Alberta Premier Ralph Klein has announced plans to create an external committee that will advise government on longer-term issues surrounding electrical deregulation.
"The government is providing rebates for residential and industrial users, plus a commercial market transition credit throughout 2001 to ease the initial transition period to a competitive market, and substantial new generation is on the horizon to address the supply shortage. The advisory committee will provide a longer-term outlook that will enhance stability and confidence in the province’s energy future," the premier said.
The mandate of the advisory committee on electricity will be to provide policy recommendations and analysis to government. A diverse group of stakeholders will be invited to participate on the council, including the Industrial Power Consumers and Co-generators Association of Alberta, the Independent Power Society of Alberta, the Consumers Association of Alberta, power companies, rural electrification associations, the Alberta Urban Municipalities Association, the Alberta Association of Municipal Districts and Counties, the Environmental Resource Centre, and other business and community organizations.
Leonard Bolger, currently co-chair of the Alberta Energy Research Institute, has agreed to chair the advisory council. Mr. Bolger is also a member of the board of directors of the Alberta Science and Research Authority, and is retired from Shell Canada Ltd., where he served as vice-president.
"There are a range of issues to be explored, and the council will work with stakeholders to see that consumers’ concerns are addressed," Mr. Bolger said. "Our primary concern will be to help ensure a reliable, ample and competitively priced supply of electrical energy for Albertans."
"Electrical deregulation is underway in Alberta and investor confidence in the Alberta electrical market is strong, with firm commitments made to new power generation projects," the Premier said. "We will look to the advisory group to help us deal with issues in the market as they arise, with a focus on consumer issues and priorities. We want their input on how to resolve problems and how to ensure stability for consumers. We look forward to the ideas and critical analysis such groups can bring to the table," he said.
Alberta's Electricity Supply
Alberta's deregulated electricity market has helped to encourage additional new generation. The new, competitive system enables the market to be more responsive to changes in supply and demand by allowing anyone to build new generation, not just the province's traditional utilities.
New generation of about 1,400 Megawatts (MW) was added to the Alberta power suppyly by the end of 2000. An additional 4,400 MW is under development over the next few years (see Table)
At present, installed capacity exceeds 10,000 Megawatts, however, all that capacity is not continuously available to meet electricity demand. This winter's current peak demand is reported by the Power Pool to be 7,785 Megawatts -- up from 7,408 Megawatts in 1999. Of the installed capacity, there is currently over 9,300 Megawatts available to the Alberta System, including capacity that may be available from imports.
What is the Outlook for Energy Prices?
Although prices are high, independent experts expect that Alberta may see downward pressure on both natural gas and electricity prices.
Private sector forecasters say natural gas prices should drop to around $5 or $6 per gigajoule in 2002, with the trend continuing downward in the following years. The government reports that electricity prices are expected to go down. For example, in the November electricity auction, the market purchased power for 2001 at 12˘ per kilowatt-hour (kWh), year 2002 power at 6.8˘ per kWh, and year 2003 power at 6˘ per kWh.
These forecasts are based on new supplies of natural gas and electricity coming on line.
Natural gas prices are determined by the competitive natural gas market. Because prices are high right now, gas producers are drilling wells at record levels. In Alberta, the number of wells drilled set a record in 2000, jumping almost 40 per cent in just one year.
At the same time, direct employment in the drilling industry increased 15 per cent over the last year, creating spin-off employment in various other sectors.
On the electricity side, Alberta's new deregulated market is encouraging investor confidence. With close to 3,000 MW of new electricity generation coming on line or planned by the year 2005, this represents about $3 billion in new investment from the private sector. That's enough power to light up 30 cities the size of Red Deer. About 500 megawatts of that power is expected to come on line in 2001. In December alone, companies announced more than 1,300 MW of new generation.
TransAlta Also Expanding
TransAlta announced plans for a 900-megawatt (MW) expansion of their coal-fired Keephills power plant located near Edmonton, Alberta. The company also announced a new $5-million Cdn investment in Vision Quest Windelectric Inc. of Calgary, Alberta and plans to switch their Calgary-based corporate head office to wind power.
"These projects represent another major step in TransAlta's strategy to increase its generation capacity to 10,000 megawatts by 2002," said Steve Snyder, TransAlta's president and CEO. "Low-cost generation using a diverse range of fuels is what we do best. We are moving ahead to grow our business in the competitive markets of Alberta and Washington State. Both of these growing economies need more low-cost power."
"We anticipate a rigorous regulatory and environmental assessment of our plans and look forward to working with interested stakeholders," added Mr. Snyder.
Pending regulatory approval, the $1.8-billion Cdn ($1.2-billion US) expansion of the coal-fired Keephills plant will see the addition of two 450-MW generating units, bringing the plant's capacity to a total of 1,654 MW. The 900-MW Keephills expansion will meet all the environmental standards required of a new plant of its kind. TransAlta expects to commission the new units in early 2005.
TransAlta is investing $5 million Cdn ($3.3 million US) in Vision Quest to purchase 40 new Vestas V47 wind turbines. These turbines can generate 26.4 MW of electricity.
Graphics courtesy of Alberta Department of Energy. ET