Alberta consumers will pay for coal phase-out: experts
Cost of switching to renewable forms of energy will drive electricity price up
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Albertans can expect to pay more for electricity when renewable projects roll out, but by how much has yet to be determined.
Earlier this month, TransCanada terminated three Alberta coal deals, citing costs associated with carbon-dioxide emissions from the plants have risen and are forecast to increase, given the NDP government’s plans to impose a carbon tax.
But the plants won’t shut down — the government said its provincial agency, the Balance Pool, bought the agreements and will transition them to the competition.
But by assuming these “negative” contracts, the Balance Pool will see its overall assets erode, said energy expert Blake Shaffer, adding the transfer could cost the public up to $1 billion.
“If prices were high, they wouldn’t have terminated these contracts,” he said. “So you have to ask yourself, ‘Would you prefer high prices and no termination cost or low prices and sharing a little bit of the termination costs? For consumers, it’s arguably better to have the latter one.”
And as the government transitions from coal, it’ll have to play its cards right, Shaffer added.
To ensure electricity prices don’t spike during the phase-out period, he said coal fired plants will have to be weaned off at market-friendly pace. In other words, electricity profits must be attractive to warrant investment but also low enough so bill-payers don’t scream.
Angela Anderson, external relations advisor at the Alberta Electric System Operator (AESO), said the current price of electricity is at historic lows
“In the meantime, the prices are going to stay low — we have a ton of generation in the system,” she said. “That being said we expect there will be an increase overtime.
She couldn’t say by how much the cost would increase.
“It’s really early to tell at this point,” she said. “Some pieces of the policy aren’t finalized yet. But we know we have sufficient transmission capacity to accommodate new generation.”
The government has asked AESO to develop and implement a renewable electricity incentive program to add additional renewable generation capacity into Alberta’s electricity system. Renewable electricity comes in the forms of wind, solar and geo-thermal.
The competition consultation — which could come in the form of a bid — for the new renewable project is expected in late 2016, aiming to be built and in service built by 2019.
“We’re not expecting to build a lot of new transmission to accommodate the new renewables,” she said.