INDEPENDENT POWER PRODUCERS SOCIETY OF ALBERTA

Letter to the Editor

RE: Farm families hit hard by soaring electricity costs; Rural meeting sees growing dissatisfaction

We know power costs spiked on the regulated rate option (RRO) this winter on expectations of cold weather and coal plant outages.  We also know these power rates came at a time when Albertans are grappling with the rising cost of living in our growing province.

But we believe that competition is working in Alberta’s electricity industry.  To the point, from 2001 to 2011, Alberta’s generation capacity increased by 40%, yet wholesale prices increased by less than 10%.

2012 wholesale prices have averaged ¢6.6/kilowatt hour (KWh), which is below the cost of new coal, new wind and new efficient combined-cycle gas-fired generation.  Current prices result from warmer weather, softening seasonal demand and a lot of wind power.  Consumers benefit when prices are below cost.

It is also true that RRO rates have come down considerably since December.  We also know that residential consumers have options outside of the RRO.   The competitive retail market is offering stable rates at ¢8 per KWh and those offering monthly wholesale price flow-through, plus a penny, would be around ¢7.6/KWh so far in 2012.   For more information on these options, see ucahelps.alberta.ca.

When comparing Alberta’s prices against other provinces, we need to consider that Alberta’s prices reflect the true price of power.  Alberta power producers pay taxes, can’t debt finance their operations, and rely mostly on coal and natural gas, not cheaper hydro, to produce power.

Also, Alberta has needed to build new generation to meet the fastest growing demand for power in Canada.  Rates would have risen in Alberta to meet growing demand, but competition has kept those costs in check as wholesale prices have risen by less than 10% in 2011 compared to 2001.   Albertans can benefit from the competitive wholesale market in the form of competitive products at the residential level.

Sincerely,

Evan Bahry
Executive Director
IPPSA

The Independent Power Producers Society of Alberta (IPPSA) was founded in 1993 as a forum for dialogue among Alberta's power producers and as a proponent of competition in Alberta's electricity market.   IPPSA represents all of Alberta’s major power producers. For more information, visit www.ippsa.com.