Making Sense of Energy

Energy Market Update – May 2014

albertaAlberta

TransAlta Corporation is currently facing allegation over incidents that happened in 2010 and 2011. During winter of those years, TransAlta turned 3 coal fired power plants off line and electricity prices in the market increased. TransAlta acquired $16 million in profits during the shutdown of those 3 plants. According to Market Surveillance Administrator, this action is in clear violation of anti-competitive conduct law. However, this is not the first time TransAlta has been in trouble with the law. In 2012, they were fined $370,000 for manipulation of power prices and at that time TransAlta argued saying the rules were unclear. TransAlta will face a public hearing later this summer. (Source: The Globe and Mail)

While TransAlta is still facing charges against its engagement with the anti-competitive conduct law in Alberta, it has settled a charge in California due its pricing dating back to 2000-2001. The settlement cost for the power provider is $149 million and will be taken out of their receivables of $52 million and interest of $45 million, it will also pay out two payments of $26 million. The unfair manipulation of prices happened during the California crisis 13 years ago.

Dawn Farrell, CEO and president of TransAlta, claims it was simply “a disagreement over pricing” and that “the settlement recognizes that TransAlta admits to no wrongdoing during the crisis”. Furthermore, spokeswoman Stacey Hatcher, said that the California and Alberta cases “could not be more dissimilar” and that they were invited to provide power there during an extraordinary period of energy need. (Source: Edmonton Journal)

ATCO Ltd. has voiced their concern over deregulation in Alberta. Last month, a study from Fraser Institute came out reporting Alberta has one of the highest electricity rates in North America. ATCO CEO Nancy Southern addressed this issue by stating that the growing number of regulatory agencies has cost Albertans over $137 Million compared to $13 million in 1998. These agencies include Alberta’s Market Surveillance Administrator, the Utilities Consumer Advocate, Alberta Utilities Commission, and the Alberta Electric System Operator. ATCO is currently trading at $40 per share which is more than double their share price of $17 per share back in 2009. Earnings has also increased in the first quarter this year to $186 million, a $6 million increase from last year.

Electricity Prices for Alberta

The Alberta power pool price averaged 5.405 cents per kWh in May 2014. This price is 2.33 cents higher than last month’s average of 3.067 cents per kWh. The pool price has averaged 6.430 cents per kWh over the last 12 months.

As of May 1, 2014, the forward market was predicting electricity prices for the calendar years of 2014, 2015, 2016, and 2017. These prices are 4.7, 4.925, 5.4 and 5.750 cents per kWh respectively.

Gas Prices for Alberta

Direct Energy’s gas rate for May was $2.748 per GJ in the North and $3.915 per GJ in the South. The June rate has been set at $4.470 per GJ in the North and $4.470 per GJ in the South. Alberta gas prices have averaged $3.801 per GJ over the last 12 months.

As of June 3, 2014, the forward market was predicting gas prices for the calendar years of 2014, 2015, 2016, 2017 and 2018. These prices are 4.56, 4.55, 4.04, 4.13, and 4.44 cents per GJ respectively.

bcBritish Columbia

B.C. Hydro will find out if its proposed Site C dam will be cleared to be built. The individual responsible to lead this project is former top bureaucrat Jessica McDonald. This project is projected to cost around $7.9-billion, but looking back at previous B.C hydro projects, it is very likely to cost more. Even though there are lots of side effects resulting from this project, such as wildlife and flooding 82 acres of farm land along the Peace River, the project will still be beneficial. Bill Benette, B.C.’s Energy minister, will not say if he is supporting the project but he does address the need for energy in this province. (Source: The Globe and Mail)

ontarioOntario

Brant County Power has been purchased by Cambridge and North Dumfries Hydro for $40.2 million. Unlike previous mergers and acquisitions this one does not involve Hydro One. Back in 2012, the province recommended to lessen the number of power utilities which sat at 73 and since then, Hydro one has been involved in multiple transactions. As part of the deal, Brant Country Power will continue current operations for 5 more years and customers can expect to pay current rates. After the 5 years, Cambridge and North Dumfries Hydro will apply their own rates. (Source: CTV News)

Electricity Prices for Ontario

The weighted-average Hourly Ontario Energy Price (HOEP) was 1.79 cents per kWh in May 2014. This price is cents 1.54 lower than last month’s 3.33 cents per kWh. The weighted-average price has averaged 3.81 cents per kWh over the last 12 months.

The Global Adjustment rate for May was set at 7.196 cents per kWh. This rate was 5.198 cents in April. The Global Adjustment is an additional charge paid by non-regulated customers. (Source: IESO)

saskSaskatchewan

SaskPower residential customers are paying 13.15 cents per kWh all-in rate for their electricity which makes them number 8 out of 12 Canadian cities with the highest power rates. On the other hand, SaskPower commercial and industrial customers are paying 10.82 cents per kWh and 9.53 cents per kWh respectively. This ranks them number 4 out of the 12 cities. According to the corporation, residential customers are actually recovering 98 percent of the revenue required to serve them. With industrial customers, they are recovering 101 percent of the cost of service. (Source: Leaderpost)

People moving into their new homes will now have to be careful when putting that new fence or deck in. SaskEnergy, SaskPower and SaskTel have partnered to create a type of enforcement that forces residents to pay for the cost of damaging one of their underground lines. According to SaskEnergy, damage costs can range anywhere between $3,000 to $25,000. With the implementation of this new enforcement, lines hits are projected to decrease by 10 percent. If successful, it is likely to be followed by other provinces. (Source: Globe and Mail)

novascotiaNova Scotia

The technological modernization of the North American electricity grids, including such improvements as smart metering and less centralized generation, is creating new opportunities for cyberthreats or hacking to enter the system, and disrupt utilities. At a conference in Halifax, U.S energy regulator Philip Jones addressed an issue regarding hackers that are targeting the North America energy infrastructures. Companies that own and operate utility infrastructure are growing more aware of nuisance hacking as well as more serious threats. Hacking groups may be able to disrupt software systems, steal secrets, sow terror or disable critical infrastructures, unless proper utilities safeguarding is utilized. (Source: Globe and Mail)