Making Sense of Energy

Energy Market Update – November 2014

albertaAlberta

Alberta electricity demand has been on the rise for 5 consecutive years. In 2014 alone the demand increased 3.5%, driven by population growth as well as energy sector developments. Despite the increased demand, Alberta Electric System Operator (AESO) claims the system is handling it “reliably and the pool price remained competitive”. In 2014, energy developments contributed more than both 2012 and 2013 combined. Most of the power coming from natural gas by the Shepard Energy Center. The rest from developments in wind energy. However, both projects will provide reliable energy with the Shepard Company contributing up to 873 MW and wind energy contributing 300 MW. “This was a big year of added generation due to two large scale projects really helps when we think about our forecast for generation over the next 20 years, which tell us we will require another 11,900 MW by 2034.” Stated by Miranda Keating Erickson, vice president of operations at AESO. (Source: Market Wired)

At a Bennett Jones Business Forum in Lake Louise, president of ATCO Nancy Southern, addressed the opportunity to switch to hydro dams over coal and natural gas. “The vision would be instead of being completely reliant on natural gas as a fuel for the future, to utilize water in a way that addresses so many different concerns” said Nancy Southern. She went on to argue emissions will continue to rise despite shutting down the coal fired plants and that building a water dam would be a better solution. However, there are several challenges that stands in the way, the main being the cost at $6 billion per dam. As well, there would be damage to the rivers and surrounding wildlife environments.
(Source: CBC News)

The Alberta Utilities Commission said Friday it has approved the purchase of AltaLink by Warren Buffet’s Berkshire Hathaway Energy for $3.2 billion. Altalink owns more than half of Alberta’s transmission grid with close to 12,000 km of transmission lines, delivering to 85% of the provinces demand. The deal was initially accepted in May but required both AUC approval and Federal approval. The deal won approval from the federal government in July with a long list of conditions and finally received its verification from the AUC in November. The commission said it found “no harm” in the change in title of ownership and ensures that customers will not face additional charges. Overall the transaction will not affect anything in its place and will operate business as usual. There is the possibility it will benefit the company as a whole in the financing perspective as it opens up a broader range of opportunity for the company to explore. For example, it plans to raise funds to build a large number of transmission lines. At the moment, Berkshire Hathaway operates 284,000 kilometers of transmission and distribution lines.
(Source: Edmonton Journal)

Electricity Prices for Alberta
The Alberta power pool price averaged 3.77 cents per kWh in November 2014. This price is 1.067 cents higher than last month’s average of 2.703 cents per kWh. The pool price has averaged 5.096 cents per kWh over the last 12 months.

As of December 1, 2014, the forward market was predicting electricity prices for the calendar years of 2015, 2016, 2017, 2018 and 2019. These prices are 4.7, 4.8, 5.15, 5.425 and 5.775 cents per kWh respectively.

Gas Prices for Alberta
Direct Energy’s gas rate for November was $3.686 per GJ in the North and $3.683 per GJ in the South. The December rate has been set at $4.182 per GJ in the North and $4.184 per GJ in the South. Alberta gas prices have averaged $4.514 per GJ over the last 12 months.

As of December 14th, 2014, the forward market was predicting gas prices for the calendar years of 2014, 2015, 2016, 2017, 2018 and 2019. These prices are 3.54, 3.50, 3.63, 4.00 and 4.22 cents per GJ respectively.

bcBritish Columbia

Liquid Natural Gas Canada (LNG Canada) and British Columbia Hydro (BC Hydro) has signed a milestone agreement to connect up to the British Columbia power grid. LNG Canada is a joint venture composed between Shell PetroChina, Korea Gas Corp, and Mitsubishi, which comes as the Liberal government announced the power rates for the LNG proponents. There will be 18 potential project at various development stages but none have made a final decision. This will be the first signed with an LNG proponent.

However, the LNG industry is expected to pay higher rates. Mines Minister Bill Bennett said the energy and demand charges for LNG facilities will be $83.02 per megawatt and expected to increase 2 percent annually until 2024. At the moment, other industry customers in the province pay $54.34 per MWh. Furthermore, Bennett explains the LNG firms will ensure they cover the full cost of the power they need as well as taking approximate 20 percent of the electricity off the grid. By taking electricity to drive the compressors to chill natural gas to liquid form, environmentalist say this will increase the harmful greenhouse gas emissions. On the other hand, president of BC Hydro Jessica McDonald, said in a statement that the agreement will ensure future energy demand is met and also provide a benefit to its customers. (Source: CBC )

ontarioOntario

Plans for the TransCanada’s Energy East pipeline ignited a national debate. The proposed project will move conventional oil to Atlantic Canada for refining while replacing the current purpose of carrying natural gas. This project will have a significant effect on the economy as a whole. A report done by Deloitte projects $35 billion in additional GDP over the life of the project with $6.3 billion seen in Quebec, $13 billion in Ontario, and the rest spread between Saskatchewan, Alberta and the rest of the country. This number is equal to the contributions made by the auto industry. On top of that, there will be $10 billion in additional tax revenues along with 10,000 full time jobs created over the life of the project. Energy East could provide a $12-billion boost to the Canadian economy, providing jobs, economic growth and increased tax revenue for government. In order to receive approval, the National Energy Board is conducting a full review of the proposal as they are mandated to do.
(Source: OurWinsor.ca)

Electricity Prices for Ontario
The weighted-average Hourly Ontario Energy Price (HOEP) was 1.649 cents per kWh in November 2014. This price is cents 0.9374 cents higher than last month’s 0.712 cents per kWh. The weighted-average price has averaged 3.54 cents per kWh for the past 12 months.

The Global Adjustment rate for November was set at 7.318 cents per kWh. This rate was 7.49 cents in October. The Global Adjustment is an additional charge paid by non-regulated customers. (Source: IESO)

saskSaskatchewan

Another smart meter failure in the province of Saskatchewan. This records as the 9th confirmed incident over the past few months. Saskpower has been contacted and says the meter caused no injuries to anyone but there were damaged incurred by the smoky meter. Earlier this year, SaskPower announced plan to uninstall all 105,000 so called ‘smart’ meters made by a company called Sensus. The meters have failed and caused extensive fire damages in a number of homes in Saskatchewan. The crown corporation is ordered to remove all meters by March 15, 2015
(Source: CBC News )

Despite the incidents regarding the faulty meters in Saskatchewan. The power company’s board of directors still stand behind their decision to purchase the meters from Sensus. Rob Pletch said “the board can only act on the information given, so when they read the letters from Sensus claiming the meters were safe, why would they think otherwise?” He asked the questions “when the supplier assures you there are no meter faults and you know other jurisdictions are using the same product with no problems, what do you do?” He went on to say all signs and assurances pointed to the fact the meters were safe. The crown corporation’s board of directors are elected by lieutenant governor and it’s charged with “setting direction, monitoring and reporting achievement, as well as analyzing, evaluating and taking corrective action for SaskPower.” Relating this back to the smart meters, Pletch said “obviously we didn’t have any concerns of the nature discussed in the report, or clearly we would not have proceeded – it is a lesson to be learned.” As for now, the board has not received their copy of the smart meter review and will stand behind their decision to purchase them in the first place.
(Source: Leaderpost )