EDMONTON — Albertans will continue to pay high electricity prices for several more years, says the former president of Alberta’s rural power association.
“What concerns us is it’s going to take three to four years before there’s much change in the price of electricity,” said Herman Schwenk of Coronation.
That’s how long it is expected to take for three recently announced electrical generating stations to come on stream in Alberta, he added.
But first the controversial coal-powered plants have to pass environmental and regulatory approvals. As well, the multi-million- dollar plants must be built with skilled labor, which is in short supply, Schwenk said during the Alberta Federation of Rural Electrification Associations’ annual meeting.
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“I don’t think the provincial government has any bloody choice but to use coal.”
More than 35 percent of Alberta’s power is made with high-priced natural gas, also at near record high prices.
“We can’t put the genie back in the bottle, but we can do a lot to encourage a lot of generation that will pull the price down, because now it’s ridiculous.”
In 1992, when the Alberta government first floated the idea of deregulating Alberta’s energy industry, power companies put the brakes on electrical plant expansion.
It took the government another three years to announce it would deregulate the electrical industry and a further six years to figure out how it would work.
Few new electricity plants were built in Alberta in almost 10 years.
At the beginning of 2001, when deregulation became official, there was more demand for power than supply because of Alberta’s booming economy. The price was set to go through the roof.
But before Albertans got their first power bill, the government capped the price of electricity at 11 cents a kilowatt hour, plus transmission costs, still double what most customers were paying before deregulation.
“I really think we’re stuck with 11 cent power for the near future and it won’t help the Alberta Advantage one bit,” said Schwenk, referring to the government mantra that Alberta businesses have an advantage because of low costs.
Resource development minister Mike Cardinal said Albertans will continue to be cushioned from high energy prices, possibly even after this year when the 11 cent rate cap ends.
“If we need to make adjustments to shield Albertans, we will do that,” he told the group.
“You’ll agree, the Alberta government is doing its job of caring for Albertans.”
The Alberta government was expected to announce a provincial election Feb. 12, four days after Cardinal spoke to the REA meeting.
“I believe the Alberta government is heading in the right direction. We have the deregulation system in place and we’re on course with the recent announcement of 4,000 mega-watts to come on stream. A year from now prices will be a lot different. I believe they’ll be a lot lower than they are today.”
What Cardinal didn’t say was Alberta had the lowest energy prices in the country before deregulation.
“He didn’t acknowledge that the prices would have been lower in the old system,” Schwenk said. “If they’d left the bloody system, the worst case scenario would have been eight cent power.”
More plants needed
Earl Bergman of Erskine, Alta., said the Alberta government should guarantee low-price power by encouraging the development of power plants to beef up supply.
“Now, the only thing they can do is maximize the amount of power generated and be exported and be able to sell it rather than buy it,” Bergman said.
Some federation members wondered if reregulating the industry was possible.
Federation president Dan Astner said that would result in chaos.
“The egg’s already been scrambled.”
REAs’ only option is to work within the new rules and lobby governments to make long-term improvements.
“Let’s make the best of today’s situation.”
Last week, Cardinal announced a special committee to look at how to ensure low-price power over the long term.
“It appears to be a more reactionary atmosphere rather than forward planning,” Astner said. “Meanwhile, the alligators are coming up behind us.”
