Electricity Export Policy Exposes Albertans to Risk of Increased Pollution and Higher Power Prices

Alberta Government Breaks Commitment to Consult Public

A policy to expand electricity exports will increase human health and environmental risks in Alberta and expose consumers to higher U.S. prices, while increasing profits for generators, Tom Marr-Laing, Director of the Pembina Institute's Energy Watch program, said today, referring to the electricity export principles recently announced by Minister of Energy Murray Smith.

Furthermore, the Alberta government has broken a commitment to consult with Albertans on the export of electricity. "The Alberta government indicated in a January presentation to the Board of the Clean Air Strategic Alliance that it would consult with Albertans in developing its electricity export policy," Marr-Laing said. "While consultants hired by the government did interview 20 'electricity stakeholders ' in developing this policy, no opportunities were provided for public interest bodies or the general public to provide input."

"The issue of expanded capacity to export electricity poses significant, long-term economic, social, and environmental risks. Albertans have the right to be consulted," he said.

Marr-Laing highlighted a number of major concerns:

  • Integrating the Alberta system more closely with the vastly larger markets of the U.S. will expose Alberta ratepayers to the power prices set by these markets (which have historically been substantially higher than Alberta rates). Changes in Power Pool pricing have been implemented to protect the system from predatory pricing behavior by generators importing power into the Alberta system. However, with increased "liquidity" in the market — wherein an Alberta-based generator can offer its power equally to serve domestic or export customers — such generators will naturally price their power to the highest rate possible. Such rates will generally be reflective of what the generator could receive if U.S. consumers purchased the power. Although the power would be allocated to first assure system reliability in Alberta, the price charged would no longer be constrained by domestic supply/demand dynamics. Market demand would become a function of the scale of the sub-continental region into which Alberta was integrated and subject to the price variability in that market.
  • Albertans will bear the health and environmental risks from pollution associated with increased electricity generation — while U.S. consumers will receive the benefit of the power. Pollution is especially high for electricity from coal-fired power plants, which will likely be a major source of export supply.
  • Exporting electricity generated from Alberta's fossil fuels will further increase the burden of high greenhouse gas emissions that this province will have to bear under Kyoto.
  • An increase in exports will require new transmission lines. This will not only have an impact on landowners and the landscape, but could mean an increased cost for Albertans. The Alberta Energy and Utilities Board is currently holding hearings on transmission congestion, so it is not yet known who will pay for new lines — Albertans or those exporting the power.
  • Recent additions to the province's generation supply have already led to very low wholesale electricity prices in 2002 (currently averaging $36/MWh, down from a high of $133/MWh in 2000). Existing limited import/export transmission has been adequate to contribute to this lower price regime; increased capacity is not required.

One of the Minister's principles refers to 'enhancing the environment' and requiring 'continuous improvements in environmental performance'. "Even if standards, which are currently less stringent than in the U.S., are improved, there will still be more emissions if we generate electricity for export than if we generate primarily for domestic use," Marr-Laing said. "Albertans should be asked for their views and look critically at what the export principles will mean for them."

For more information:

Tom Marr-Laing: 780-621-2472 (cell)
Mary Griffiths: 780-915-9771 (cell)

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