. Or, if you insist on being dramatic, weeping.

But those descriptors don’t do justice to the size of the surface contamination. Enough bitumen has oozed out of the ground to half fill an Olympic swimming pool. Put another way, in volume it’s about onethird the size of the Enbridge accident that dumped more than 20,000 barrels of oil into Michigan’s Kalamazoo River in 2010, causing the largest inland pipeline spill in United States history and creating an $800-million cleanup job.

No matter the size or how you describe it, an oil spill is not a pretty sight – not that it’s been easy to take a peek at the CNRL accident. The affected area is not only remote, it is on the Cold Lake Air Weapons range which means it is out of bounds to civilians. Its inaccessibility has made the story more intriguing to journalists in Canada but around the world. On Thursday, company and military officials took a gaggle of local, national and international reporters to the site to see for themselves. My colleague Sheila Pratt was among them and reported that 200 workers are urgently trying to clean up the mess and prevent migrating birds from landing on a small lake in the contaminated area: “In

an effort to scare off birds, noise cannons are booming, flags flutter on the site, decoys of predators dot the lake and bizarre mannequins peek out of trees,” wrote Pratt. “On the lake, large booms contain the surface oil while crews collect bitumen.”

We don’t know how much all this will cost CNRL, not the least because we don’t know how long it will continue.

The problem seems to be related to the company’s in situ process for recovering bitumen. In what’s called “highpressure cyclic steam stimulation,” CNRL injects steam into deep wells to melt the bitumen. After weeks of injection the process is reversed and bitumen is pumped to the surface. CNRL officials think the leak was caused by an old well bore that couldn’t withstand the massive underground pressure and they say the problem should improve as the underground pressure decreases. However, the province’s governmental watchdog, the Alberta Energy Regulator, says it’s too early to reach any conclusions about the cause. As a precaution, the regulator has ordered the company to stop steaming in the affected area. There remains the possibility the problem was the result of a crack in the overlying cap rock created by the high-pressure steaming process. That would be a much larger problem for CNRL. It’s one thing for the company to plug up an old cracked well bore but quite another to deal with cracks in a geological formation.

It would also be a much larger problem for the oilsands industry that is moving away from open pit mining to in situ methods designed to be less environmentally disruptive. The CNRL incident is raising troubling questions and providing ammunition for environmental groups to once again attack the industry.

Also troubling is the fact this is the second CNRL leak in the same area. In 2009, 5,600 barrels seeped into the environment. The cause was never conclusively determined but the provincial regulator said “geological weakness in combination with stress induced by high pressure steam injection” may have contributed to the incident.

Greenpeace spokesman Mike Hudema says regulators need to review the in situ methods: “How do we identify what formations are safe to take highpressure steam?” Given that the industry plans to recover 80 per cent of the oilsands through the in situ process, CNRL and regulators must come up with some answers. The first and most obvious is question is what happened at the company’s operations near Cold Lake? It doesn’t matter if you call it a leak or a spill or an underground blowout – we need to know what caused it and what it means to the integrity of the oilsands industry.

gthomson@edmontonjournal. com

© Copyright (c) The Edmonton Journal

Surging wholesale electricity prices should shock Albertans into abandoning regulated-rate options for a more stable contract deal with a power provider, warns the province’s former consumer advocate.

“The way our market is going to exhibit high prices in the future is with these sort of events,” said David Gray, an electricity consultant who previously worked for the province’s Utilities Consumer Advocate.

Those “events” were laid out in a new report from the province’s electricity watchdog, which found average wholesale prices for electricity spiked 207 per cent during the second quarter of 2013 over the same period last year.

In its report, the Market Surveillance Administrator notes the triple-digit spike was a result of a low supply cushion, higher demand, lower imports, as well as planned and forced outages.

The average pool price for power was $123 per megawatt-hour compared with $40 per MW-h in 2012, amid a 28 per cent drop in supply reserve year-over-year.

One week in April saw the pool price average $324 per MW-h, up from $77 per MW-h the previous week, and the second-highest weekly average since October 2000.

“This is the new normal,” predicted Gray, who advised signing onto fixed-rate contracts for electricity, but floating-rate agreements for natural gas.

But Richard Penn, senior adviser for the Market Surveillance Administrator and author of the recent report, said volatility during this year’s second quarter was largely due to planned and forced outages, which choked the supply.

“Come the springtime, when the demand is falling and lower, then generators start to take outages,” Penn said. “They’re maintaining them for the next big season, which is summer. So you end up with a lot of outages in a small period of time.

“Had there been one or two less forced outages, then we probably wouldn’t have seen those prices,” he added.

Penn said residential consumers who aren’t locked into a contract with a retail supplier will feel the brunt of the recent volatility.

About two-thirds of Albertans have not signed contracts with a provider, and instead pay what is called the monthly regulated rate option, which is procured 45 days in advance by the province’s three major utilities.

An Enmax spokeswoman said about 38 per cent of its residential customers have already signed onto a contract.

But customers on the regulated rate option are already paying higher prices because the company purchases electricity on the wholesale market, said Doris Kaufmann-Woodcock.

Enmax’s website shows its regulated rate has increased from $0.07 KW-h in March (before the spike) to $0.11 KW-h in August. Epcor saw comparable increases to its regulated rate.

“The wholesale market is working as designed and the market reacts to changes in supply and demand drivers and this causes variances in wholesale market prices,” Kaufmann-Woodcock said in an e-mail.

Gray said the more volatile regulated rate option is a problem for Albertan’s who can least afford wild price fluctuations.

“Part of the problem is you need to have good credit to get on a contract,” said Gray. “There are some new programs for people if they can put up a deposit, but it has typically been an issue.”

Wildrose electricity critic Joe Anglin blasted the current system as being “extremely destructive” to Alberta’s economy, and to consumers.

“It is critical in the sense of economic stability that we don’t have spiking,” said Anglin. “Because eventually all these costs get paid for and they catch up to us in one form or another.

“It’s going to be devastating on seniors with fixed income, it’s going to be just unbearable on the poor, and we have real problem in the marketplace.”

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It’s being hailed as a “historic” project that will link the country together, but a planned $12-billion oilsands pipeline set off immediate divisions as opponents vowed to stop the energy development.

Calgary-based TransCanada Corp. announced Thursday it would go ahead with its Energy East project, building upon the company’s existing pipeline system to take western Canadian crude as far east as Saint John, N.B., while passing through Montreal and Quebec City.

The project starts with a high level of political support and the Alberta government expressed optimism the line will win public backing as it moves through regulatory hurdles.

“This pipeline is 70 per cent in the ground today,” Finance Minister Doug Horner told reporters in Edmonton. “This benefits all Canadians. It doesn’t just benefit Albertans.”

But other oilsands pipeline plans, such as Enbridge’s proposed Northern Gateway development to the British Columbia coast and Trans­Canada’s Keystone XL project to the U.S. Gulf Coast, have faced staunch opposition from environmental groups and local interests.

TransCanada CEO Russ Girling said the announcement was a “historic” day for both his company and Canada, comparing Energy East to legacy projects such as the Canadian Pacific Railway and the Trans-Canada Highway.

But he acknowledged “there will always be those that are opposed to a project like this for one reason or another.”

“What we need to do is sit down with folks that are opposed for those kinds of reasons and explain to them, at least from our perspective, why we think it’s beneficial to economic development and job creation and long-term prosperity for this country,” he said in Calgary.

Girling said Energy East would fill a growing appetite among eastern Canadian refineries for less expensive and more reliable western crude, rather than importing more than 700,000 barrels a day from overseas sources.

At the same time, he said oil producers would secure access to overseas markets through marine terminals in Quebec and New Brunswick.

Energy East would involve converting a portion of TransCanada’s underused natural gas main line to ship oil 3,000 kilometres from Alberta to its terminus near the Quebec-Vermont border.

Some 1,400 kilometres of new pipe will be built to Saint John, where crude can both feed Irving Oil’s massive refinery as well as be shipped offshore. In New Brunswick, Irving announced Thursday it planned to build a $300-million marine terminal to handle the increase.

However, organizations such as Greenpeace, the Sierra Club and the Council of Canadians immediately lined up to oppose Energy East. They maintain there are safety concerns around converting natural gas pipelines and major environmental problems associated with pipeline construction, as well as increased carbon emissions from expanding oilsands production.

Keith Stewart of Greenpeace said there has “been a much more organized political push” for the eastern pipeline, but noted there was little initial concern raised about Northern Gateway, only to see that project ultimately shunned by B.C.’s two main political parties.

“Most people in Quebec haven’t even thought of this yet,” he said from Toronto.

Premier Alison Redford — who in a statement called Energy East a “nation-building” exercise — and Quebec Premier Pauline Marois agreed last year to create a working group on resource issues, including pipelines. Marois said last week her province would have to thoroughly examine any pipeline proposal before signing off on the project.

However, the pipeline plan has the enthusiastic support of New Brunswick Premier David Alward, who on Thursday called it “a game-changer.”

“It will change the direction of our province, our economy, the fate of many of our citizens, and it will help create a stronger more prosperous future for all of us,” he said.

The federal Conservative government, which has made increasing energy development a key component of its agenda, also supports the East Coast line.

“Initiatives like this could allow Canadian refineries to process more potentially lower-priced Canadian oil, enhancing Canada’s energy security and making our country less reliant on foreign oil,” Natural Resources Minister Joe Oliver said in a statement.

The federal NDP, which opposes Gateway and Keystone, also backs the concept of a west-to-east pipeline.

NDP natural resources critic Peter Julian believes there is greater public support for the idea because it’s seen as a “wise use of resources that ensures the maximum benefit to Canada and Canada’s regions.”

But he cautioned that the Conservative government’s approach, which he characterized as attempting to ram projects such as Northern Gateway through by undermining the environmental review process, won’t fly.

For Alberta, Energy East is seen as a chance to gain access to new markets, such as India.

Horner said its impact would be “huge” because the pipeline will reduce the price differential between Alberta crude and world oil prices and help guarantee ramped-up production from the oilsands.

“The investment in infrastructure in our province is going to provide the revenue that we need to build the province,” said Horner.

“This is a significant piece to our royalties, this is a significant piece to the job creation in the province and it’s a significant piece to the investment across the province.”

Alberta has already agreed to purchase firm capacity of up to 100,000 barrels per day for 20 years on the Energy East line.

But the Alberta Federation of Labour, while supporting an eastern pipeline in principle, said the project must be built around refining crude in Canada, not exporting raw bitumen.

“Without strong leadership from the province and the federal government, this will be another missed opportunity,” said AFL president Gil McGowan.

With files from The Canadian Press

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