Energy division expects low power pricing in 2025

By Collin Gallant on October 18, 2024.

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Cheap power through 2025 is the prediction from the city’s energy division, officials recently told council committee overseeing the division.

“We continue to see a downward trend that is a concern for our broader profitability, but is certainly good for our customers,” said managing director Rochelle Pancoast at the Oct. 3 meeting of the energy, environment and land committee.

That is partly offset by an extremely low price of natural gas used to produce power at the city’s power plant.

“It helps for electricity, but not on gas (production).”

The division reported that the average price on the Alberta power market to mid-September was $66 per megawatt hour, and forecast $55 per MWh to the end of the year and $46 per MWh through 2025. That translates to 6.6 cents per kilowatt hour, 5.5 cents and 4.6 cents, respectively.

Gas on the Alberta market averaged 75 cents per gigajoule in September, but fell below 10 cents for six days.

The city power division’s budget predicted a grid price at $91 per MWh for the balance of the year in 2024, and a dividend of $81 million based on expected exports.

The city’s next financial report is due Oct. 23 when the audit committee meets.

The city is able to export power when prices rise, and lower production or hold back exports when prices are low, but the number of high-priced hours has dropped while extremely low prices are becoming more common, some observers report.

Export prices are not the prices to the consumer, however.

In late 2023, city council agreed to an interim local pricing formula suggested by staff in response to record high floating prices that summer.

It established a price ceiling of 11 cents per kilowatt hour – a near two-thirds discount at the time compared to non-contract pricing – but also a floor of 7 cents, where the price was set .

The local interim price is based on the 12-month forecast for wholesale power – the rate available to other energy marketers in the province, who then add a markup.

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