Liberals unveil electricity pricing plan
The Alberta Liberals are calling on the NDP government to make changes to electricity pricing, to save consumers money and deal with taxpayers’ looming liability related to powerpurchase arrangements.
In a news conference Wednesday, Liberal Leader David Swann, joined by former utilities consumer advocate Rob Spraggins, said the government needs to adjust the regulation rate option (RRO), the price most Albertans pay for electricity, to reflect the actual cost of power as opposed to the estimated “forward” price used.
Spraggins said Albertans on the regulated rate option have been massively overcharged over the past decade because of the forward price.
Linking it to the actual cost would reduce consumers’ bills by an average of $15.70 a month, leading to savings of approximately $670 million for Albertans between 2017 and 2020.
That cut to the RRO would in turn cushion Albertans who will be forced to make a payment on their power bills to cover the liability — estimated at $2.5 to $3 billion — related to the relinquishment of powerpurchase arrangements to the Balancing Pool, an independent government agency.
“What this is all about in the end is simply offsetting the costs of the PPA liability,” said Spraggins.
“You offset that by changing the RRO methodology and save consumers as much as $10 to $15 a month, so consumers come out ahead of the game.”
Starting in December of 2015, Enmax, TransCanada, ASTC Power Partnership (an association between TransCanada and AltaGas) and Capital Power returned money-losing PPAs for coal-fired power to the Balancing Pool, citing the NDP’s Jan. 1, 2016, increase in the carbon levy on large greenhouse gas emitters as the cause.
The PPA holders used an opt-out provision that allows the companies to terminate the agreements if any change in law makes the deals unprofitable or “more unprofitable.”
The government has since reached settlements with all of the companies except for Enmax, but the Balancing Pool has accepted the PPAs.
The Balancing Pool will implement a new monthly charge to help pay for the subsequent liability, but it is expected to be kept relatively low as the NDP government has authorized the agency to borrow to cover the costs.
Swann said that presents dangers of its own.
“Albertans are extremely concerned with the debt loads this government is taking on,” said Swann, noting the borrowing allows the government to “cover up their mistakes in the electricity market.”
“The simple changes we are proposing will remove the need for this additional debt.”
In a statement, the government said the Liberals are overestimating the PPA liability and dismissed Swann’s proposal around the regulated rate option.