Albertans are getting hammered this summer by high electricity prices – just one of the impacts of the chaotic wide-open Alberta electricity market that was Conservative premier Ralph Klein’s gift to the province at the turn of the century.
Back in 2000, as readers with long memories may recall, we were promised prices would decline and service would improve as a consequence of electricity deregulation.
This is the opposite of what has happened as a result of that policy – which seems to have come about when a lobbyist for the notorious and now defunct Enron Corp. got the ear of the Klein Government and played it like a fiddle. This happened, the Globe and Mail explained in 2016, “the year before Enron’s name became shorthand for massive corporate accounting fraud.”
Today, low-income Albertans with poor credit ratings who can’t qualify to be approved for a cheaper fixed rate contract are being gouged mercilessly as a result. The rest of us are being gouged too, just not quite as badly.
How bad is it? Well, Canadian electricity prices in rose 11.7 per cent in July compared with July 2022. In Alberta, they soared 128 per cent! That’s not a typo.
It’s so bad that Alberta’s electricity prices were a significant contributor to Canadian inflation, Statistics Canada said on Aug. 15. “This acceleration was mostly due to a 127.8 per cent increase in Albertan electricity prices, which can be volatile, amid high summer demand,” the federal statistic agency explained in its July Consumer Price Index report.
The second worst hit province was Saskatchewan, where prices increased a mere 12 per cent.
Economist Jim Stanford of the Centre for Future Work pointed out that provinces with publicly owned power that is regulated with stability as a goal (British Columbia, Quebec, and Manitoba) have stable prices.
Indeed, as the chart based on Statscan’s figures that he published on social media shows, the July-2022-to-July-2023 rate increase in Manitoba was zero, nada, nothing at all.
In August, according to one calculation, electricity users without a contract could be paying as much as $320.64 for 750 kilowatt hours in Alberta. The same usage would have cost Western Canadians $74.69 in B.C., $141.70 in Saskatchewan, and $79.13 in Manitoba.
According to Statscan, part of the outrageous cost increase in Alberta is the little deception perpetrated by the United Conservative Party during the campaign leading up to the May 29 election and all-but-ignored by the Opposition NDP. Go figure, since it was an excellent issue made for the NDP to exploit.
That is, the UCP’s pre-election electricity “rebate” that wasn’t a rebate at all, but in effect a forced loan.
“In the early months of the year, when demand was last this high, provincial rebates and a price cap kept prices lower for consumers,” Statscan explained. “These policy interventions were gradually phased out and ended in spring 2023. A base-year effect also contributed to the increase. When the provincial rebate program was introduced in July 2022, prices fell 24.4 per cent month over month. This decrease is no longer impacting the 12-month movement, putting upward pressure on the year-over-year figure.”
The Financial Post quoted National Bank of Canada Chief Economist Stefane Marion saying there was more to the big jump in electricity prices. “Alberta’s electricity demand reflects not only the summer heat, but also record population growth.”
The United Conservative Party Government, naturally, has tried repeatedly to blame the closing of Alberta’s coal-fired electricity-generation plants by the NDP, which reduced emissions by 25 million tonnes a year, for the jump. There’s no question converting coal-fired plants to natural gas costs big money, and private power generation corporations will recoup it. But it’s obviously not seen as a major cause of the July price jump by experts who don’t have a dog in Alberta’s political fight.
As for why the poorest customers are getting hit the hardest, a CTV reporter explained last month that regulated rate option prices – the ones you get stuck with if you have a lousy credit rating – are even higher “because those customers are now repaying the $200 million deferral from the UCP government’s recent price cap.” (Emphasis added.)
Back in July, consumer advocate Jim Wachowich told the CTV’s reporter that it was time to think about re-regulating the electricity market so that Albertans can have electricity prices like other Canadians instead of experiencing a distinct Alberta Disadvantage.
“We can see the problem, we can understand the scope of the problem, and we really have to start talking about solutions,” he said.
Dr. Stanford said much the same thing, with the caveat that he doesn’t specialize in energy economics. “I would say public ownership and planning, and faster rollout of renewables which are not sensitive to fluctuations in oil and gas prices” would help, he said in a Twitter DM.
Despite the differences in power generation between provinces, which impacts the price of electricity in Alberta with its absence of major hydro power projects, Dr. Stanford noted that “a key issue is that the current AB system allows companies to withhold supply to boost the price.”
It’s “absolutely critical to understand,” retired Calgary mayor Naheed Nenshi said last week in a tweet, that “the recent increase in power prices (is) largely driven by the behaviour of electricity companies.”
This would not happen in a properly regulated system.