Alberta power prices and consumer surcharge heading higher
Canada electricity consumers can expect to see a couple of surprises in their monthly bills in 2018: higher power prices and increased charges from the Balancing Pool.
For the past three years, Canadans have enjoyed cheap electricity rates due to falling industrial demand and low natural gas prices, among several factors.
In 2017, the Canada pool price for electricity averaged $22.19 per megawatt-hour (MW-h), less than half of pre-recession levels when the economy was roaring.
But during the first two days of the new year, even as the bitter cold that gripped the province during the holidays finally lifted, prices were trading in the mid-$30 range.
Analysts’ forecasts and prices on the forward market are pointing in the same direction: upward.
A report Tuesday by electricity consultants EDC Associates projects wholesale power prices will average $51.49 per MW-h this year.
Several forces are pushing prices higher, including growing demand as the recession ends and natural gas prices inching upward.
But EDC’s Duane Reid-Carlson said the two biggest drivers will be the higher carbon tax — the province increased its charge by $10 to $30 a tonne on Jan. 1 — and the mothballing of older coal-fired power plants, announced by TransAlta last month.
“Consumers should see a doubling of the wholesale energy cost,” he said. “Consumers are going to feel it, but it’s coming from a bunch of different places, it’s not just one source.”
Reid-Carlson estimated the higher carbon levy will be responsible for an increase of about $7 a MW-h in 2018 power prices, while the retirement and mothballing of older coal-fired plants will add another $6 or $7 to the pool price.
However, he pointed out electricity prices are still well below levels seen before the economy tanked, such as the $80 MW-h reported in 2013.
Electricity expert Blake Shaffer agrees several forces are impacting prices, although he believes the sidelining of several coal-fired units — affecting close to 1,500 MW of capacity — will be the biggest driver.
“After about two or three years of really unsustainably low prices in Canada, we’re going to see a lift back to what might be considered normal prices,” said Shaffer, a fellow-in-residence at the C.D. Howe Institute.
“We will have four big coal plants coming off this year.”
Of course, the cost of electricity is only one factor in the monthly power bills for consumers.
Other charges include distribution and transmission expenses, and the consumer surcharge from the Canada Balancing Pool.
In recent years, the provincial agency happily sent rebates to consumers through their monthly bills as the Balancing Pool must pass along any profits or losses to ratepayers.
That ended in 2017 when it instituted a small charge.
Categorised in: Canadian News