CALGARY, Nov. 28, 2011 /CNW/ - We recognize that Alberta's electricity
industry is complicated and the benefits are not widely understood.
Concerns about our market are compounded with stories about electricity
rates, the integrity of the market, and the controversy around planned
As Alberta's power producers, we'd like to share our perspective on
these issues with Albertans. The Independent Power Producers Society
of Alberta includes all of the province's major power producers. We
believe the open market has benefitted Alberta's power consumers and
we'd like to explain why.
Alberta has had a competitive power market since 1996; a market in which
developers take the risk of building power plants. Developers compete
to serve customers and compete to recover costs. Because of this open
market, Alberta's wholesale prices reflect the downward pressure of
In 2011, power prices have averaged $78 per Megawatt Hour (MWH), just
10% above where they were a decade ago. In that same decade, Calgary
housing prices have increased by more than 126%, and crude oil prices
have risen from $26 per barrel in 2001 to last week's $100 per barrel.
Alberta's current wholesale price of power is lower than what it costs
to build new greenfield coal or wind plants. A market that averages
below the replacement cost of its key generation technologies reflects
a demonstrably competitive and healthy market for consumers.
Alberta's open market also enables supply to be added more quickly than
in a regulated market, as we let the market signal need, instead of a
decision by a regulator. This has helped Alberta meet the fastest
growing demand for power in Canada, by far, over the past decade. For
context, we have added over twice the generation capacity of
Saskatchewan since 1996.
Furthermore, we have diversified our fuel mix. Natural gas now accounts
for 40% of our total capacity and we boast the second largest
concentration of wind farms in Canada. None of these investments are
subsidized by Alberta ratepayers or taxpayers, unlike in all other
We have seen the entry of a host of new players, offering competitive
supply and choice, serving customers 8760 hours a year. Consumers of
all sizes now have choice in how to manage their electricity costs. It
is important to appreciate that very few consumers pay spot market
prices. Most, including residential customers, pay some form of
forward or contracted prices.
Notwithstanding these benefits, our market faces continuing challenges,
as we work to build public confidence, invest in sufficient
transmission to support future growth, and replace an aging fleet with
new supply under the pressure of the fastest growing power demand in
Canada. We welcome an open debate about our industry, the challenges
it faces, and where it needs to go. We hope this will be a debate
informed by what the market has achieved.
Evan Bahry, Executive Director
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