Officials expect lower power price to trend for a while

By Medicine Hat News on June 2, 2020.

Power prices in Medicine Hat will edge downward in June, giving some indication about lower demand across the province, while local officials say revised forecasts expect lower prices to persist.

The city-owned utility company sets its local commodity price based on the average of rates across the province, which themselves are based on price forecasts for the month ahead.

In Medicine Hat, the price for the month was set at 5.576-cents per kilowatt hour, down five one-hundredths of a cent from May.

The current rate is also 17 per cent lower than in June 2019.

“We’ve watched pretty closely and right now they are muted,” utility commissioner Brad Maynes told the News on Monday. “There’s a belief that power will stay lower over the next few months and maybe to the end of the year.”

Natural gas for residential and small to medium commercial customers will rise in price to $3.15 per gigajoule, up from $2.27 in May.

Power prices in Alberta typically drop on the spring and fall – called shoulder seasons – but begin to rise as temperatures increase and air conditioners kick in, or the days get shorter and more lighting is required.

This spring however, prices fell more dramatically as power demand has been affected by changing patterns of use.

It’s been a cooler spring than has been typical, and more people are staying home during the coronavirus pandemic, leading to an increase in residential power, but lower economic activity is a larger factor. Industrial activity is also affected by the price crash in oil and production.

The bid price on the Alberta Electric System Operator went to zero in the early hours of Monday morning before recovering, but the average prices throughout the day are lower.

The city sets a floating default rate for large commercial and industrial and street lighting customers at the average grid price from the previous month plus a 2-cent premium. The rate for May was just 4.6-cents.

Specific to rate-setting for June, the two gas prices that city utility department uses to determine the average and local price were $2.38 from Direct Energy and $3.92 from AltaGas.

Similar power prices were 6.0-cents from Direct, 5.5-cents from Epcor-Edmonton, 5.4-cents from Epcor-rural, and 5.4-cents from Enmax.

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