Taking a page from Ontario’s power-pricing playbook

As Fraser Institute researchers have shown, Ontario’s embrace of green energy has come with a painful price tag:

Ontario now has the fastest growing electricity costs in the country and among the highest in North America. Between 2008 and 2016, Ontario’s residential electricity costs increased by 71 per cent, far outpacing the 34 per cent average growth in electricity prices across Canada. In 2016, Toronto residents paid $60 more per month than the average Canadian for electricity.

Ontario’s skyrocketing electricity rates also apply to the province’s industrial sector. Between 2010 and 2016, large industrial users in Toronto and Ottawa experienced cost spikes of 53 percent and 46 per cent, respectively, while the average increase in electric costs for the rest of Canada was only 14 per cent.

Overall, skyrocketing electricity costs came at the cost of some 75,000 job losses in Ontario’s manufacturing sector from 2008 to 2015.

Now, writing in the Calgary Herald, Chris Varcoe suggests that Alberta’s own green energy crusade may be taking Alberta power consumers for a similar ride.

Alberta’s approach to green energy is to phase-out coal power and bring in more renewable electricity. Part of that agenda consists of changing Alberta’s energy market to a so-called “capacity market.” In a capacity market, Varcoe observes, “By 2021, Alberta power generators will also receive ‘capacity payments,’ for having electricity available on demand, regardless of whether it’s used.”

Varcoe cites some worrisome filings to the Alberta Utilities Commission (AUC) by the Consumers’ Coalition of Alberta. In submissions to the AUC, the electricity consultancy EDC Associates warns that the new system would “effectively require new supply immediately, requiring consumers to pay 40 per cent more for electricity in 2021/2022 than then would pay under the current market. This would mean, EDC calculated, that “consumers could potentially pay an extra $1.44 billion in direct costs.”

ENMAX Corporation, which generates and distributes electricity, natural gas and renewable energy in Alberta, agrees. According to Varcoe, ENMAX estimates the additional cost to Alberta customers will be hundreds of millions of dollars per year because of over-procurement of capacity.

The lessons of Ontario’s green energy fiasco could not have been more clear, even as Premier Rachel Notley decided to adopt much of the same playbook here in Alberta. And we are now, predictably, heading for many of the same unpleasant consequences for electricity consumers in Alberta.