Transmission fees will hit city power rates

By Mabell, Dave on January 14, 2014.

Dave Mabell


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Think you’re paying too much for electricity now? Things are only going to get worse, warns Mayor Chris Spearman.

“This is just the tip of the iceberg ” he told city council members Monday, after a detailed briefing from the city’s electrical utility manager.

Alberta’s electrical transmission costs have doubled over the last five years, manager Otto Lenz pointed out.

“And transmission charges could double again in the next five years,” he predicted.

With Lethbridge power bills expected to increase as much as 6.3 per cent per year, Lenz told council three of the city’s largest power users are already hoping to build their own power stations and go “off grid.” The impact, at least in the short term, would be to download more costs on Lethbridge homeowners and small businesses.

The soaring costs of power transmission, he said, are a result of the Conservative government’s decision to build two high-voltage transmission lines in central Alberta. They’ll cost $2 billion, he said, and the government has ruled ordinary Albertans should pay for their construction instead of the companies’ investors.

The two north-south lines’ capacity will be far in excess of need, Lenz said. They’ll be of little benefit to Lethbridge-area customers.

“It’s like running a Via Rail train between Coaldale and Lethbridge, for one passenger.”

Lethbridge officials have often made that point during presentations to the government-appointed energy regulators, he said.

“It’s fallen on deaf ears.”

Responding to council members’ questions, Lenz said while large, power-hungry companies are allowed to generate their own power, the city’s electrical utility is not. Yet Calgary and Edmonton are permitted to own large electric utilities which are allowed to generate.

Medicine Hat has to abide by almost none of the regulations that hamstring Lethbridge, he added. But Lethbridge, as a “wire services provider,” is required to provide service to local customers who do not want to sign a contract with Enmax or one of its retail competitors.

While it’s intended to operate on a break-even basis, he said the utility has lost as much as $2.8 million on those customers one year – when power prices spiked after a train derailed into Lake Wabamun, site of a major power plant west of Edmonton.

Year-end results for 2013 were a loss of about $1.5 million, he said, due to unexpected hikes in transmission charges set by the Alberta Electrical System Operator. The utility transferred $9.7 million to the city’s coffers, however, as a return on the city’s investment in electrical facilities.

In the power distribution tariff proposed for 2014, Lenz said the utility could resume a break-even course despite slight reductions to access fees for distribution.

A typical homeowner using 650 kilowatt-hours could see the bill rise from $112.66 to $117.64 per month, he estimated. A large retailer using about 35,000 kilovolts would see last year’s $5,472 bill increase to $5,841 per month.

The city recently created a higher-impact residential rate, Lenz said, in response to some owners’ decisions to use heat pumps for geothermal heating, or plug-in electric cars. Their monthly bills could advance to $466 for 3,500 kilowatt hours, up from $446 last year.