Heat is on power prices

Posted on August 7, 2014 by Taber Times

Record heat and little wind mean many Albertans are cranking up the air conditioning, and energy prices along with it. However, consumers are being advised to conserve electricity.

An energy emergency alert went out last week from the Alberta Electrical System Operator (AESO) to power generators advising that they are closely monitoring the supply.

“We still have enough supply to meet demand, but we’re in a situation where we’re going to have to use our reserve cushion of power to maintain stability of the grid,” said AESO communications director, Mike Deising.

“That can happen at times throughout the year when you have very high-demand days, and today we see we’ll set another new record forecast in the province. So because of that, we’re using our reserve supply. We have enough power to meet demand today, but we’re obviously watching it very closely and we’re asking Albertans if they can do any little bit to help, it can be greatly appreciated.”

Deising said some of the simple tricks are turning the lights off and using major appliances such as washers, dryers and dishwashers in the evening, when energy demand is lower.

“Every little bit helps. And, of course, air-conditioning units are another big one.”

If the demand continues, there could be consequences across the province, such as rolling blackouts.

Tips to conserve energy can be found on the AESO website at poweringalberta.com.

With the spike in energy consumption, prices are also soaring. According to the AESO website, the daily average pool price was $476.23/MWh Wednesday, compared to $34.27/MWh only one week ago.

Consumers are rarely aware of how much they ultimately pay for that extra energy until they get kicked with a large bill at the end of the month. For that reason, Gray Energy Economics Inc. has created a free app available on iTunes and Google Play that allows consumers to see real-time energy prices, and is easy to read like a mood ring.

Company president David Gray said it’s essential knowledge for businesses and individuals so they can make the decision to conserve when prices are high.

“The power market is like filling up your car with gasoline,” Gray said. “Sometimes it’s 10 cents a litre and you’re really, really happy. Other times it’s $10 a litre and you’re really, really upset. With the power market you don’t actually find that out until you get your bill at the end of the month. It’s like Russian roulette for customers, and for our customers that are mostly mainstreet businesses on the default supply rate, that’s exactly the situation they’re facing.”

Gray believes energy prices are being driven up by a practice called economic withholding.

“Since 2011, they’ve permitted economic withholding which is essentially in any other market usurious pricing. It’s exactly the same phenomenon you see in gasoline where the price goes up before a long weekend,” said Gray.

“So, what we saw Monday, when the price was up in the 95 cent/kWh range, was that six of TransCanada’s plants were operating at two-thirds capacity. And that means that they priced the output of the rest of the one-third of those plants at some price above 95 cents. So they’re saying to the consumers of Alberta, you’re not getting our power unless you pay us probably 20 times what it’s worth. That’s the system as we have it. It’s not illegal what they’ve done, but it is pathetic.”

He said his hope in creating this app is that people will be mindful of what the price is and cut down on their consumption when the price is high.

“People will be amazed. A tiny drop in peak demands will crater that price,” said Gray.

AESO communications director Mike Deising says any specific claim against a company should be directed to the market surveillance administrator, the agency that looks at market participant behaviour.

“From our perspective we look at the overall grid, to make sure that companies are making available all power that they have with their plants and we’re seeing in Alberta that is the case,” Deising said.