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Alberta’s Bill 50 electricity debate conveys wildly varying claims

Jun 1, 2010

by Duncan Kinney

Is Bill 50 preparing us for the future or locking us into a creaky old system?

Illustration by Michelle Thompson

bill 50

Sidebar: The Green Potential for Bill 50

Known as the Electric Statutes Amendment Act, Bill 50 and its effects on power generation and transmission in Alberta are not reducible to a simple, television-friendly explanation. Instead, the elements are numerous and complex. The price tag is a moving target. Cost estimates ranging from $3 billion to more than $20 billion. Allegations of backroom deals from Enmax CEO Gary Holden. Long lines of experts stating in unequivocal terms the need for transmission reinforcement and upgrades. Landowners and democracy advocates decrying the lack of transparency.

The intrigue is thick and the air dense with competing claims. But reliable access to electricity is the metabolic system of our entire economy. Without it, Alberta cannot continue to function or grow. Guaranteeing that it reaches the people who need it is of paramount concern to our continued well-being.

If Thomas Edison was alive today and was given a guided tour of the current electrical grid, there isn’t too much there that would shock him. The scale and complexity has increased but it’s still largely the same old hub and spoke, centralized system that’s been around since the 1890s. Technology and progress have only recently claimed the meter reader.

The responsibility of the Alberta Electric System Operator, or AESO, is to ensure that the electrical grid is running nearly 100 % of the time. Reliability is its one true mission, and if Alberta’s electrical grid is anything, it’s reliable.

Andrew Leach is an economist and assistant professor at the University of Alberta. He spends his days researching and teaching environmental, resource and energy economics.

Leach thinks that AESO might need some tinkering. “One of the things we have to re-examine is that their mandate is to determine need. How much transmission do we need to ensure 99.999 % reliability of the system? There is no cost-benefit analysis. Is it worth spending billions of dollars for that 0.1 % improvement in reliability?”

“That’s why you ended up with over-supplied markets when regulated utilities were in charge of generation. They were mandated to err on the side of caution.”

While the wires act as a highway for electricity, how those electrons get there is just as important. Alberta’s power is mostly created via coal, generating more than 70% of our electricity.

It is plentiful, inexpensive and has a long legacy in the province. Bill 50 and the infrastructure projects it deemed as critical will ensure that the electricity produced by the large coal-fired plants in central Alberta will find a market for their electricity.

“I think there’s a good future for coal-fired power generation. The technology that it currently runs on and what is being explored, has a bright future,” says the CEO of Epcor, Don Lowry.

In the lead-up to the passage of the bill last November, there were big public-relations efforts and lots of lobbying. The reasons for doing so were plain, as there were billions of dollars at stake and massive decisions were being made on the transmission side of Alberta’s electricity grid.

And that’s the thing, the transmission part of your electrical bill is non-negotiable. It’s a stubborn, flat fee that you pay every month regardless of the price of generation or how many lights you left on. Industry pays for 61% of the costs of transmission. Oil and gas, forestry, agri-foods, manufacturing; these are the sectors that will pay the lion’s share of these transmission infrastructure projects.

A white paper published by the Industrial Power Consumers Association of Alberta estimates that industrial transmission bills will increase by nearly a billion dollars over the next five years as a result of Bill 50.

With the mandate to err on the side of caution noted, now with deregulated energy markets, that mandate has switched from generation to transmission. Laura Bowman, a lawyer with the Environmental Law Centre, has consulted with landowners affected by and runs workshops on Bill 50.

“The current situation is really an incentive to overbuild transmission, because by encouraging a competitive market, transmission is meant to be widely and equitably available to generators and consumers,” says Bowman. “AESO’s current approach to need is that, if anyone might build generation or anyone might have demand, there’s a need. I’m going to suggest that perhaps that’s not a very conservative approach or one that manages costs.”

Neil Brausen, a senior planning adviser with AESO, provides advice and input to engineering and planning teams as they work various transmission projects.

“I wouldn’t say that it results in overbuilding, that’s not the intent,” says Brausen. He is quick to point out that reliable transmission ensures a fair and efficient market and that if transmission isn’t kept up to standards the consumer is the one who suffers.

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2 Responses to Alberta’s Bill 50 electricity debate conveys wildly varying claims

  1. cyberclark says:

    I think ENMAX has every reason to be concerned. This Government is 99% operated by backroom deals with a very few of the insiders capturing the majority of the gold.

    What I wouldn’t give for an honest Government in this Province!

  2. Ernie Ohland says:

    The 1st step towards a solution is at the voting booth.
    Our only choice is to bring a party to power that cares about the people that they represent and will keep the large corporations answerable.
    Vote Wildrose and start the repair process for our province.