Alberta electricity rates to rise sharply because of climate plan: study

An open pit mine at the Grande Cache Coal mine in northwestern Alberta. Credit: Grande Cache Coal

CALGARY – A new study has found that Alberta’s Climate Leadership Plan would result in big reductions in emissions but that the cost of boosting renewable energy usage would mean significantly higher electricity rates.

“The report, prepared by utilities consultant EDC Associates Ltd., looked at the impact of the NDP government’s plan to phase out coal power by 2030 and source 30 per cent of energy from renewable sources.

It found that the boost in renewables and the end of coal would mean a 45 per cent reduction in emissions, or 18.5 million fewer tonnes of carbon released into the atmosphere a year.

However, under the province’s privatized utility system, prices would have to be between $60 to $85 per megawatt hour to justify wind power construction.

And if solar power were to make up 50 per cent of the renewables mix “it would cost between $200 and $300 per megawatt hour,” the study found.

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With power markets oversupplied, the province’s current pool price is hovering around $20 per megawatt hour, while in 2014 pool prices averaged about $50 per megawatt hours and $80 in 2013.

The report also found that the early closure of coal power plants would mean power producers lose out on anywhere between $3 billion and $16 billion in gross operating margin, depending on how much future earnings are valued and how many years of lost production are compensated.

The NDP government has not made a clear commitment to compensate producers for the early closure of coal-fired power plants, but it has said it would treat producers “fairly” and not “unnecessarily strand capital.”

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