UCP government halts switch to capacity electricity market
The Alberta government has reversed the former NDP government's decision to move towards a capacity electricity market. This is where power generators are paid for its overall ability to produce electricity, and remain energy-only market.
The former government planned to have the capacity market model implemented by 2021. The government decision will stop that process and continue in an energy market where electricity generators are paid only for the electricity they produce in real-time.
“Albertans and investors need certainty in our province’s electricity market system, not an experiment. The energy-only market works. Investors want to participate in it and it provides Albertans with reliable and affordable electricity,” Sonya Savage, Minister of Energy said.
The change came after the government held five round table sessions with key stakeholders.
“Part of our campaign promises was that we said in 90 days we would come up with a decision on whether we would proceed with that by 2021 or we would stay with an energy-only market and I believe we came to the right conclusion,” Drumheller-Stettler MLA Nate Horner told the Mail. “In hearing the minister's consultations she said it was basically unanimous, there was maybe one exception.”
“The capacity market, while it is used in some places, it is, in my mind, a market that is used to push renewable on a population. You are paid for the power you could produce, not the power you produce and I don’t think it was ever thought through.”
Part of the NDP’s move to a capacity market is they capped the price of power for electricity for consumers and the difference was paid through the carbon tax. Horner says removing the cap may be discussed.
For consumers, the reality is currently only a small portion of their electricity bill is made up of charges for electricity. Often this is dwarfed by distribution and transmission charges.
John Shoff of Reality Byes in Drumheller says this is the most concerning issue.
He explains Drumheller residents pay a much higher rate for transmission and distribution than in urban centers because the area is so vast and the population is sparse. Residents of Calgary or Edmonton see much lower rates for transmission and distribution.
“If we could take the entire province and everybody is pooled into one platform and the distribution fees are paid out of it, that to me would be the best way, It is a provincial electric grid so why aren’t we paying into it equally?” Shoff said. “The way it is right now is you are in an area. If you are in an ACTO area you pay their rate, If you are in Fortis’ area you pay their rate.”
Horner agrees this is a pressing issue.
“Right now we are hearing about the price of power, but the real issue out in Alberta is transmission and distribution,” he said.
He believes the UCP government will look into this issue.
“I believe it is a crisis that is facing Alberta, to be frank. I think it is right up there with pipelines and the caribou file. Whatever the Alberta advantage was it had to have affordable power. When we talk about diversifying and manufacturing, we need affordable power.”