February 28th, 2024

Power prices expected to spike

By COLLIN GALLANT on August 3, 2021.

The city's main power plant on the shore of the South Saskatchewan River is shown in this May 2018 file photo. The price for electricity in August is expected to skyrocket as heatwaves continue to dominate the 2021 summer months.--NEWS FILE PHOTO


The price of electricity could move 20 per cent higher in August as sweltering heat continues, demand remains high across the province and prices appear headed to set an all-time annual record.

The City of Medicine Hat offers a set-rate for power, but most customers are on a floating commodity rate that is the average of other default prices in the province.

Those rates, from Enmax, Epcor (urban and rural) and Direct Energy, are approved by the Alberta Utility Commission each month.

Applications filed late last week show rates ranging from about 12 cents per kilowatt hour, to 12.3 cents, and the average would be 12.21 cents.

That would the highest monthly price charged in Medicine Hat in at last seven years (easily accessible records only back to 2014).

“Part of that is playing catch up from June and July, when (the Alberta grid) real-time prices went much higher (than rates charged to customers),” said Josh Barclay, a market analyst with the city’s electric utility department. “Looking forward at pricing (into the fall), we see that falling off, but still remain (comparably) high.”

On the Alberta transmission grid, prices spike during times of high demand or low supply. During times of substantial shortages, prices can go as high as a maximum $1,000 per megawatt hour, equal to $10 per kilowatt hour. The AUC also requires companies to alter rates to customers when forecast prices are higher or lower than actual prices.

Through six months of 2021, the average wholesale power rate to distributors sits at $104 per megawatt hour, on average of all hours, including low-demand, low price period overnight.

That average price is up from about $60 over the course of 2020 when analysts said slower industrial and commercial activity during the pandemic led to a drop in demand.

Similarly for household rates, the 12-cent price expected in August is almost double the whole-year average of 6.6 cents in 2020.

The two-cent difference between July and August could add $10 to $15 to a homeowners bill, based on typical usage.

Provincial demand has likely increased due to a lengthy heatwave across large portions of the province, said Barclay, as well as increased oilpatch activity and oil production.

The Alberta Electrical System Operator issued two emergency warnings in July stating demand was in danger of overwhelming supply capacity. No elevated emergency took place but prices rose, with analysts citing coal plants going off line in heat, others under construction to convert to natural gas-fired systems, and intermittent renewables production as causes.

The city offers a set rate of 6.8 cents, based on the average of contract rates offered by other providers in Alberta, but customers must sign up one month prior and remain on the pricing system for at least six months.

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