Compensation to Atco’s power rivals creates ‘injustice,’ CEO charges

Atco chief executive Nancy Southern says a provincial program to compensate coal power producers for shutting plants early gives her competitors an “unfavourable advantage” and should be changed or scrapped.

The Alberta government announced last November it will pay Atco, TransAlta Corp. and Capital Power Corp. a total of $97 million annually over 14 years, beginning in 2017, or a total of almost $1.36 billion.

The government’s climatechange plan aims to close all coalfired plants in Alberta by 2030, but six newer facilities were previously allowed to operate until as late as 2061, leading their owners to call for compensation.

Atco was aware of issues around carbon emissions more than a decade ago and, unlike other companies, focused on natural gas generation rather than coal, Southern said in Edmonton Wednesday following the annual general meeting of subsidiary Canadian Utilities Ltd.

She’s concerned coal plants built before and after the 1998 start of power deregulation are treated the same under the compensation system.

“They invested in those plants with their eyes wide open, making their own risk decisions, and now they have been compensated for those investments to a degree that I believe has actually ended up disenfranchising the value that should have gone to Albertans,” she said.

“We make bilateral contracts with industry, bilateral contracts with governments … but those plants didn’t have those types of contracts, so compensation for a higher-risk investment I think has been an injustice.”

Atco will receive a total of $66 million by 2030 for shutting down the two coal-fired units of the Sheerness generating station it co-owns with TransAlta up to a decade earlier than scheduled.

But Southern said the amount of funding provided under the program has created an “unlevel playing field.”

“When your competitors are given an unfavourable advantage, especially right here in Alberta, in our backyard, in our hometown, I’m disappointed,” she said.

“I believe they could be compensated, but then there has to be some adjustment to put us at the same level playing field, or don’t compensate any of us.”

An energy department spokesman said in an email the agreements are based on the advice of an expert in coal transitions and are fair “for workers, companies and Albertans.”

Southern also cautioned that Alberta wholesale electricity prices must triple to attract money for natural gas and hydro generating capacity needed for a reliable power supply when there isn’t enough juice from renewable sources.

The cost of investment in these facilities is around seven cents a kilowatt hour, compared to the current price of two cents, although it’s unclear how much retail charges will rise, she said.

The government has capped power prices at 6.8 cents per kilowatt hour from June 2017 to June 2021 while the overhaul gradually begins, which isn’t considered exorbitant because current prices are low.

Canadian Utilities president Siegfried Kiefer said he wants new investment rules as soon as possible so work on projects can get underway, although Alberta has time because the power supply is larger than needed.

“By converting some existing infrastructure now, we can get off coal quicker than waiting until the rules of 2020 to do it.”