Spi­ralling trans­mis­sion costs hit power bills

Al­berta could be­come highest-cost elec­tric­ity ju­ris­dic­tion, ex­pert warns

Edmonton Journal - - CITY - DARCY HENTON dhen­ton@post­media.com

Trans­mis­sion costs on Al­berta power bills are climb­ing at un­sus­tain­able rates with in­creases that are un­prece­dented in North Amer­ica, con­sumer groups warn.

A coali­tion of groups rep­re­sent­ing res­i­den­tial, busi­ness and in­dus­trial power con­sumers has warned the Al­berta Util­ity Com­mis­sion that trans­mis­sion rates have es­ca­lated to the point where they threaten to af­fect devel­op­ment of elec­tri­cal gen­er­a­tion and the en­ergy mar­ket.

“These cost driv­ers, un­less mit­i­gated, could lead to sub­stan­tial amounts of un­needed sur­plus ca­pac­ity, spi­ralling rate in­creases and are a threat to the long-term sus- tain­abil­ity of Al­berta’s in­te­grated elec­tric sys­tem,” the con­sumer groups warned the com­mis­sion in a joint sub­mis­sion filed in Jan­uary.

The groups say an an­nounced new car­bon tax could boost pool prices while new trans­mis­sion in­fra­struc­ture re­quired to sup­port the NDP gov­ern­ment’s pledge to re­place coal-fired power with re­new­able en­ergy could drive trans­mis­sion costs even higher than forecast.

“The ratepayer group is con­cerned that trans­mis­sion rates in Al­berta ap­pear likely to ex­ceed other known rates in North Amer­ica due to an un­prece­dented level of cost in­creases,” said the pa­per sub­mit­ted by the Al­berta Con­sumers’ Coali­tion, the Di­rect Con­nect Con­sumers As­so­ci­a­tion and the In­dus- trial Power Con­sumers As­so­ci­a­tion.

Elec­tric­ity con­sul­tant David Gray said Wed­nes­day that trans­mis­sion costs, which make up about 15 per cent of North Amer­i­can power bills, are forecast to soon ac­count for 45 per cent of power bills in Al­berta.

He said the Al­berta Elec­tric Sys­tem Op­er­a­tor has vastly over­es­ti­mated the growth of Al­berta de­mand, and as a re­sult has mas­sively over­built the elec­tri­cal trans­mis­sion sys­tem.

While the spot­light has been fo­cused on the dereg­u­lated por­tion of the elec­tric­ity mar­ket for the past decade, costs on the reg­u­lated side for trans­mis­sion, distri­bu­tion and ad­min­is­tra­tion have spi­ralled out of con­trol, Gray said.

“Where Al­berta has drifted way off track is in the distri­bu­tion and trans­mis­sion of power,” he noted in a re­port re­leased this week. “These charges are reg­u­lated but have be- come ex­traor­di­nar­ily high — even with a firm reg­u­la­tor over­see­ing the costs.”

Gray, for­mer ex­ec­u­tive di­rec­tor of the Util­i­ties Con­sumer Ad­vo­cate, fears the situation could be­come worse with re­cent ter­mi­na­tions of power pur­chase ar­range­ments (PPAs) and other pend­ing costs.

“Coal PPAs pushed back on con­sumers through the Bal­anc­ing Pool charges, in­creases in trans­mis­sion for projects not yet com­pleted and con­sumer-based taxes pro­posed by the gov­ern­ment could re­sult in Al­ber­tans hav­ing the unique distinc­tion (of be­ing) the high­est­cost elec­tric­ity ju­ris­dic­tion in the world,” he said in his re­port.

AESO said Wed­nes­day that trans­mis­sion fees have in­creased only $3 — to $21 — on av­er­age res­i­den­tial power bills since two con­tro­ver­sial north-south high-volt­age trans­mis­sion lines were con­structed in Al­berta. Over the same three-year pe­riod, distri­bu­tion fees in­creased to $44 from $40.

AESO spokes­woman An­gela An­der­son said trans­mis­sion costs are ex­pected to rise $6 more to $27 per month in five years, with other fees to to­tal about $61 on an av­er­age power bill.

“New trans­mis­sion projects typ­i­cally cost res­i­den­tial con­sumers ap­prox­i­mately $1.40 per month more per bil­lion of in­vest­ment for the life of the trans­mis­sion project,” she said in an email.

An­der­son said it is still too early to tell how the re­new­able pol­icy will af­fect trans­mis­sion costs but it is not ex­pected to sig­nif­i­cantly af­fect the AESO trans­mis­sion cost pro­jec­tions.

For­mer Bal­anc­ing Pool ex­ec­u­tive Gary Reynolds is skep­ti­cal. “I think this is a com­plete fal­lacy and re­sults from the Al­berta gov­ern­ment’s at­tempt to down­play the real costs of tran­si­tion off coal,” he said.

Reynolds es­ti­mated Al­berta will re­quire about 3,660 wind tur­bines gen­er­at­ing 1,800 megawatts to meet its goal of hav­ing 30 per cent of its power gen­er­a­tion com­ing from re­new­able en­ergy sources.

“Who could be­lieve that ty­ing in thou­sands of new wind tur­bines isn’t go­ing to re­quire sub­stan­tial new costs for trans­mis­sion in­fra­struc­ture? I sure can’t,” he said.

JOHN LU­CAS/FILE

High ten­sion power lines along the south­east Hen­day. Al­berta has mas­sively over­built the elec­tri­cal trans­mis­sion sys­tem, re­sult­ing in huge costs, says a re­port from a ratepayer coali­tion.

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