By Charlotte Morritt-Jacobs - (@morrittjacobs on Twitter)

A Conversation On Capacity With Don MacIntyre

Dec 5, 2016 | 6:49 AM

The recent announcements made by the NDP that Alberta will transition from full deregulation to a capacity market has many energy experts speaking out, including Wildrose Official Opposition Electricity and Renewables Shadow Minister, Don MacIntyre.

According to MacInytre the move towards a capacity market is unnecessary and will result in Albertans paying more on their electricity bills in upcoming years. 

CAN YOU EXPLAIN THE CHANGE?
“The current rate of RROs sits at 3.5 – 3.8 cents per kilowatt hour, which has brought quite a bit of savings to consumers and now the government has been put an 6.8 cent cap on this. Any Albertan could have ended into a large term contract to level out the price of electricity from any of the 30 independent power retailers or Enmax. Each had plans that you could sign a contract that would eliminate price volatility on your bill. This cap on RROs is really just temporary window dressing to placate consumers who don’t quite understand the electricity market, until the new capacity model comes online at which time there will be no cap and we will get slammed.”

WILL MORE PEOPLE SIGN UP WITH AN ELECTRICITY PROVIDER NOW?

“Well that’s going to depend on the rate of power that you can get on a contract and it’s unfortunate that now we have the government competing with companies. We already have providers offering a cap till 2020 so that’s pretty stable. To put a cap where we didn’t need one indicates that pricing for electricity is going to be going through the roof. Even with a cap on RRO someone has to pay the differential and that will fall to the taxpayer.”

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WAS THERE A NEED TO CHANGE TO A CAPACITY MARKET?

“Absolutely not — the volatility argument is nothing but a red herring — an intentional attempt to deceive Albertans who do not understand the complexity of our electricity market. We had a perfectly working model as an energy only model because the risk for the building of the multibillion dollar electricity plants was entirely on the ones who built them. Albertans had no utility debt and I believe that we are the only jurisdiction in all of North America without utility debt.”

“Now under a capacity model in 2021, the risk and liability falls upon the shoulders of Albertans and not the companies. The government is not talking about retail volatility but wholesale volatility; in other words, the price or amount of money made by the corporations was volatile and they have not liked the low price in the market in the pat year. They like the capacity model because the government will guarentee them a fixed profit for everything they do.” 

HOW WILL THE NDP GOVERNMENT BE ACCOUNTABLE FOR THIS?

“The next line of action from the NDP government is to push Bill 27 the Renewable Electricity Act and that act is dangerous in that in the market system administrator (MSA) is the electricity police in the government. Under Bill 27, the MSA is not allowed to investigate any improprieties that take place with regards to renewable electricity.”

“Also, the Minister can insist that there be renewable electricity generation built without having to demonstrate that there is a need for it.Since the MSA cannot receive any complaints from the public when it comes to renewables that means that if the minister insists on generation being built the public cannot complain on it.”

YOU WOULD PREFER KEEPING THE CURRENT SYSTEM?

“The energy only model was entirely competitive with the 80 some odd members in the balancing pool participated the same as an auction and the lowest bidder wins. That’s why we had the very low electricity prices that we had, so I don’t like going to anything regulated by a government.”

“The problem most people complain about on their electricity bill is not the price but all of those line items on there that have nothing to do with how much electricity we consume. All of those line items are the portion of our electricity bill that fall within a regulated electricity market and the deregulated side is the price of electricity that we pay. Going to a capacity market means going to a regulated  market where the government is going to determine far too much of the price.”