Making Sense of Energy

Energy Market Update – September 2014

albertaAlberta

Enmax fights its dispute to return $375 Million to its consumers under a payment in lieu of taxes (PILOT) program designed to even the playing field between municipally owned utilities and corporations. The province of Alberta accused the Alberta utility provider of inflating the value of contracts and interest rates to drive down the amount to be paid in lieu of taxes. According to Enmax spokeswomen Doris Kaufmann, this is “simply a difference of opinion between Enmax and Alberta finance on the value of certain assets”. For example, Enmax charged Enmax PSA Corporation 10.3 per cent interest for a $309-million loan which the province reassessed at 5.26 per cent which meant a difference of $17.5 million dollar difference in interest deductions. Other times this has happened has led to differences of $2.7 million and $23.6 million. However, it is still a long ways to go for this case and it simply a “matter up to the courts”, stated by Alberta’s Utilities Consumer Advocate Rob Spragins. (Edmonton Journal)

Alberta premier Jim Prentice wants to take a look into the price spikes in the deregulated power market. Some consumers have accused electricity generators of a technique called economic withholding where they hold back power to create a shortage followed by a spike in price of electricity. Prentice didn’t not promise any changes to be made but did say that “I’m open to a look-see at why we have consumer price spikes”. The deregulated market in Alberta has benefitted its industrial customers greatly but comes at a cost because of its problems, especially price spikes, associated with the residential customers. For example, TransAlta made nearly $16 million from 6 different occasions where shutdowns happened. TransAlta in return defended itself by saying it required repairs which were the rules set out by the Alberta Electric System Operator. (Edmonton Journal)

Electricity Prices for Alberta
The Alberta power pool price averaged 7.088 cents per kWh in August 2014. This price is 5.166 cents lower than last month’s average of 12.254 cents per kWh. The pool price has averaged 6.356 cents per kWh over the last 12 months.

As of September 1, 2014, the forward market was predicting electricity prices for the calendar years of 2014, 2015, 2016, 2017 and 2018. These prices are 5.45, 4.875, 4.95, 5.20 and 5.625 cents per kWh respectively.

Gas Prices for Alberta
Direct Energy’s gas rate for September was $3.350 per GJ in the North and $3.708 per GJ in the South. The October rate has been set at $4.149 per GJ in the North and $4.180 per GJ in the South. Alberta gas prices have averaged $4.444 per GJ over the last 12 months.

As of October 14th, 2014, the forward market was predicting gas prices for the calendar years of 2014, 2015, 2016, 2017 and 2018. These prices are 3.99, 3.81, 3.82, 3.93, and 4.02 cents per GJ respectively.

bcBritish Columbia

BC Hydro power saving program has been saving money for users for the past 25 years. Currently, this program helps save 12 percent of costs annually or 4,460 gigawatt hours which is enough to power 425,000 homes. Every October BC hydro celebrates this program by offering incentives on energy efficient appliances or products. Minister of Energy and Mines Bill Bennett said “our 10 year plan for BC Hydro commits to providing customers with tools to manage their electricity costs. Power smart month raises awareness about energy efficient products and services as well as financial incentives that can help British Columbians save money by saving power”. (BC Hydro)

Petrona is ready to pull out a major liquefied natural gas project set to take place in British Columbia. The $10 million dollar project is projected to create thousands of jobs and clear the provinces debt. Many speculated reasons for the sudden change in Petrona’s interest but some of the main points are taxes, lack of incentives, and slow regulatory process in British Columbia. Canada is currently lacking in LNG export, especially to the neighboring country United States. In fact, according to chief executive officer of Petrona Shamsul Abbas, he said that Canada is actually “40 years behind in the game”. He went on to say that “Canada has to buck up fast to be a credible LNG player to be taken seriously to potential investors”. As of now, the project consist of a 62 percent from Petrona, 15 percent from Chinese energy giant Sinopec, 10 percent from Japan Petroleum Exploration Co. Ltd and Indian Oil Corp, and PetroleumBrunei owns 3 percent interest. (CTV news)

ontarioOntario

Samsung Renewable Energy and Pattern Energy Group LP have announced their Belle River Wind project. This will be the fifth wind project of their $5 billion renewable energy investment in Ontario. The project will feature a 100-megawatt wind farm just outside of Windosr, Ont. It will also generate enough power to bring energy to 350,000 Ontario homes annually. The companies seem to be proud of this investment and genuinely looking to help bring Ontario’s energy grid. “Samsung is dedicated to delivering meaningful benefits to communities where we are building clean, renewable energy projects” stated Vice president Steve Cho. Furthermore, this project will cancel 300,000 tonnes of carbon dioxide produced from coal fired generation. That would be equal to taking 60,000 cars off the road. (CanadianManufacturing).

Electricity Prices for Ontario
The weighted-average Hourly Ontario Energy Price (HOEP) was 1.55 cents per kWh in September 2014. This price is cents 0.66 lower than last month’s 2.21 cents per kWh. The weighted-average price has averaged 4.26 cents per kWh year to date.

The Global Adjustment rate for September was set at 8.05 cents per kWh. This rate was 6.11 cents in August. The Global Adjustment is an additional charge paid by non-regulated customers. (Source: IESO)

saskSaskatchewan

SaskPower unveiled to the world the first ever carbon capture and storage project. More than 250 people from at least 20 countries attended the unveiling of the $1.4 billion facility. This technology aims to take carbon dioxide released by the Boundary Dam power plant near Estevan and release the gas deep underground using a steel pipeline for storage. This is the first of its kind technology and hope to set an example to help fight climate change. The project is expected to reduce emission by one million tons each year, which is the same as 90 percent of what coal fired plants produces. On the other hand, critics of this project argue that the money could have been better spent on renewable energy project instead of promoting the use of burning coal. Saskatchewan premier fought back by saying it creates affordable energy while reducing the effects to the environment. SaskPower and the province of Saskatchewan looks to influence other countries of this technology, as stated by Mike Monea. “It would be a shame not to help other countries learn how to clean up their emissions”. (CTV News)

manitobaManitoba

Manitoba Hydro’s Bipole III transmission line overshot its initial budget of 2.2 billion to a $4.6 billion, as the crown corporation announced earlier this month. This drew up a number of speculations and now even the Canadian taxpayer federation and the former chairman of Manitoba Public Utilities board are asking for a private investigation. According to Garland Laliberte, former dean of engineering at University of Manitoba, “there’s pretty good evidence that the way we have planned our electrical energy production and use in this province… was based on figures that never were real”. The evidence he is referring to were leaked documents showing the initial real budget of $4 billion. Critics say the crown corporation and the government insisted the figure be lower to be granted regulatory approval. On the other hand, minister responsible for Hydro Stan Struthers defended the case by saying “in 2011 we had an estimate..an estimate that was put together before the Clean Environment Commission hearings and before the route was selected and before tenders started coming in to do with the convertor technology. I’m confident that we now have a solid, controlled budget that we are dealing with”. He went on to say that he would welcome the provincial auditor on the reasons for the Bipole III higher cost. (The Carillon)