Hatters spared in power system redo
By Collin Gallant on April 20, 2018.
cgallant@medicinehatnews.com @CollinGallant A restructuring of the Alberta electricity system may not after all have the pronounced effect on the City of Medicine Hat’s power operations some observers feared. That’s because individual Hatters will likely be shielded from a new set of charges to pay for stabilizing supply and prices on the Alberta grid, provincial officials suggested on Thursday. As well, the city has moved sharply to lock up huge portions of its production in long-term contracts with local industrial customers — a strategy outlined last year as a way to counteract the coming end of lucrative power exports. On Thursday, Energy Minister Margaret McCuaig-Boyd introduced Bill 13 in the legislature, which would begin the process of laying down rules for the switchover in the power buying and supply system. It would also give the Alberta Utility Commission power to resolve consumer billing complaints more quickly and levy fines. It will also begin discussions with stakeholders on rules on billing procedures, and what consumer bills will look like in 2021 when changes are enacted. “It will help guarantee that our electricity system becomes a modern, reliable network,” McCuaig-Boyd said Thursday during a mid-day press conference call. “(The capacity market is) a system that will protect Albertans from price swings and poor service, and a system that will attract investment.” In late 2016, the provincial government announced it would seek to move from an “energy only” market where companies relied on price spikes to book profits, to a “capacity market” where they would be paid to keep reserve capacity in stow. Among the most notable differences however, is a splitting of charges on bills to reflect the recovery of operational expenses in an energy charge, and capital costs or a capacity charge. City utility commissioner Cal Lenz told the News that since local prices are set as the average across all prices, a new local formula might need to be devised. “We don’t know what the numbers are going to look like, but we’ll have to see what they come back with. “It’s been an ongoing process, but we expect more information (this summer) and we’ll analyze from there what the effect will be on us.” As a self-sufficient producer, Medicine Hat doesn’t import power, and as such, Hatters are not subject to transmission tariffs paid by other Albertans to pay for upgrading major power lines that transport power. Provincial administrators said during an information briefing Thursday the same sort of exemption would exist under early designs. Medicine Hat has however, made tens of millions of dollars in profit over the years exporting power when the grid price spiked — a pricing system that will be phased out by 2021. In the past month however, the city has announced 10-year deals to sell a total of 84 megawatts of power — about one-third the total generating capacity — equally to Hut 8 dataprocessing facility and Aurora Sun cannabis facility. Both could be operating in the next 12 months, and combined with peak use from other customers, bring Medicine Hat close to using its entire production, leaving little for export during times of high local demand, namely in the hottest months of the summer. “We’re looking at different actions and strategies,” said Lenz, who said that based on usage, excess power will still be available for outside sales in the spring and fall. “With the new contracts, we’ll be able to handle those. We still need to look at how to handle excess energy … Can we participate in a capacity market? These are things we still have to understand.” Bill 13 would also give the power of the Alberta Utilities Commission to hear cases more quickly and level fines or corrective action without the need for formal hearings. Lenz said that complaint resolution process is something his departments would comply with, but currently city hall does a good job of communicating with customers. “Our people are very focused on customer service,” he said. 23
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