City mulls its power position

By COLLIN GALLANT on November 19, 2021.

The City of Medicine Hat is looking at its power position following new legislation introduced in Edmonton.--NEWS FILE PHOTO

cgallant@medicinehatnews.com@CollinGallant

New regulations to deal with a coming wave of electricity storage projects are being debated in the legislature less than a year after city administrators began studying what a remake of the provincial grid would mean for power plant profits.

Medicine Hat power officials said Thursday they are now examining the potential rules laid out the day before as Bill 86, an act to amend the Electrical Statutes Act.

If passed, it would give the Minister of Energy the authority to develop rules in 2023 that officials say would make it easier to build and operate new battery storage systems.

That would govern the use of emerging technology, and add it to the existing power grid in hopes of complementing a burgeoning amount of intermittent green energy production, potentially lowering cost of power and the need for costly grid upgrades.

Grayson Mauch, Medicine Hat’s director of operations including the power distribution system, says the legislation should not interfere with the city’s electrical charter as it pertains to internal sales of regular exports.

Those export sales account for the majority of major profits in the division, totalling more than $100 million over the last three years.

On Thursday, officials said the effect on grid pricing wouldn’t be known for some time.

“We do look at industry trends, but we don’t have an exact picture of the future, which I doubt anyone has,” said Mauch. He felt it could be three to five years before a substantial amount of storage capacity could be built to affect the pricing system.

“It is fair to say though that this legislation would enable a multitude of energy (technological solutions), and that tends to stabilize prices for consumers.”

City budget forecasters said this week they expect power prices to remain high next year, but fall off in following years.

Newly elected city councillor Alison Van Dyke launched an opposition campaign to the potential sale component of the division’s 2021 review, but supported work to forecast the effect of renewable power development on the city’s business model.

Now the chair of the utility and infrastructure committee that oversees the power generation division, Van Dyke reiterated her stance that the city should update its pricing forecasting to include potential changes in the industry.

“It is important that we remain aware of changes in the industry and plan ahead for the implications,” she said in a statement. “Council is committed to enabling continued technological evolution locally while ensuring we continue to meet our regulatory obligations.”

Mauch says it is still being determined what storage options are open to the city as it plans to modernize the utility.

“We will continue to look at opportunities with our partners to enable to use of emerging technology,” he told the News on Thursday. “We continue to work with business owners on their options.”

Other changes may reduce the marketability of the municipally-owned provider to forge relationships with high-power demand companies.

A traditional provider, the city can employ power purchase agreements. A deal in place since the early 2000s with Cancarb was recently renewed to accommodate the company’s expansion and increased heat recovery capacity.

Going forward in Alberta, new co-generation or battery plants with direct grid access may, at times, be able to sell to Alberta’s deregulated electrical system at tremendous mark-up in the energy bidding system.

As well, renewable production, such as overbuilt on-site solar arrays could be paired with storage to provide stable, own-use power supply.

Energy Ministry officials describe allowing unlimited capacity for self supply with an ability to export sales.

Currently the city’s production capacity is capped at the amount needed to fully supply maximum power demand of its franchise area – the city, Redcliff and some parts of Cypress County. Since that theoretical level of demand is never achieved, excess power can be sold onto the grid.

Since it is self sufficient, the city’s customers are shielded from fees to maintain the provincial power grid.

Those fees would be extended to battery-storage entries on a pro-rated basis, according to ministry officials.