Concerns over price volatility and an overall rise in the cost of electricity has become a growing issue for many Albertans, and sparking opposition from provincial NDP leader Brian Mason.
Alberta power consumers will pay on average 15.2 cents per kilowatt hour in January — an all-time record for the monthly rate. This rate is double what Albertans paid in January, 2011.
Mason has attacked the current system and lays much of the blame on excessive deregulation of utilities in Alberta.
“High power rates put the squeeze on family
budgets.  P.C. power deregulation is failing to protect families from painful hits to the wallet,” said Mason, in a press release. “Power-company CEOs are paid millions in salaries and bonuses while families are pinched. This system doesn’t work.”
The Industrial Power Consumers Association measurement of price volatility shows prices are twice as volatile this year compared to January, 2010. Shifting power prices make it more expensive for wholesalers to buy hedges against future prices, a cost that is often passed on to consumers.
Cardston-Taber-Warner Progressive Conservative Party candidate Pat Shimbashi indicated the rising cost trend of electricity in Alberta isn’t necessarily due to de-regulation, as Mason suggests.
“High prices in recent months reflect factors such as the unexpected loss of base load generation at Sundance 1 and 2 and maintenance outages on the transmission connection to B.C. Although the electric industry is deregulated as far as ownership is concerned, the Alberta Government has regulation over rate increases and government regulation concerning environmental issues. Alberta has the largest-growing demand for electricity due to population growth and industrial growth. Deregulation of the electrical industry was protected by government but also the public in Alberta is also protected by government so that electrical companies do not rape and pillage the consumer.”
Cardston-Taber-Warner Wildrose Alliance Party candidate Gary Bikman does not entirely agree with this assessment of the electrical industry in Alberta.
“We are paying too much,” said Bikman, who went on to criticize how deregulation was achieved under a previous P.C. government. “The Klein-era approach to deregulation was highlighted in a Business Week (or Fortune) magazine article at the time as, How Not to Privatize. Of course, the increase is not justifiable. If there was true competition in a genuinely free market, this kind of high-handedness could not occur.”
Mason has pledged to reintroduce electrical regulation if elected premier.
“A regulated system would keep prices low and steady so Albertans can budget properly,” said Mason. “I commit to Albertans that as premier I would regulate power prices in Alberta so this most essential service is affordable for all.”
Shimbashi explained that in other provinces in Canada, the electrical situation is markedly different than what exists in Alberta, sometimes leaving the province open to unfair comparisons.
“Over the past five years, the average regulated rate has been $0.08 per kilowatt hour per hour, which is in line with other provinces, which do not have large hydro like Quebec and Manitoba. Manitoba subsidizes its power from the money it receives from equalization. Other provinces use Crown-owned utilities to pay for electricity, but pay taxes to cover debt from building new generating plants. Quebec hydro debt is more than $200 billion. Alberta does not have any public debt associated with electricity, because in Alberta industry takes on the full cost and all of the risks.”
The promises of utility deregulation have proven to be largely false and misleading, according to Bikman.
“Complete deception and sleight of hand — just because you call a pig a cow doesn't make it so. We are not buying electricity in a free and open market. This kind of abuse of power cannot exist in the absence of government intervention. The cost of the electricity itself may actually be fair but the transportation fees and other extras are illegitimate — much like the P.C. MLAs and bureaucrats that designed the system and allow it to perpetuate.”
Due to the prevalence of coal-fired power generation in Alberta, the province will need to look to alternative solutions to power generation in the future.
“The federal government, under pressure from environmental concerns, have instituted laws governing the coal-fired generation,” explained Shimbashi, taking a matter-of-fact approach to the problem. “Sheerness and Sundance generating stations are coal-fired. All coal-fired plants will be shut down and will have to be replaced by natural gas or nuclear generating stations. If natural gas prices increase on the world market to twice the current value, yes, the price of electricity will increase substantially. If we pay for what it costs to produce electricity under wind power prices will continue to increase. Solar power is out of the question. There is a lot of potential for hydro in Alberta, but the environmental concerns may make hydro prohibitive. Under a regulatory process the amount of electrical rates are based on the highest cost of electricity on a kilowatt basis. If it is based on wind power, we could be paying double what we are paying today.”
Bikman proposed a “Wildrose prescription” for curing this ailment.
“Repeal Bill 50 and begin an impartial assessment by the Alberta Utilities Commission to determine the need for additional transmission lines, encourage the transition from coal burning to natural gas for electricity generation, reform the way in which electricity is purchased and sold in Alberta, specifically focusing on reducing price spikes for consumers and businesses, and reduce electricity demand by developing market-based mechanisms that encourage efficiency and allow businesses and individual Albertans to sell locally-generated electricity from co-gen, wind, solar, and biomass, back to the grid.”