Edmonton Journal

Spiralling transmissi­on costs hit power bills

Alberta could become highest-cost electricit­y jurisdicti­on, expert warns

- 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.
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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