2016 A Year in Review

2016 was an interesting year in the electricity industry.  As consumers, we enjoyed record low prices, but these low prices coupled with falling demand is not sustainable for power generators.

As you can see from the chart below, the Alberta power pool price is at an all-time low compared to the last 10 years. 

Chart: Average Yearly Pool Price Natural Gas IndustryChart: Average Yearly Pool Price
 

With the industry struggling, the government announced 4 major plans in 2016 that are going to change the natural gas market.

Switch to a Capacity Market

The government confirmed its plan to migrate from an energy-only market to a capacity market in 2021 (see our blog Capacity Market). The Alberta government’s move to a capacity market is meant to encourage companies to finance a greener grid. The capacity market will pay companies for both the energy they produce and the energy the generator can produce. The dual revenue will help companies be more financially stable and invest in cleaner, renewable energy.

A Deal to End Coal-Fired Electricity

Alberta will pay three major power producers a combined $97 million a year to shutdown over the next 14 years. The money is meant to both help the 3 producers changeover to greener forms of energy and compensate for them shutting down their coal-fired electricity plants by 2030. Watch the Global News Report Here

$100 Million Investment in the Natural Gas and Renewable Energy Sectors

Economic Development Minister Deron Bilous said that almost $100 million will be used to expand development in clean energy, further environmental innovation, and consolidate natural gas assets. Watch the Global News Report Here

The Carbon Levy

The Alberta government announced that January 1, 2017 a carbon levy will take effect to generate revenue to reduce the emissions of greenhouse gases and support climate change initiatives.

What did you think about the natural gas market in 2016? Are you worried about the changes? Have you noticed any difference in the prices for your day-day-to-day purchases (groceries and gas)? Do you think the proposed rebates will help offset the costs?  We would love to hear from you.

For more information about your bill, contact Camrose Energy for a complimentary, no pressure bill analysis. We review your current bill and determine what you could have saved with Camrose Energy.


Take Our 8 Step Quiz To Help You Determine Where Your Home Is Losing Energy And How You Can Save Money


Capacity Market

Alberta is preparing to switch from an energy-only market to a capacity market by 2021.  This move by the government is designed to attract companies to build more eco-friendly power plants and to offset the cost of phasing out coal-fired generation.

The current energy-only marketswitch from an energy-only market to a capacity market

The problem with an energy-only market is the unpredictable price swings in the cost of electricity. Electricity prices are volatile because generators are paid only for the energy they produce, not for how much (the capacity) they can produce. Supply and demand determine the price of electricity which means that price often fluctuates.

What is a capacity market?

In a capacity market, a company is paid for both the price of the electricity and the capacity a generator could produce. The dual revenue stream guarantees income to electricity producers which in turn incentivizes them to invest in green energy sources.

What does a capacity market mean for you, the consumer?

A capacity market will mean more stable prices for the consumer, but not necessarily cheaper prices.

Pros:

  1. Less price volatility
  2. Supply stabilizes and is capable of meeting unexpected demands
  3. Investors are incentivized to build new, green, and sustainable energy sources
  4. Creates a smooth transition to adopting cleaner power without relying solely on new energy sources
  5. Companies compete to provide the lowest packages for consumers

 

Cons:

  1. Currently, we are enjoying low electricity prices due to excess supply and low demand. These prices may be cheaper than capacity market prices
  2. Taxpayers are likely to be burdened with the additional cost to pay for the capacity

 

What will happen between now and 2021?
 

The government will be working with the Alberta Electric System Operator (AESO), consumer groups, electricity generators, electricity agencies, among others to determine and implement a capacity market. Below is a timeline for the transition per the AESO website.

Capacity Market
 

You can follow the stakeholder engagement schedule to stay up-to-date with the transition progress: www.aeso.ca/market/capacity-market-transition/stak…

What do you think about the change from an energy-only market to a capacity market? Do you prefer stable prices, even if the prices are higher than what you currently enjoy? We’d love to hear from you.

Contact Camrose Energy for a complimentary, no pressure bill analysis. We review your current bill and determine what you could have saved with Camrose Energy.


Take Our 8 Step Quiz To Help You Determine Where Your Home Is Losing Energy And How You Can Save Money