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.
If you ask anyone who is a power engineer, or anyone who is related to a power engineer, they will tell you that electricity deregulation was the dumbest move ever. It gouges power consumers, and makes the costs of power very unaffordable. Imagine a senior on a sparse pension, or a person on a limited income trying to pay for power. It would be hard for them to do it. Ralph Klein simply did not care how much harm his devious schemes, and ill conceived policies would inflict on people. Looking at power bills in Alberta, and there are many different surcharges that are far more than what someone pays for the cost of the power itself. Nothing can get rid of these surcharges. There are people who have residences, which they don’t reside in for part of the year, like summer recreational properties, and they don’t use any power when they are not there. Despite this, they still must ante up an extravagant amount of money to pay for these different fees, on their power bills. I’ve even heard about MLAs who were under Peter Lougheed’s government, and they said that deregulation of electricity was a big mistake, and that it shouldn’t have happened. The less than fine folks at Enron were in on this too. Orchestrating brown outs, to make it look like there was something wrong with the power grid in Alberta. Project Stanley, named after the Stanley Cup hockey trophy, for the NHL, was set up to screw Alberta good. Those people in the Enron corporation, either offed themselves, or were imprisoned, because of the magnitude of the crimes committed. Electricity deregulation, including the Enron Clause, also known as the PPA (Power Purchase Agreements), has set Albertans back st least $40 billion in total, and likely more, by now. Power companies, such as TransAlta, who had Ralph Klein era Alberta PC MLAs on their board, thought they were being crafty, and also tried to gouge power consumers in Alberta, but they faced legal consequences, once they were caught. The downside of that was that the power consumers had to absorb the financial penalties given to TransAlta, on their power bills. There have been people who claimed that Ralph Klein was deceased for a number of years, and that this isn’t relevant anymore. It still is, because deregulation of electricity is still with us. In addition, they make Rachel Notley and the NDP the scapegoat for why our power bills in Alberta are so outrageous. They claim that Rachel Notley shut down coal fired power plants in Alberta. She didn’t do that. That policy decision predated her time as premier of Alberta, and was a decision from the CPC, and specifically from one of their high profile cabinet ministers, and a future premier of Alberta, Jim Prentice. In fact, Jim Prentice had brought that same intent when he became premier of Alberta. He wanted the Paris Accord targets met, because he was embarrassed by how far behind Canada was in dealing with greenhouse gas emissions. Air quality reports in Alberta were deemed to be bad, and coal fired power plants were deemed to be the cause. That’s also why Jim Prentice sought the decommissioning of coal fired power plants in Alberta. The various political parties in Alberta were also aware of this, and they had that as one of their provincial election platforms in 2015. Another really big kicker for making power prices so costly in Alberta, that came to light, was economic witholding, from the UCP. They rubbed salt on the wounds of power consumers in Alberta. On top of that, the UCP did a cunning move to score political points, and get re-elected. They did a stunt where power consumers in Alberta were being duped into thinking their power bills would be reduced. Just perfect in time for a provincial election! Alas, it was a loan to the power companies, and the power consumers will be on the hook for this loan, which must be repaid. It is mind-boggling how people were fooled by these phony Conservatives and Reformers. Despite the warnings, they didn’t listen to the people who said they were bad. Nasty names were hurled at anyone who disagreed with them. I even recall someone being called a communist for not supporting the UCP. How out of touch with reality can people be?
I had my own personal experience with the turn of the century Klein/Enron cash grab. Every spring I used to get electrical bills averaged over the winter months for around $250. Then deregulation came along and suddenly I got a bill for over $900. I was not alone. I attended several town hall meetings and they were packed with angry farmers similarly getting gouged. Ken Kowalski, the long time serving local MLA who was very instrumental in getting Klein to power, got an earful.
Don’t expect things to get better with the rollout of renewable energy. I have a feeling the same Enron-style hustlers are behind the green energy push except this time you will be told you are helping “save the planet” as they slowly twist the knife in your back.
An excellent analysis on the UK experience with offshore windmills.
https://twitter.com/LoftusSteve/status/1669760302672478233?s=20
And yet, they still all will vote for a turd if it drives a blue pickup.
“… got an earful.” Wow! Just wow!
And you get your information from social media. It’s now wonder people like you are taken.
What are you talking about? I was there, in person.
Speaking of electrical scams, let us not forget the daily morning peak power scam. That is where the generators run their plants at full power overnight when Alberta demand is low and store that energy in BC Hydro dams. The process is known as ‘pumped hydro storage.’ Then they bring that electricity back from BC during the morning rush hour at several times the cost of producing and storing it. Before Klein we had a Public Utilities Board that did an annual audit of those generators and made them put the excess profits back into the system to keep domestic electricity rates among the lowest in the country. Without regulation that simple inter-tie line to BC is a license to steal money from Alberta households by gaming the system.
Pumped hydro storage works for wind and solar storage too. So, of course the UCP’s great innovation is to keep those guys out of the game.
There are no pumped hydro systems operating in western Canada, although there are a few planned. Kangs statement is 100% false.
Alas Doug, you are 100% mistaken. If you check on the Ab Electric System Operator web site you will see there is an interchange with BC listed which carries electricity out of and into Alberta as I indicated.
This interchange, usually known in the trade as an inter-tie, is actually a 500 Kv AC electrical transmission line that runs through the Crows Nest Pass. You can see the towers when you drive through the pass to BC. This line enables generators here to use BC Hydro as a pumped hydro storage facility and they have done that since the line was completed in the late 1970s.
http://ets.aeso.ca/ets_web/ip/Market/Reports/CSDReportServlet
There are many sites in Alberta suitable for pumped hydro storage, but the proximity of BC with its largely untapped capacity for storage and the relatively low cost of connecting to Manitoba Hydro make those proposals financially marginal. Add in the rapidly falling cost of grid scale battery storage and the window for building that type of system in Alberta is closing.
Perhaps you’re thinking of water batteries?
https://www.npr.org/2022/10/14/1126523766/water-batteries-could-store-solar-and-wind-power-for-when-its-needed
Could this be the real reason Danielle Smith decided to halt new renewables projects over a certain size? Renewables aren’t next to useless in the winter months as Danielle Smith would have us believe. However, she didn’t mention that they’re pretty great in the summer when Albertans are running air conditioners and fans like never before to cope with weeks of summer heat brought to us by climate change (which is also bringing a hurricane this way later today).
Cancelling new renewables projects until we’re deep into winter is nothing more than withholding supply to increase the price of electricity. Who would be in favor of that? Who does it benefit? Utilities companies? Oil and gas companies that coincidentally dumped their renewables holdings just before this announcement? (That’s not insider trading is it, unless it can be proven?)
As any libertarian who worships Ayn Rand knows, the wealthy are heroes and the poor are zeroes. Sticking it to the poor people is what they do best. Remembering Ayn Rand who stuck her nose in the public trough when she found her own circumstances diminished late in life. Libertarians should remember this. One day it could even happen to someone like Bitcoin speculator/spiritual believer Danielle Smith. (Ref. https://www.theprogressreport.ca/danielle_smith_is_cuckoo_for_cryptocurrency)
Getting back to how to bring the price consumers pay for electricity down, if I ran a renewables company, I might start working on many smaller projects just under the limit imposed by Danielle Sith. These could be grouped together on the same site as the larger ones already in the works. Surely any libertarian appreciates people who know how to get around ridiculous red tape. These could each be built by a different numbered company run by the same people.
In a jurisdiction that doesn’t believe in regulation, has no recent experience (for 40 years) with responsible regulation, has no administrative capacity for regulation with no workforce depth for even basic fairness and consistency of regulatory administration – how on Earth can one expect an effective and efficiently regulated public utility?
As always, the wealthy and their insider stooges will get what they need while the rest pay for it.
Screwing over the poor is a feature of Alberta’s TBA government, not a bug. It makes the party’s owners and supporters feel better about themselves.
Deja vu voodoo, because it all sounds so very familiar in an historical recurring, repetitive sort of way.
Because dogma. Because TINA. [“Herbert Spencer, who lived from 1820 to 1903, was a British intellectual who strongly defended classical liberalism. He believed in laissez-faire government and positivism, or the ability of technological and social progress to solve society’s problems. To critics of capitalism, free markets, and democracy, he frequently responded, “There is no alternative.””
“Margaret Thatcher, a Conservative who served as Britain’s prime minister from 1979 to 1990, used TINA as a political slogan. She deployed the phrase when responding to critics of her market-oriented policies of deregulation, political centralization, spending cuts, and a rollback of the welfare state. Actually, there were alternatives to this approach, including the policies advocated by the opposition Labour Party. To Thatcher, however, free-market neoliberalism had no alternative.”]
Or, perhaps in other words, a self medicating [“Mr. Klein admitted to drinking the equivalent of a bottle of wine a day and said he often needed to tipple during office hours to get over particularly bad hangovers.”] useful idiot [The people hiding in the shadows that were manipulating the useful idiot for their own benefit have never been fully and completely exposed. Why not?]
“has completed the creation of the first functional post-democratic government in North America, run by elites for elites — with the citizenry left on political standby to profit from a predatory economy if it can, and otherwise to fend for itself.” . . . . “In Alberta, people are no longer portrayed as citizens and wage earners in a democratic community. They are now consumers, investors and stakeholders, acting as individuals in the private marketplace. Everything public is discredited.”
https://thetyee.ca/Views/2006/09/08/RalphKlein/
There is an obvious real world familiarity and candor in those statements, as observable and easily verifiable truths.
Hello DJC and fellow commenters,
I think that I read somewhere that independent power producers had some kind of contract to produce electricity ?for the grid? and that they receive a high payment for their power. I don’t know who they are or how they operate or, really, anything about this issue? Does anyone know if this is correct and, if so, how that system operate?
A friend got into a 5 year electricity contract about 5 years ago – at 5.99 cents per Kwhr. The coming increase will gouge them considerably as the current rate equivalent will be around 13 cents per Kwhr. And the gouging goes on elsewhere too. Telus, who is having trouble making more money than G*d, has gone for customers pockets at the rate of a 28% increase in TV and Internet over the past two years! This will not stop until there is a taxation system that really takes account of just who is reaping rewards at the cost of Albertans all around the province.
Well what can I say? I have lived in BC for 20 years +. My hydro (power) and car insurance bills have been reasonable. Since I left Alberta, which roughly corresponds to the privatization innovations of Ralphie, bills for Albertans have skyrocketed. ICBC isn’t perfect mind, but I prefer them to the Wild West of private insurance. And, yes I shopped around. When I came here, I got full options insurance for fifty percent of what it cost me for just basic insurance in Alberta. Is it any wonder I tend to think Conservative politicians are snake oil salespeople, who smell like they bathe in a midden.
Midden. The more you know! The funny thing about Alberta’s TBA government is that the 99.99% midden matter that makes up their party really ruins the whole TBA muffin.
I guess we just wait, for the howling of shot dogs! https://youtu.be/Wz3SVL3DB6E?t=2
I can still hear my late father, a power plant engineer, whining about what that bastard, as he called him, Ralph Klein was doing to us. I’m glad he didn’t live long enough to see it. Everything he said would happen has happened. One of the former MLAs from the Lougheed government told me in 2003 that it was the dirtiest trick Klein could have played on the Alberta people and it was just one of many yet here we are watching the mindless Albertans, mostly seniors, letting them continue to destroy jobs and put this province in a even worse financial mess. Their idiotic excuses they provide to try to convince themselves that they are right and the rest of us are wrong is sickening. There is no question that they have destroyed our children’s future.
Alan K. Spiller: You are correct, but people don’t care. Even one of my uncles, who passed away, a few years ago, in his 90s, knew that Ralph Klein was no good. My senior father, also knew that Ralph Klein was no good. Here we go again, with the UCP. How foolish can people be?
i’m sure the government and its online brigades will be trying to shift blame to the carbon tax.
Dumb crackers gotta crack.
Considering that Jason Kenney was recently appointed to a number of boards representing energy utilities, one wonders how deep the UCP grift runs?
Pretty deep.
Wait until R-Star rears its ugly head.
Hello DJc and fellow commenters,
Would someone please explain how pumped storage batteries work as I have not previously heard of them. Thanks very much.
Christine: Here is a pretty good explanation from the U.S. Government. https://www.energy.gov/eere/water/pumped-storage-hydropower DJC
Hello DJC,
Thanks.