Rising power bills feared amid shift away from coal

By Darcy Henton, Calgary Herald June 5, 2014

EDMONTON — Alberta’s long-term electricity outlook forecasts a dramatic shift from coal-fired to more expensive gas-fired generation, but a consumers group says skyrocketing transmission costs will drive power bills even higher.

The Alberta Electric System Operator’s 20-year outlook suggests coal-fired plants that now produce 43 per cent of the province’s electricity will produce only 10 per cent in 2034, while natural gas-fired power will jump from 11 per cent to 45 per cent of total generation.

The report, released Thursday, doesn’t forecast what impact that will have on prices in Canada’s only fully deregulated electricity market, but consumer groups expect to see them rise as a result, particularly when costs of new transmission lines are added to power bills.

Consumers’ Coalition spokesman Jim Wachowich said the actual cost of electricity is expected to be low in the short-term, but residential power bills will increase as a result of transmission costs that are forecast to rise from $2 to $12 per month over the next five years.

“We think that’s conservative,” he said Thursday. “If it’s wrong, it’s probably low.”

Wachowich said coal-fired power in cheaper to produce than natural gas power, but he is more worried about the impact of dramatically increasing transmission costs

The AESO report suggests Alberta’s aging fleet of six coal-fired plants will begin shutting down as early as 2019 with 3,700 megawatts of coal-fired power generation being de-commissioned over the next decade if stringent environmental policies are introduced to significantly increase the Alberta levy on greenhouse gas emissions.

New regulations require new plants to be equipped with carbon capture and storage features, but the report says the cost of the technology is prohibitive.

“Given the current costs of CCS, the 2014 long-term outlook anticipates that no new coal-fired plants will develop,” says the report.

But AESO forecaster John Esaiw said there are no concerns about insufficient supply coming on stream to replace the generation lost as a result of coal-fired plant closures.

“We have almost 13,000 MW of proposed new generation as projects that we’re currently managing, so there’s certainly a lot of interest in the province for new generation to support the retiring coal fleet as well as to support the new load growth,” he said.

The province’s generation fleet, which has a capacity to produce 14,568 MW of power, is expected to grow to 25,000 MW by 2034, according to the report.

One of the gas plants being built to address the demand is Enmax’s 800 MW Shepard plant, east of Calgary, which Esaiw described as the largest gas-fired plant in the province and one of the largest in Canada.

Enmax executive vice-president David Rehn said the plant, which is on time and on budget, will come on line next year.

He said gas-fired power will likely be more expensive than coal-fired power, but not significantly.

“I don’t foresee that this is going to be a huge jump in price,” he said. “There have been some folks that expressed a concern that this will radically alter the cost of electricity. I don’t think you are going to see that.”

Wildrose critic Joe Anglin said his party wants to bolster hydro generation either with hydroelectric stations in Alberta or by importing more electricity from provinces with cheap hydropower.

“The Wildrose looked at a hydro-natural gas scenario that makes far more sense,” he said. “If you get two different energy sources to cover your baseload, then that offers you a lot of opportunities to work on your renewables.”

The report forecasts growth in wind power, which currently generates about nine per cent of supply, and suggests it could potentially produce 36,000 MW of electricity.

Alberta’s demand for power is forecast to grow at a steady rate of 2.5 per cent per year over the next two decades, driven largely by oilsands development, the report says.

[email protected]

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Review of deregulated electricity market now overdue

Delay blamed on MLA’s resignation

By Darcy Henton Calgary Herald May19, 2014


EDMONTON — A plan to educate consumers about the deregulated electricity market and to bolster the powers of the market watchdog is three weeks overdue and likely won’t be submitted to government until June, says the chairman of the committee of six Tory MLAs tasked with the job.

Everett McDonald, PC MLA for Grande Prairie-Smoky, said he now hopes to produce a report on the implementation of 33 recommendations to Energy Minister Diana McQueen June 1.

“Our team is just finishing the report,” McDonald said in an email. “We have one more review and will present to the minister.”

He said he is looking forward to completing the report after 65 meetings with stakeholders and residents

McDonald attributed the delay to the appointment and subsequent departure of an associate minister of electricity, Donna Kennedy-Glans, who resigned over her disenchantment with the party and crossed the floor to sit as an independent.

The committee was assigned May 1, 2013 to provide advice and support to the energy ministry regarding decisions required to implement the 33 recommendations from the blue-ribbon panel’s September 2012 Power For the People report.

It presented an interim report to former energy minister Ken Hughes last fall, but it was never released.

Alberta Energy spokesman Mike Feenstra said the minister is expecting the report soon.

“Our expectation is it will provide a path for us to implement the recommendations we accepted,” he said.

The issue dates back to spiking power prices on the eve of the 2012 election.

Premier Alison Redford diffused a potential election issue on Feb. 23, 2012 by announcing a four-point plan that addressed several growing areas of concerns.

She appointed to blue-ribbon panel of experts to review the variable rate option — the electricity price paid by Albertans who aren’t on fixed contracts — “to reduce volatility and costs.”

She also temporarily froze fees attached to power bills for transmission, distribution and administration charges, called on the Alberta Utilities Commission to find efficiencies with electricity distribution and amended regulations to reduce the deposits required from energy marketers in a bid to increase consumer options.

Since then, four different cabinet ministers have handled the file and electricity prices remain volatile with the regulated rate option jumping 40 per cent from April to May due to plant and transmission line maintenance.

Critics say they aren’t holding out a lot of hope the report will improve the plight of residential consumers.

“They’ve spent a lot of taxpayers dollars to produce a whole bunch of committees and a whole bunch of reports,” said Wildrose critic Joe Anglin. “This is indicative of the fact they don’t know what to do.”

He said report may be late but consumer electricity bills will arrive on time.

“It would not surprise me at all, their having not done anything since the last election … that what they will end up doing here is waiting for the next election and doing something silly again, whatever they have to do to get elected,” Anglin said. “That’s not how you manage a market-based electricity system.”

NDP MLA David Eggen said Albertans are increasingly demanding an explanation for why their electricity bills are so high and he hopes the report will provide some answers.

“We need to have a plan of action to protect Albertans who are right now paying some of the highest monthly rates in North America for residential and commercial power,” he said. “Let’s make it crystal clear why that is, then we can start to solve the problem, because it’s outrageous that we have to pay such high power bills in this province.”

Alberta Consumers Coalition spokesman Jim Wachowich said the plan to create a retail market for electricity in Alberta has been a failure and he is not optimistic a committee of Tory MLAs can fix it.

“This whole process of trying to re-design the utility marketplace has been a very, very flawed process,” he said. “It is our belief that we have just paid a whole lot of money into a conceptual re-design that hasn’t delivered the benefits and probably is not going to deliver benefits that outweigh the costs.”

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ATCO boss takes aim at regulators, says Albertans power bills are too high

By Amanda Stephenson, Calgary Herald May 14, 2014

Albertans pay more than they should for electricity because the province’s regulatory system is inefficient and cumbersome, said ATCO boss Nancy Southern on Wednesday.

The president and CEO of the Calgary-based company accused regulatory bodies of creating “needless challenges” for industry that end up being reflected on consumers’ power bills. And she told reporters following ATCO’s annual general meeting that she worries about the future, saying federal regulations requiring the phase-out of cheap, coal-fired generation could drive up electricity prices even further.

“There is no ceiling,” Southern said.

Last week, a report by independent think-tank the Fraser Institute ranked Alberta’s electricity prices as among the highest in North America. The report’s authors said the province can’t compete with other jurisdictions that have access to large amounts of hydroelectricity, but also acknowledged that bills here are high because Alberta has a market-based system that means consumers pay the full cost of electricity up front rather than through government subsidies or tax dollars.

But Southern said the report is indicative of a regulatory regime that means it can take years for companies to get a power plant or transmission project approved. Figures provided by ATCO say regulatory costs in Alberta have climbed from $13.5 million in 1998 to $146 million in 2014. (Electricity consumption and generating capacity also increased during that time.)

“It’s created a huge cost burden for all Albertans and what’s the return?” she said. “We’re slowing down our industry because we go through these lengthy processes for permitting and licensing.”

ATCO’s chief operating officer for energy and utilities, Siegfried Kiefer, said the province needs to overhaul electricity regulation the way it did with oil and gas last year when it launched the new Alberta Energy Regulator.

He said there is currently significant overlap between separate bodies like the Alberta Utilities Commission, the Market Surveillance Administration, the Utilities Consumer Advocate, and the Transmission Facilities Cost Monitoring Committee.

“When you allow endless questions, debates on costs that haven’t changed in years and take up hours and hours of time in a hearing room with lawyers, then that (regulatory) process needs to be reviewed,” Kiefer said.

The Herald attempted to contact the Alberta Utilities Commission on Wednesday but was unsuccessful.

Southern also warned that consumers’ electricity bills could spike higher due to federal greenhouse gas regulations that will require up to a dozen of Alberta’s coal-fired power plants — two of which are operated by ATCO — to be shut down out over the next 15 to 20 years. ATCO is revisiting the development of hydro facilities in northern Alberta on the Slave and Athabasca Rivers as a source of long-term reliable green power to replace coal, but Southern said projects like that are expensive and in the meantime electricity demand continues to grow.

“I understand why we’re shutting them (the coal plants) down and I agree we have to be careful of our environment,” she said. “But I also get very concerned that we have a wonderful asset base in Alberta that is going to be thrown out with the bathwater . . . And all of us today are not going to be able to enjoy that low-cost benefit that we have today and have paid for.”

Also on Wednesday, ATCO announced the launch of a new division that will sell power directly to commercial and industrial customers in Alberta.

The company will offer customers such as hospitals, shopping malls, light industry, and large industrial operations electricity solutions for their business.

[email protected]

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Reject AltaLink sale, NDP’s Mason urges province

By Mariam Ibrahim, Edmonton Journal May 2, 2014 1:26 PM

EDMONTON – NDP leader Brian Mason is calling on the province to ask the Alberta Utilities Commission to reject the sale of AltaLink to U.S. Berkshire Hathaway Energy for $3.2 billion.

SNC-Lavalin announced this week it is selling Alberta’s largest regulated electricity transmission company to the subsidiary of a holding company owned by U.S. investor Warren Buffett.

If given the regulatory green-light by the Alberta Utilities Commission and Industry Canada, the deal is expected to close Dec. 31.

Mason said the deal will allow an American company to reap the profits from utility lines paid for by Albertans and could ultimately drive electricity prices even higher.

“I don’t believe, fundamentally, that our transmission system in this province should be an internationally traded commodity,” Mason said Friday. “All of that will merely serve to ultimately raise the price of our electricity.”

AltaLink owns roughly 12,000 kilometres of transmission lines and 280 substations. It provides electricity to the majority — about 85 per cent — of Alberta. The company had assets of about $5.9 billion at the end of last year.

“In private hands, especially foreign hands, where a company is in it to make money, there’s a real risk there won’t be enough invested in maintenance of the existing system, which could lead ultimately to serious problems with the delivery of electricity in the province.”

The province’s electricity transmission system is worth about $17 billion, with AltaLink owning about half the grid.

Last year, the company reported revenue of $534 million, with $161.6 million in net income.

Iowa-based Berkshire Hathaway Energy has $70 billion in assets and owns and operates 284,000 kilometres of transmission and distribution lines.

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SNC-Lavalin to sell Alberta transmission company AltaLink for $3.2B


Warren Buffett holding company snaps up Calgary-based firm

Buffett’s power unit, renamed this week as Berkshire Hathaway Energy, has been expanding through acquisitions under Greg Abel, CEO of the business.
Photograph by: Scott Eells/Bloomberg , Financial Post
MONTREAL – SNC-Lavalin (TSX: SNC) announced Thursday that it is selling AltaLink, Alberta’s largest regulated electricity transmission company, to a subsidiary of the holding company run by U.S. financier Warren Buffett for gross proceeds of $3.2 billion.

The deal with Berkshire Hathaway Energy, owned by Bershire Hathaway Inc., is expected to close Dec. 31 and represents what the Montreal-based engineering giant says is “another significant step” in its strategic plan to unlock and create value from its portfolio of infrastructure concession investments.

AltaLink, owns more than half of Alberta’s transmission grid, some 12,000 kilometres of transmission lines, as well as 280 substations, delivering electricity to about 85 per cent of the province’s population.

“After a robust process that drew considerable interest, we are very pleased to announce a transaction that recognizes significant value for AltaLink — a unique regulated asset in a high-growth electricity market —while also providing for a continued relationship with SNC-Lavalin,” president and CEO Robert Card said in a statement announcing the deal after markets closed.

“I would like to thank AltaLink’s employees, who have helped make their company so successful. I know they will have a bright future and benefit from enhanced career opportunities as part of Berkshire Hathaway Energy,” Card added.

“The sale of AltaLink will help us build value for our company by providing opportunities to advance our E&C (engineering and construction) growth strategy.”

Meanwhile, SNC and MidAmerican Transmission, a subsidiary of Berkshire Hathaway Energy, have also mutually agreed to develop engineering, procurement and construction opportunities in the United States and Canada.

“The agreement combines the engineering and construction management strengths of SNC-Lavalin with the strong track record of MidAmerican Transmission on joint transmission projects with other entities,” SNC said.

Completion of the sale is subject to customary regulatory approvals, including approval by the Alberta Utilities Commission and approvals pursuant to the Competition Act and Investment Canada Act, which requires that deals of this size involving foreign buyers are of net benefit to Canada.

Based in Des Moines, Iowa, Berkshire Hathaway Energy, with assets of some $70 billion, owns and operates some 284,000 kilometres of transmission and distribution lines. Its subsidiary, MidAmerican Transmission, owns transmission lines throughout the U.S. and Canada.

SNC-Lavalin is one of the leading engineering and construction groups in the world and is a major player in the ownership of infrastructure and in the provision of operations and maintenance services.

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Albertans warned of power ‘price spike’

By Darcy Henton, Calgary Herald April 18, 2014

Alberta power consumers should brace themselves for a shock next month, warns the province’s utilities consumer advocate.

Electricity prices are expected to jump 30 to 40 per cent in May, costing consumers in Canada’s only fully deregulated market millions of dollars.

“We’re going to see a price spike,” utilities consumer advocate Rob Spragins said Thursday. “It’s almost a guarantee at this point. We want to let consumers know this is coming.”

Spragins said his office is drafting an alert to warn consumers and advise those who don’t have fixed price contracts to get on an equalization plan or fixed contract to avoid the price volatility.

But 70 per cent of residential consumers are on the regulated rate option or default rate, which is expected to jump from seven cents per kilowatt-hour to 10 or 11 cents depending on the electricity provider, Spragins said.

The average homeowner will see about a $25 increase on their May electricity bill, he added.

Fortunately, electricity prices are expected to drop to more normal levels this summer, Spragins said.

Premier Dave Hancock said Thursday he wasn’t aware of the situation but would ask Energy Minister Diana McQueen for more information.

He suggested the Alberta Electric System Operator (AESO) should deal with the issue, but industry officials and consumer groups say AESO triggered the increase.

The Redford government appointed a committee of PC MLAs to implement changes to the retail electricity market to reduce price volatility, but its initial report to the minister has not been released.

Spragins, whose office is a branch of the provincial government, said the price spike was sparked by AESO announcements of several planned power plant outages and the shut down of a major transmission line west of Edmonton that transports power from several major coal-fired generating stations in the Wabamun Lake and Keephills area.

A 500 kilovolt line, known as the 1209 line, is being shut down for 12 days in May in order for it to be connected to AltaLink’s high voltage direct current Western Alberta Transmission Line.

The outage announcements immediately caused the price of electricity on the forward market to spike and that affected purchases of electricity for retail market regulated rate customers.

AESO vice-president of operations Miranda Keating-Erickson said the agency tries to schedule power plant outages and line outages in shoulder seasons when there is an adequate supply reserve to minimize the impact on the system and the market.

“What we do try to do when we’re co-ordinating is minimize the impact on availability of supply so that it minimizes the impact on the market,” she said. “What we’re not trying to do is manage what we think the price reaction will be.”

Keating-Erickson said AESO decided that May was the best time to do the work that needed to be done.

“Based on the information we have, we do our best,” she said. “You can only look back after the fact to know what the actual impact is.”

But opposition critics said the agency should have done a much better job of scheduling the outages to protect consumers from being gouged by market traders.

“Without knowing any of the particulars, I can tell you there has to be a better way of doing this,” said Wildrose MLA Joe Anglin. “They have created a false scenario that will cost consumers millions of dollars.”

Liberal Leader Raj Sherman said an energy super province like Alberta should have the lowest-cost electricity and natural gas in the country, but instead it has among the highest.

“The cost going up even more is very disconcerting,” he said. “It’s going to hurt seniors. It’s going to hurt families.”

NDP Leader Brian Mason said the situation is another example of how the deregulated electricity market doesn’t work in the consumers’ interests.

“It subjects them to sky-high prices and very volatile prices,” he said. “At the very minimum, the government should step in and ensure the price of electricity be fixed for that one month.”

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Chinook Area Land Users Association, Letters to the Editor Pincher Creek Voice

Wednesday, April 2, 2014 Pincher Creek Voice

CALUA: Review of SATR needs identification

Chinook Area Land Users Association, Letters to the Editor
Enclosed are two letters written by the Chinook Area Land Users Association (CALUA), a land owner group in the M.D. of Pincher Creek, to the Alberta Electric Systems Operator regarding the proposed “Goose Lake to Etzikom Coulee” (GLEC)  transmission line which would be a part of SATR.  CALUA met with AESO on March 13, 2014 to discuss the possibility of re-opening the needs assessment (NID) for this line.  The second letter is in response to this meeting.
Editor’s note: The original letters as reproduced below were addressed to Alberta Electricity Systems Operator (AESO) Calgary Place, Attn: David Erickson, President and CEO

First letter February 5, 2014
Dear Sir:
The Chinook Area Land Users Association (CALUA) is an active organization representing over 200 individuals and more than 80% of the land owners in Division 1 and 2 in the MD of Pincher Creek.
CALUA is writing this letter to express our deep concern as land owners and Alberta tax payers to future implementation of decisions arising from AESO’s Future Demand and Energy Outlook 2009-2029, and in particular, conclusions drawn relating to the South Alberta Transmission Reinforcement (SATR)  projects  in  Southern  Alberta.  Our  concerns  relate  to  the  fact  that changing economic trends, and projected changes in consumer patterns in oil and electrical demand call into question the conclusions in the report, which were based upon substantially different  economic  projections  largely  derived  from  historical,  high  oil  prices  prior  to  the economic crisis in 2008.
In December 2008 AESO submitted its original Needs Identification Document (NID) to seek Alberta  Utilities  Commission  (AUC)  approval  for  a  massive  increase  in  transmission  line capacity in Southern Alberta, most notably designed to tie-in wind power generation in three phases called SATR I, II and III.
CALUA is of the opinion that a review of the needs for certain components of the SATR project is warranted due to significant recent changes in oil demand, changing forecasts for energy requirements, and a growing awareness of the unfavorable economic and ecological characteristics of wind energy. At today’s pace of economic change, virtually all current developments indicate that the principles applied in AESO’s 2009 study are no longer valid. Combined with the current cost overruns in Alberta’s expansion of transmission line network, we believe that it would be prudent and in the public’s best interests to undertake a thorough review. To not undertake the review would be negligent.
We also believe that AESO is  feeling the pressures related to  the new trends given the information provided in AESO’s SATR update of August 2013 informing its stakeholders of the cancellation of the Ware Junction to Langdon substation SATR III component, and the delay of three further SATR components: i) Picture Butte to Etzikom Coulee, ii) Goose Lake to Etzikom Coulee (GLEC); and iii) Etzikom Coulee to Whitla. In addition to AESO’s SATR III cancellation
CALUA believes that the Goose Lake to Etzikom Coulee (GLEC) route is also not needed and that an upgraded transmission circuit can be achieved using existing routes.
Further, it is our understanding that the intertie analysis that relates to the tie-in requirements of AESO’s transmission line projects to British Columbia, the US and Saskatchewan apparently needs to be reviewed indicating to us that AESO is re-considering the scope of the SATR projects with respect to actual costs, power demand and grid capacity.
Whilst CALUA recognizes AESO’s strategy to  balance benefits and  costs in  the  wake of significantly increased costs in the build-out of Alberta’s transmission system is partly driven by longer than expected permitting processes, and higher than forecasted construction labour costs (e.g. increased costs of $200 million for the Western Alberta Transmission Line (WATL), currently standing at $1.65 billion), we believe this only strengthens the need for a review of the 2009 study.
Understandably, it is difficult to predict long term trends, but inaccurate forecasts lead to wrong conclusions, and in particular when applied to long term investments they can do irreparable damage to an economy and its people. Lately, many fundamental trends have been emerging that were not considered in the 2009 AESO study, and CALUA believes they fundamentally affect the assumptions and conclusions made in the study.
Increase of global oil demand may be lower than predicted:

  • In 2006-2008 it was impossible to predict the shale gas boom which puts an enormous downward pressure  on  natural  gas  prices,  and  consequently, on  oil  demand.  The downturn is pinching provincial coffers, with royalties from gas expected to reach only $965 million this year, about one-sixth the 2006/07 levels used in the original 2009 study.
  • The profitability of oil sands is increasingly coming under pressure as fracking  has revolutionized oil and gas production in North America, paving the way for the U.S. to surpass Saudi Arabia as the world’s top oil producer, thereby reducing its dependence on oil imports (including from Canada), and pushing Canada to find new  markets for growing oil production.
  • Recent developments increasingly indicate that global oil demand may not increase as predicted due to improved automotive technology, national programs to reduce energy dependence, China’s recently imposed policies designed to “leapfrog” the country’s transport system, changing driving patterns and an emerging variety of alternatives to oil as transport fuel.
  • Alberta oil will be landlocked for years to come (e.g. debate over Keystone XL, Northern Gateway, Energy East), and the recent rail accidents in Quebec, North Dakota and New Brunswick have brought additional public pressure on the industry. In the EU, resistance against Alberta oil has been building steadily, which is reflected in the EU’s Fuel Quality Directive fueled by pressure from environmental activists, which is also growing.

The above mentioned effects caused discounts on Canadian heavy oil opening up a provincial government budget deficit. The lack of export pipeline capacity was repeatedly cited in price differentials that ranged from $10 to $40 a barrel during the year and reportedly costs Canada’s economy $18 billion annually. In 2013 alone, these effects are expected to result in about 6 billion dollars less in provincial revenue.

The need for grid based electricity systems may be lower than expected
  • Worldwide public pressure against subsidized grid-based renewable energy and  the required massive transmission systems is increasing. Examples are i) Australia’s push to fully abandon subsidized power generation and ii) Germany, once the poster  child of renewable energy has become the cautionary tale for Europe, an example of where the wrong  energy  policies  are  damaging,  perhaps  mortally  wounding,  its   economy, punishing  consumers  while  undermining  the  green  objectives,  of   reduced  CO2 emissions, it set out to achieve.
  • In 2014 German consumers will be forced to pay $30 billion to subsidize electricity with a real market price of $4 billion. Two thirds of the electricity price increase is due to new government surcharges and taxes to sustain renewable energy (prices per kWh, transmission fees, etc.). Per-household costs have tripled in the last five years and are likely to continue rising. Compounding problems, when the wind stops blowing the electricity  supply  needed  to  power  the  national  grid  is  becoming  scarce  pushing Germany into an increased use of fossil fuels leading to higher carbon dioxide emissions proving that wind energy is not “green”, when seen in context of permanent availability.
  • Public perception of wind energy’s inefficiency is growing. Based on AESO’s NID and its 2012 Market Stats an efficiency of 25% is a realistic assumption. CALUA is concerned that Alberta tax payers are being misled by AESO’s strategy to only advertise “nominal” wind  energy  production  capacity  whilst  effectively  only  25%  can  be  realized.  For example, compared to AESO’s statement that “at the end of 2012, generating capacity from wind power facilities totaled 1,087 MW which constituted 7.5 % of Alberta’s total installed generating capacity” the actual (real) wind generation was less than 300 MW which is equivalent to only 2% of Alberta’s generating capacity.
  • There is an increasing trend to develop decentralized energy production (e.g. gas fired power generation, such as the Shepard plant) and smaller, community based distribution concepts eliminating the need for large transmission networks with the associated line losses.

From all we can see, the current trend seems to be that natural gas will be the fuel of choice for the foreseeable future. Natural gas will help achieve climate goals and reduce CO2 emissions. It offers plenty of room for future development until decentralized, diverse energy generation based on renewable resources will take over. The power grid as proposed by AESO may be no longer be a sound technical option based upon the emerging global trends and the inherent inefficiencies in wind power and long distance electrical transmission.

Alberta as a province is in the same dilemma as any business owner. In times of uncertainty, spending money on potentially non-revenue generating infrastructure projects is very risky as it generates permanent fixed costs, uses up consumers’ disposable income, and reduces liquidity in times of need; all of which increase costs to consumers ultimately. The expansion of the transmission grid will cost billions at a time when royalty revenues are dwindling and its ultimate need will be subject to significant uncertainties over the coming years. In times of limited liquidity, expenses for questionable wind energy projects must be avoided.
The NID estimate for all three stages of the SATR project, which includes allowance for funds used during construction (or carrying costs) and escalation of $1.16 billion, was $3.44 billion. Given the province’s budget deficit of $6 billion in 2013 alone, and the cost overruns for lines already under construction, AESO should cut costs by eliminating non-essential components of the originally proposed transmission network.
As stated before, the current effective wind capacity installed in Southern Alberta is less than
300 MW. This power generation capacity can be handled by the existing grid. All of the existing wind farms are tied-in through existing substations. Between 2008 and 2017 the NID which is the basis for all SATR stages assumes only 320 MW effectively coming from wind (nominal 1,600 MW). In the same document AESO lists a number of not further substantiated wind interests with an overall effective capacity of nearly1,900 MW (nominal 7,500 MW). From this list at least one sizable wind project, the Wild Steer Butte project with an effective capacity of close to 200 MW (nominal 790 MW), has been abandoned by Shell due to unfavourable economics.
In the extreme South only two wind interests are shown with a combined effective capacity of less than 100 MW (nominal 470 MW). The southern leg of SATR II, the GLEC expansion is a 220 km transmission line designed to tie-in these 100 MW. AESO is seemingly aware that this line is over-designed as it is planned as a double circuit 240 kV single-strung transmission line. The cost for just this line is expected to be around $400-500 million.
Beside the fact that this transmission line is planned to run through the most pristine land of the Waterton Prairie-to-the-Mountain corridor the costs of $500 million are not justifiable to tie-in 100 MW of wind power.
We believe that it is a waste of tax payers’ money to tie-in a handful of wind farms with questionable economic features (low efficiency, low cost-to-benefit ratio, need for subsidies and huge footprint expressed in MW/acre (almost 2,000 times higher than the Shepard plant). In today’s world of cheap gas the installation of new wind energy farms is no longer an attractive alternative.
In a diverse world with a fast-paced, ever changing economic environment long term forecasts that support large infrastructure projects (e.g. transmission line grids) are increasingly becoming a concept of the past.
Clearly, the majority of the assumptions that drove the conclusions in the 2009 Demand and Outlook report are no longer valid, and as such, the conclusions in the report are also no longer valid. CALUA hereby strongly urges AESO to review the original Needs Identification Document based on the trends that have arisen since the original data was collected in the mid-2000’s and eliminate unnecessary components of its transmission line network to prevent irreversible, permanent financial liabilities to all Albertans. Some sober second thought now could save Albertans from a costly white elephant that they will have to pay for through their utility bills for generations to come.
Sincerely The Board and Executive
Chinook Area Land Users Association
Second letter March 31, 2014
Dear Sir,
The Chinook Area Land Users Association (CALUA) greatly appreciates AESO meeting with us in order to better understand our concerns, as expressed in our letter to AESO dated 05 February 2014. We met with five AESO representatives on March 13, 2014 in the Twin Butte community hall to exchange our views of the matter. The discussion revolved around technical, procedural and, at times, the emotional aspects of AESO’s proposed power corridors in the Chinook area.
In the following paragraphs we want to summarize the results of the meeting:
CALUA presented its case that the need for the “Goose Lake to Etzikom Coulee (GLEC) transmission line faces significant uncertainty due to doubts about the viability of wind power in the region and the reduction in wind interests along the planned route. During the process AESO was also presented with a map showing strong opposition to wind and transmission line developments by a large majority of constituents in Divisions 1 and 2 of the MD of Pincher Creek (the “Waterton Corridor”)
During the meeting, AESO confirmed that the wind efficiency factor is only 25-30%, meaning that wind farms can only deliver 25-30% of their “nameplate” capacity. In other words a wind farm rated at 100 MW will in average only produce 25-30 MW. This is fundamentally different to gas fired power plants which are designed to continuously run at nameplate capacity. Transmission lines for gas plants must therefore be designed for nameplate capacity and that means transmission lines dedicated to wind power generation are 3-4 times oversized.
AESO acknowledged the “per-MegaWatt” foot print (land used) of wind based power generation is about 1,800 times higher than for natural gas based power generation, which means that the projected wind farms would use up roughly 100,000 acres of land for an energy equivalent which can be achieved with a 60 acre area gas production foot print.
It was also mentioned that wind power, due to its unreliability and the continuous need for fossil back-up does not provide any real CO2 benefits.
AESO  acknowledged that  wind  interests  have  declined  drastically  since  the  2008  Needs Identification Document (NID) but stated that the “need” for the GLEC line was re-confirmed in its latest “AESO 2013 Long-Term Transmission Plan”. A copy of this document was provided to CALUA.
CALUA conducted a review of this document and has the following comments:

  • The 2014 overall energy consumption for the entire province of Alberta in 2013  is roughly 70,000 GWh. On page 60, the study states that at the end of 2012,  total generation capacity in the province was 14,404 MW. Industrial installations in average operate about 340 days per year (8,160 hours/year), and the 14,404 MW  generating capacity would be able to produce 118,000 GWh per year. This indicates that Alberta’s existing energy generation supply already exceeds the demand by 75%. This begs the question: Where is the need to add more generating and transmission capacity?
  • Based  on  the  same  document,  Alberta’s  overall  energy  consumption  for  2032  is projected to be about 115,000 GWh. Based on our reading this means that the current power generation is sufficient for at least the next 20 years. Based on page  60 the installed generation capacity is expected to grow to approximately 23,600 MW by 2032, which would provide 193,000 GWh – almost 3 times of the current demand and almost twice the projected demand in 2032. Again, we would ask, where is the need  for the additional generation and transmission capacity?
  • AESO’s 2013 Long-Term Transmission Plan document does not appear to take  into account changing realities. The original NID mentioned a wind queue of 7,500  MW nameplate capacity for southern Alberta. At our 13 March 2014 meeting and on page 88/89 AESO indicated that the current queue has been reduced by 75% to a nameplate capacity of only about 1,875 MW by 2032 a portion of which is located mainly on the eastern leg of the GLEC line. This significant reduction would further call into question the need for additional transmission lines in the Chinook area.
  • In its 2013 study, AESO frequently mentions the risks and uncertainties of  inaccurate predictions. The precision range of the study is described as being  accurate  within ± 30%. Given the information in the above points, ±30% really doesn’t alter any of the conclusions reached by CALUA in reviewing the document. Further, ±30 percent is really only feasibility level analysis and is hardly the confidence level a government should be spending large sums of public dollars on.
  • Page  29  states  that  “in  recognition  of  this  uncertainty,  the  2003   Transmission Development Policy provides direction to AESO to be proactive in its planning and build transmission lines in advance of need”. As a policy, it does not have the force of law and potentially puts AESO in the position of doing too much development, too far in advance.
  • 1,875 MW of nameplate capacity are equivalent to an actual capacity of only 470-625 MW within the next 20 years. Arguing that under the circumstances described above a C$ 500 million – 250 km single-strung transmission line to capture 470-625 MW of wind power which by design has to be 3-4 times oversized is necessary does not seem credible to the Alberta tax payer. The amount of power from all projected wind farms along the GLEC line could be provided by one (1) gas fired power station of the size of the Shepard plant.

From the meeting we understand that AESO is reviewing the NID on an ongoing basis and now, more than before, we feel strengthened in our belief that at least portions of the GLEC line are not needed. CALUA believes that it is unconscionable for AESO to continue on its proposed development path in the Chinook area and to forever compromise the majesty of the Waterton corridor by running massive 240 KV transmission lines through one of Alberta’s most scenic landscapes  for  two  minor  wind  development  when  other  alternatives  exist.  By  its  own statements AESO’s models are not designed to consider scenery. Since CALUA’s concerns are not part of the development considerations, we feel completely ignored by AESO, Altalink and the Alberta Government. With the vast majority of local land owners signed on and opposed to this development, we believe Government needs to step in and provide some balance to the discussion.

Once built, this majestic region will be forever compromised. CALUA recommends:

  1. A moratorium on power transmission development in the Chinook area until such time as a  current  needs  assessment has  been  done  that  accurately reflects  the  changing realities  of  wind  power  generation,  Alberta’s  power  requirements  and  the  broader desires of the population of Alberta to have some unspoiled vistas; and
  2. A mechanism whereby taxpayers interests are recognized before significant amounts of tax payer’s dollars are spent unnecessarily and in the absence of a compelling need.

Projects like this often have a significant momentum due to time and resources invested and frequently get done despite changing circumstances. It takes courage and leadership to back out of  such projects and we  encourage AESO, the AUC and the Alberta Government to demonstrate that leadership and courage, and do the right thing.
Sincerely The Board and Executive Chinook Area Land Users Association

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Damages could hit $160M in alleged TransAlta electricity scheme

By Darcy Henton, Calgary Herald March 26, 2014 6:38 AM

EDMONTON — Damages stemming from alleged electricity market manipulation by TransAlta Corp. could exceed $100 million, according to new documents filed with the Alberta Utilities Commission.

Alberta’s electricity watchdog, the Market Surveillance Administrator, claims a TransAlta strategy to drive up power prices cost electricity consumers and other utilities tens of millions of dollars while TransAlta reaped $16 million in profits.

“The MSA does not have a precise estimate on exposure to pool price and instead has shown harm relative to different proportions of total consumption of electric energy from the Alberta grid,” say new documents filed with the AUC.

The MSA charted an impact ranging from $40 million to $160 million, and that doesn’t include the impact on the forward power market.

The watchdog filed allegations of anti-competitive behaviour against Alberta’s largest utility last month, accusing it of staging discretionary shutdowns at six power plants during peak demand periods over 11 days in 2010 and 2011.

The supper-hour shutdowns on cold winter nights increased electricity prices by 10 to 60 per cent, and forced the companies that owned the rights to the power to scramble to purchase high-priced electricity for their customers, according to MSA filings. The shutdowns in 2011 triggered an emergency alert over the short supply of power.

TransAlta and two of its electricity traders have denied any wrongdoing and have filed complaints about the MSA’s handling of the investigation with the Alberta Utilities Commission.

“To be clear, we do not agree with the findings of the MSA, including the conclusions that there was market harm, and we will challenge those conclusions at the hearing,” TransAlta spokeswoman Marcy McAuley said in an email.

She said TransAlta will address all of the filings and related documents, “including those demonstrating that the MSA permitted the actions taken by TransAlta.”

The AUC is considering whether to hear the complaints against the MSA separately or together with the allegations against TransAlta.

If the price hiking allegations are upheld by the AUC, TransAlta could be fined up to $1 million per day and be required to reimburse consumers and affected utilities for their costs. It may also have to pay the cost of the lengthy investigation.

Edmonton-based Capital Power says the shutdowns cost it nearly $10 million alone. In Calgary, Enmax says it also experienced financial losses but didn’t specify an amount in documents filed to the AUC.

The electricity watchdog is also asking the AUC to consider TransAlta’s failure to immediately provide critical documents it sought in the investigation and to also take into account the allegation that the utility lost or deleted key computer hard drives.

The estimates of financial harm were included in updated allegations the MSA filed against TransAlta on Friday.

“This is essentially what we say is the evidence in support of our allegations of market manipulation,” said MSA president Harry Chandler.

In the 125-page document, the MSA says TransAlta’s complaints about its investigation are a delay tactic and the utility’s argument that its activities were permitted under market rules has no merit.

While power producers can in certain circumstances withhold their own power to increase the price — a strategy known as economic withholding — TransAlta had no right to withdraw power it was committed to supply to Enmax and Capital Power, the MSA claims in its filings.

“TransAlta has no right and can claim no right to deal with committed capacity as if it was its own property,” the MSA contends in the documents.

The MSA alleges in its filings that TransAlta manipulated the price of electric energy in Alberta by removing the committed capacity of its competitors at coal-fired generating units during tight supply periods.

“The purpose and effect of this strategy was to move prices higher in the power pool and to create uncertainty that would drive prices higher for forward contracts for electric energy,” the MSA states in its filings.

“The strategy was uncompetitive in that it relied upon removing significant amounts of its competitors’ committed capacity from the available supply of electricity.”

The MSA said the normal practice in the industry is to implement discretionary shutdowns during off-peak hours, usually on weekends.

But the MSA alleges TransAlta drafted a strategy on Oct. 21, 2010, that was approved by its senior vice-presidents, to time discretionary shutdowns to maximize profits.

In documents filed with the AUC, it quotes a TransAlta internal memo explaining the strategy with the following example: “Two units are down in the province and one of our units develops a leak. We take the unit down immediately instead of scheduling the unit off for the upcoming weekend.”

The memo adds: “Previously, we have shied away from setting price during tight situations because of the ‘optics’ of this.”

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Jessica Ernst in Lethbridge on March 25, 2014

Jessica Ernst in Lethbridge on March 25, 2014:

Experiences of an oil and gas industry scientist March 25, 7:00pm PE250 First Choice Savings Centre, U of L Free. (Donations for Jessica’s case graciously accepted.) Prizes for the children’s poster contest will be awarded at the beginning of the event. Come and join Jessica as she talks about her experience and shares her knowledge. Question and answer session to follow.

More on Jessica here - http://www.ernstversusencana.ca/

Jessica Ernst, oil patch consultant with 30 years experience, is suing Encana, the Alberta government and energy regulator (AER) for negligence and unlawful activities related to hydraulic fracturing, and the AER for violating her Charter rights. Jessica’s statement of claim alleges that EnCana broke multiple provincial laws and regulations, and in 2004 fractured and contaminated Rosebud’s drinking water aquifers with methane, ethane and other chemicals. The claim reports how Alberta’s two groundwater regulators, Alberta Environment and the AER, “failed to follow the investigation and enforcement processes that they had established and publicized.

In 2005, the Rosebud water tower was destroyed in an explosion caused by “an accumulation of gases.” In 2006, the government promised to provide safe alternate water to all harmed Albertans, including Jessica. “Whatever is necessary to be done will be done,” proclaimed then Premier Ralph Klein. Jessica’s water is too explosive to even flush toilets with; she’s been hauling water herself since 2008.

After hearing arguments in January 2013, Justice Barbara Veldhuis, the case management judge, was promoted by the Harper government to the Alberta Court of Appeal and not allowed to rule. On February 15, 2013, Chief Justice Neil Wittmann volunteered to take over as case management judge. Seven months later he agreed with the AER that it had complete legal immunity, even for violating constitutional rights, and did not owe Jessica any “duty of care.” Justice Wittmann ruled the AER can’t rely on its argument that Jessica is a terrorist in “the total absence of evidence” and that the AER had violated Jessica’s Charter rights, but to prevent others coming “to the litigation process dressed in their Charter clothes whenever possible” he ruled against her. Jessica’s Appeal Factum was filed in the Alberta Court of Appeal; Jessica’s lawyers will have 45 minutes to present their arguments to a panel of three judges on May 8, 2014, in Calgary.

Justice Wittmann rejected the government’s attempts to have paragraphs stuck from the claim that mention “contamination” and other contaminated water wells in Rosebud. Subsequently, after waiting nearly three years, the government applied to have Jessica’s entire claim struck, arguing “no duty of care” and immunity. Justice Wittmann granted the government’s late request. That hearing is on April 16, 2014 in Drumheller to be heard by Justice Wittmann. Encana filed no applications to strike and argued nothing in court.”

Jessica’s response to the government was recently filed and claims that the approach taken by Alberta Environment is an abuse of process and should be dismissed


Come and join Jessica as she talks about her experience and shares her knowledge.


Sponsored by No Drilling Lethbridge – www.nodrillinglethbridge.ca


Council of Canadians Lethbridge and District Chapter
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Innisfail Says AltaLink’s Proposed Transmission Lines “Not Attractive”

Innisfail Says AltaLink’s Proposed Transmission Lines “Not Attractive”

RETA Innisfail town logo sunCraig Teal, the Town of Innisfail’s Director of Planning & Operational Services, says high voltage power lines are “not attractive” (aka ugly). Teal testified at an Alberta Utilities Commission (AUC) hearing on AltaLink’s proposed 80L high voltage transmission line that would run through Innisfail (Innisfail Province). Specifically, Teal said, “We object to the route in the south end of town as transmission lines are not attractive, and we want to ensure we are able to attract investment and interest from businesses…Transmission line land competes with residential development.” Teal also raised concerns about a new transmission line decreasing property values and resulting in lower tax revenues for the town. He suggested an alternate route through a planned industrial area would have lower visual impacts than the route through a residential area.

See this link for more information on concerns about AltaLink’s proposed new line. If the line was buried, there would be no negative visual or property value impacts.


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