Making Sense of Energy

Energy Market Update – June 2013

Alberta

Five months after the Redford government announced it was changing the way retail electricity prices are calculated in a bid to reduce market volatility, the formula still has not been applied. Although cabinet changed the regulations in January to lengthen the period of time utilities have to purchase electricity for consumers not locked into retail contracts, no utility has set the monthly rate using the new rules. The government move — increasing to 120 days the 45-day period for purchasing electricity on the market — was aimed at reducing the impact of severe price spikes in the deregulated electricity market. Enmax attempted to use the new formula to set the June monthly regulated rate option (RRO) price, but the formula applied was rejected by the Alberta Utilities Commission (AUC). In an unusual move last week, the AUC ordered Enmax to set the June RRO rate at the May level, then later relented and approved the proposed June price — but not the formula used to reach it — when Enmax complained it would cost the company about $700,000. Enmax spokeswoman Doris Kaufmann Woodcock said the June rate is set at 7.7 cents per kilowatt-hour — up from 7.2 cents in May. (Source: Calgary Herald)

Power crews from Edmonton are assisting Enmax workers in turning the electricity back on in Calgary’s flood-soaked downtown core. Epcor has sent seven, two-man Hydrovac crews and four, three-man underground network crews to help restore power in Calgary. Jason Neufeld, Senior Manager of Aerial and Trouble for Epcor says, “All their underground network vaults were flooded and those vaults contain massive transformers used to feed power to the high-rise towers in the downtown core.” Crews are dealing with about 130 power vaults affecting 8,000 customers. As of June 25, 18,500 customers remain without power. (Source: Edmonton Sun)

Alberta’s newest transmission line running between the Lethbridge area and Great Falls, Mont., will operate like a pipeline as a Spanish-owned wind energy firm and an American investment bank will pay to use it. The Enbridge-owned link is the province’s only private or merchant line and operates as such because the power is coming from the U.S. rather than other provinces or local generators, says the Alberta’s Electric System Operator. The $300-million, 340-kilometre, Montana-Alberta Tie Line (MATL) is expected to be in full operation by midsummer. The line is rated at 300 megawatts and will be able to operate in either direction to either import or export power. Wind turbines provide electricity only about 30 to 40 per cent of the time. As such, wind energy enters the Alberta competitive wholesale market at a price of zero, and then is a price-taker — getting the going rate which varies widely as demand goes up and down during the day. AESO says there are 170 participants in the Alberta marketplace and the power traded each year is worth $6.4 billion. The addition of up to 300 megawatts of Montana windpower is not expected to affect Alberta’s power prices, says AESO. And with a booming economy that is demanding more power each year, plus the closure of what Capital Power expects will be 2,400 megawatts of older coal-fired power plants by 2021, there is plenty of room for new projects. (Source: Edmonton Journal)

Albertans appear to be complying so far with a request to reduce power consumption over the long weekend, but they may need to keep it up for a few more days as temperatures continue to spike. Hot weather, coupled with the fact that a number of generators are currently out of service for planned and unplanned maintenance, has been putting a strain on electrical infrastructure. The Alberta Electric System Operator, which oversees the province’s power grid, is importing electricity from British Columbia and Saskatchewan to meet demand and has called on the public to cut down on the amount of electricity they use. Residents have been asked to turn off unnecessary lights, limit the use of air conditioners, close blinds and shades during the day and use major power-consuming equipment only during off-peak hours (after 7 p.m.). (Source: Calgary Herald)

Electricity Prices for Alberta

The Alberta power pool price averaged 10.477 cents per kWh in June 2013. This price is 2.289 cents lower than last month’s average of 12.766 cents per kWh. The pool price has averaged 8.618 cents per kWh over the last 12 months.

As of July 8, 2013, the forward market was predicting electricity prices for the calendar years of 2013, 2014, 2015, 2016 and 2017. These prices are 7.300, 5.500, 4.925, 5.150, and 5.550 cents per kWh respectively.

Gas Prices for Alberta

Direct Energy’s gas rate for June was $4.594 per GJ in the North and $4.289 per GJ in the South. The July rate has been set at $1.854 per GJ in the North and $2.926 per GJ in the South. Alberta gas prices have averaged $3.107/GJ over the last 12 months.

As of July 2, 2013, the forward market was predicting gas prices for the calendar years of 2013, 2014, 2015, 2016 and 2017. These prices are 3.22, 3.49, 3.82, 3.97, and 4.21 dollars per GJ respectively.

British Columbia

FortisBC has received approval from the B.C. Utilities Commission (BCUC) regarding changes to natural gas commodity rates and delivery rates effective July 1, 2013. “FortisBC purchases natural gas for customers from a variety of sources and passes the cost on without markup,” said Cynthia Des Brisay, vice-president of energy supply and resource development. “Even with the coming changes, customers will still be benefiting from some of the lowest natural gas costs in recent years. Commodity rates today are still about half of what they were in 2006.” The delivery portion of rates is what FortisBC charges to recover costs associated with delivering natural gas and propane to customers, including pipeline maintenance, emergency services and customer service. Delivery rates enable the company to invest in infrastructure to enhance safety and reliability of the system. (Source: Fortis BC)

The first fast charging station opened in British Columbia at BC Hydro’s Powertech facility in Surrey. “This new charging station gives electric vehicle drivers even more freedom and flexibility to move throughout Surrey and the Metro Vancouver region. It’s important that efforts are made to support the growing demand for alternative fuel vehicles and this is a welcome addition to our existing electrical charging stations,” said Dianne Watts, Mayor of Surrey. The new charging station, which can charge an electric vehicle in 30 minutes, is located in Powertech’s Tech Park. Transportation accounts for 38 percent of provincial greenhouse gas emissions. With more than 90 per cent clean electricity generation in B.C., the use of electric vehicles has the potential to significantly reduce greenhouse gas emissions from the transportation sector. All of the electric vehicle charging stations at the Tech Park will be available for the public to use from 9 a.m. to 4:30 p.m. Monday to Friday. The charging stations at the Tech Park are part of an expanding electrical infrastructure network that will see 30 DC fast chargers installed in B.C. (Source: BC Hydro)

Ontario

Over the next 18 months, solar energy and demand response will have a growing and noticeable impact on the Ontario power grid, working to reduce summer peaks and help meet the province’s overall energy needs, said the Independent Electricity System Operator (IESO) in its latest 18-month outlook. By the end of 2014, almost 1,900 megawatts MW of solar generation and an estimated 900 MW of demand response from large consumers will be available to support reliability, particularly through the summer months. Ontario’s first transmission-connected solar projects will come online over the next 18 months. When added with solar generators on low-voltage networks, these facilities will combine to generate 2.2 terawatt hours TWh of annual electricity – enough to power Guelph and Woodstock – by the end of 2014. That embedded generation will reduce demand for electricity from the transmission grid – particularly during the summer when air conditioning use is at its highest. Ontario’s power grid is also expected to encounter more frequent instances of surplus baseload generation in the spring and summer seasons of 2013 and 2014. This is due to multiple factors, including lower off-peak demand for electricity, increased nuclear capacity and more renewable generation. (Source: IESO)

Samsung signed an agreement with Ontario in 2010 to invest $7 billion in the province. It agreed to set up four manufacturing plants while developing 2,000 megawatts of wind power and 500 megawatts of solar power. However, Ontario has slashed the scope of its controversial green energy deal with Samsung. Instead of developing 2,500 megawatts of renewable energy in the province, Samsung will now develop only 1,369 megawatts, energy minister Bob Chiarelli announced. Samsung’s investment in Ontario will drop to $5 billion from the previously announced $7 billion. And the province will buy only $6 billion worth of green electricity over the next 20 years under the deal, instead of the previously agreed $9.7 billion. Chiarelli said Samsung will still be bound by its commitment to set up four manufacturing plants. Three are up and running, while a fourth will open this year in London, he said. The province and Samsung agreed to renegotiate terms of the deal after it developed more slowly than the two sides had anticipated. He described it as “good for ratepayers” because the province will be buying $3.7 billion less electricity than originally promised. (Source: Toronto Star)

On May 22, 2013, Toronto Hydro-Electric System Limited (Toronto Hydro), celebrated the start of construction on its new downtown transformer station. Located near the historic John Street Roundhouse north of Lakeshore Boulevard, it was officially named Clare R. Copeland Transformer Station and is the first station built in the downtown core by Toronto Hydro since 1955. When in service, it will provide electricity to buildings and neighbourhoods in the central-southwest region of Toronto. The new station will ‘back up’ the existing Windsor Transformer Station. The majority of the station will be built underground and will preserve the historical railroad building called the Machine Shop. The new station is expected to be complete by the end of 2014. Toronto Hydro’s investment of $195 million in Clare R. Copeland Transformer Station will add a total of 144 Mega Volt Amps of capacity, which is the equivalent to approximately 70 condo buildings. (Source: CNW)

The Ontario government recently announced that it will add 900 megawatts of new renewable energy to the provincial grid. Projected to come online starting in 2014, the new electricity will be sufficient to power over 125,000 homes every year and create over 6,000 jobs. But if the government really wants to develop this sector in the long-run, it must also boost the renewable targets contained in its Long-Term Energy Plan. That document says by 2030 wind power will supply just 10 per cent of electricity generation and solar will provide a measly 1.5 per cent. Nearly half the grid will be hogged by nuclear. Ontario coal plants emit arsenic and chromium (which cause cancer); sulphur dioxide (a component of acid rain); and mercury and lead (brain poisons). They are also major greenhouse gas (GHG) sources: at their height they produced as much air pollution as some 6 million automobiles. In 2010 they caused over 300 deaths and 158,000 illnesses. (Source: Toronto Star)

U.S. President Barack Obama spelled out his plans to fight climate change by announcing he would impose limits on greenhouse gas emissions from all U.S. power plants. The mandatory reductions by operators of power plants, the biggest single source of carbon-dioxide emissions in the U.S., are the centrepiece of Obama’s initiative, which also includes increasing energy efficiency and promoting renewable fuels. Recently, there has been a change in the government’s calculation of the social cost of carbon emissions, a measure that’s used to determine the costs and benefits of climate rules. The U.S. government now assumes it is worth about $36 per ton to avoid emitting carbon, an increase from the $22 per ton price previously used. Both the U.S. and Canada have promised that their carbon emissions in 2020 will be 17 per cent below 2005 levels. But thanks to Obama, the U.S. is on track to meeting its goal. Canada, according to the Harper government’s own figures, is not. Prime Minister Stephen Harper’s Conservative government has made it clear that it won’t introduce any taxes or regulations that might put Canadian industry at a competitive disadvantage. Clamping down further on coal-fired electrical generating will have a discernible effect, particularly for those Ontarians who must suffer the smog that wafts across the Great Lakes each summer from the U.S. (Source: The Star)

A parliamentary watchdog has found that top Liberal staffers illegally deleted emails tied to the $585-million gas plant scandal. Information and Privacy Commissioner Ann Cavoukian’s conclusions bolstered opposition charges of a high-level coverup of the costs of the Mississauga and Oakville plant closures, which McGuinty and key ministers originally claimed was $230 million. Only in recent weeks did the higher tab of $585 million emerge, along with testimony from Ontario Power Authority executives before a legislative committee probing the closings that government officials had been warned a year ago the costs would be higher than $230 million. Cavoukian found the core problem was “the practice of indiscriminate deletion of all emails sent and received by the former chief of staff to the minister of energy.” (Source: The Star)

Mayor Rob Ford supports burning garbage to create energy. At a news conference, Ford revealed he wants to see the city burn its garbage as an alternative to trucking it to the city’s Green Lane landfill near London. The committee voted to hire consultants at a cost of up to $950,000 to look at a range of methods to get rid of garbage, from increased recycling and composting to incineration. Councillor Janet Davis tabled amendments which put more emphasis on diversion, such as recycling and green bin composting. The city’s current diversion rate is 52 per cent, and the city wants to hit 70 per cent by 2016 by putting more apartment buildings on the green bin. (Source: Toronto Star)

Hearings on extending the life of the Pickering Nuclear Generating Station have just wrapped up. The Pickering plant is one of the world’s oldest nuclear facilities and Ontario Power Generation (OPG) is asking for approval to run the plant for another four to six years. This will take the Pickering reactors beyond their “design life” — essentially into unknown territory for the effects of aging on pressure tubes and other key reactor components. Independent studies have made it clear that “the Pickering A and B plants have among the worst, and, on some measures, the worst, operating measures” among the world’s entire nuclear fleet. In fact, Pickering A is the most expensive nuclear plant to operate in all of North America. It is estimated that Ontario would save $850 million a year by shutting Pickering right now and switching to cleaner, safer and cheaper alternatives. Ontario believes it needs the power from Pickering because it will soon have to spend up to $35 billion rebuilding its Darlington nuclear station. And while Darlington is down, Pickering will — at least in theory — be picking up the slack. (Source: Toronto Star)

Electricity Prices for Ontario

The weighted-average Hourly Ontario Energy Price (HOEP) was 2.377 cents per kWh in June 2013. This price is 0.161 cents lower than last month’s 2.538 cents per kWh. The weighted-average price has averaged 2.765 cents per kWh over the last 12 months.

The Global Adjustment rate for June was set at 6.410 cents per kWh. This rate was 5.130 cents in May. The Global Adjustment is an additional charge paid by non-regulated customers. It has averaged 4.903 cents over the last 12 months. (Source: IESO)

Saskatchewan

The newly constructed North Battleford Generating Station is now contributing power to the provincial electrical grid to help meet the growing demand for electricity in Saskatchewan. The 260 megawatt (MW) combined cycle natural gas facility recently began operations. The North Battleford Generating Station will provide both baseload (constant) and intermediate (on-demand) power generation for the province. It has the capacity to generate enough electricity to power approximately 250,000 homes. The addition of the station brings SaskPower’s total generating capacity to 4,355 MW. “We expect the demand for power to continue to grow over the next decade, so new generation sources are needed,” SaskPower President and CEO Robert Watson said. (Source: SaskPower)

Quebec

Electric vehicle drivers can now fill-up with clean energy at the Electric Circuit’s public charging station in the city of Rivière-Rouge. The charging station is installed on Rue L’Annonciation Nord and is available for all drivers of plug-in electric vehicles. “Through this initiative, we are contributing once more to the sustainable development of the community with this simple, practical and safe environmental solution,” said Jacinthe Godmer, general manager of the Caisse Desjardins de la Rouge. (Source: HydroQuebec)