WHY ARE POWER PRICES SO DARN HIGH? in Alberta

[shtferbrains]

The Authorities know what we need to hear?
Major Windbag knows the truth.

[chuckChuck]

Why the switch to talking about Sweden when the U of C economists clearly showed why electricity prices are so darn high in Alberta!

And wait for it.....renewable electricity is lower cost per MWh and helps lower the wholesale pool price and has almost nothing to do with higher prices.

Because of deregulation and market concentration the utilities can charge what they want!
I thought you guys in Alberta were in favour of letting the free market decide what's best for you? I hope you are enjoying your higher electricity prices!

"renewable generators can ease the pressure on the energy market. For example, average solar generation during daylight hours helped lower pool prices for Q1 2023. Because of the supply from solar generation, pool prices during the middle of the day were lower compared to the middle of the night.

However, renewable generation provides additional supply to the Alberta electrical grid, which helps stabilize the energy market."

[Hamloc]

This is an excerpt from a study done by Andrew Leach and Blake Shaffer.

Chuck2 can you read?

[chuckChuck]

So whats your conclusion from what you posted?

Hamloc, so why is there no mention of renewables causing the high electricity prices by the same author Blake Shaffer in WHY ARE POWER PRICES SO DARN HIGH?
Blake Shaffer, David Brown & Andrew Eckert

Blake Shaffer clearly identifies deregulation and market power as the cause of why electricity prices are high in Alberta.

Can you read Hamloc?
"In 2020, the difference between the realized market price and what we get from our model
with all firms offering at their marginal cost—what we call the “market markup”—was only
$9/MWh. In 2021, this markup nearly quintupled: to $44/MWh—a change of $35/MWh.
Why the sudden jump? The end of Alberta’s 20 year PPAs (Power Purchase Arrangements)
left control of more power plants in the hands of fewer power companies. This increase in
market concentration, coupled with a generally tighter market overall, means firms can more
easily exercise market power and profitably raise their offer prices."

[Hamloc]

So whats your conclusion from what you posted?

Hamloc, so why is there no mention of renewables causing the high electricity prices by the same author Blake Shaffer in WHY ARE POWER PRICES SO DARN HIGH?
Blake Shaffer, David Brown & Andrew Eckert

Blake Shaffer clearly identifies deregulation and market power as the cause of why electricity prices are high in Alberta.

Can you read Hamloc?
"In 2020, the difference between the realized market price and what we get from our model
with all firms offering at their marginal cost—what we call the “market markup”—was only
$9/MWh. In 2021, this markup nearly quintupled: to $44/MWh—a change of $35/MWh.
Why the sudden jump? The end of Alberta’s 20 year PPAs (Power Purchase Arrangements)
left control of more power plants in the hands of fewer power companies. This increase in
market concentration, coupled with a generally tighter market overall, means firms can more
easily exercise market power and profitably raise their offer prices."

Here is the problem with your article Chuck2. He is talking about power prices in 2021. In 2021 my contract price on the generation portion was 6.69 cents a kwh. In December 2022 as I have stated I signed a new 5 year contract at 6.89 cents a kwh. Throughout this period and today the highest portion of my bill is transmission and distribution, nothing to do with generation. Natural gas prices were much higher in December 2022 than they are today, but in August 2023 the 5 year price for electricity generation went up to 12.69 cents. From this point of view your article is out of whack with what I have actually payed. You seem unable to understand this point.

As well in the graph above, solar was the most expensive generation source. Blake Shaffer was one of the authors. As well the article states. How renewables are poorly suited for generation in Alberta as the highest demand for electricity is mid winter when renewables are the least productive..

[chuckChuck]

Hamloc, It looks like economists and the Premier disagree with you and have cited market power as the main driver of high electricity prices as recent as August of 2023.

In fact an increase in capacity from solar and wind help keep prices lower. As will the new 900 Mw gas plant set to open in 2024. But keep trying to deny reality all you want and blame renewables.


How 'economic withholding' is impacting Albertans' power bills and why even the premier is watching

Danielle Smith suggests 'something's broken' and needs to be done

Bryan Labby ([url]https://www.cbc.ca/news/canada/calgary/author/bryan-labby-1.4094137[/url]) · CBC News · Posted: Aug 25, 2023 4:39 PM CDT | Last Updated: August 28

Alberta's electricity market can be a complicated subject, but consumers generally understand that prices for electricity have soared.

Experts say one of the main reasons is something called "economic withholding."

In Alberta, electricity generators are allowed to hold back all or some of their electricity supply, then offer it to the Alberta Electric System Operator (AESO) at a higher price. It's an intentional — and legitimate — practice that boosts wholesale prices and profits. The province's Utilities Consumer Advocate provides full details here ([url]https://ucahelps.alberta.ca/electricity-market-pricing.aspx[/url]).

The roughly 550,000 customers on the regulated rate option (RRO) who haven't signed a fixed-rate contract with a competitive retailer are subject to those wildly fluctuating prices.

A cap earlier this year held prices at 13.5 cents per kilowatt hour. Since the cap was removed in April, prices have soared.

Enmax, Epcor and Direct Energy Regulated Services are now offering a RRO price of 32 cents per kilowatt hour.

While economic withholding is allowed in Alberta, the province's Market Surveillance Administrator (MSA) says the practice could trigger an investigation if the agency were to ever believe the big power generators, which include TransAlta, Enmax, Capital Power and Heartland, were colluding to increase wholesale prices — which affects consumers who are on the RRO.

"While the MSA cannot comment on specific investigations, economic withholding is not prohibited by the legislation or market rules and therefore has never been investigated as a potential contravention," wrote the CEO of the MSA in an email to CBC News.

The MSA also refers to the practice as market power or offer behaviour. The most recent snapshot of the practice is detailed in a recent quarterly report ([url]https://www.albertamsa.ca/assets/Documents/Quarterly-Report-for-Q2-2023.pdf[/url]).

An Alberta economist who has researched the practice says the impact on prices is clear.

"I wholeheartedly agree that I think that the big driver of recent price increases is economic withholding," said David Brown, an economist at the University of Alberta who has studied the impact economic withholding has on consumer prices.

Love it or hate it, Brown says it's a part of Alberta's free-market system which is designed to encourage large-scale investment in electricity generation and allow those firms to recoup some of their costs.

"The idea is we're going to allow firms to earn some degree of short-run profits via economic withholding to cover these large fixed costs of investment."

TransAlta, Enmax, Capital Power and Heartland declined interview requests.

Premier: 'Something's broken'

The practice is raising the ire of some people and is on the premier's radar as well.

"One of the things that changed a few years ago is this concept of economic withholding," said Danielle Smith on her weekly radio call-in show on Aug. 19.

"I think too much power is being held back, prices are escalating too much and we're all paying the price for it," she said.

The premier added: "When the regulated rate option surges to 32 cents a kilowatt hour, that's a sign that something's broken."

Smith recently instructed one of her ministers to look at ways to reduce electricity costs for Albertans, including transmission and distribution charges and the potential phase out of the RRO ([url]https://www.cbc.ca/news/canada/calgary/regulated-rate-option-electricity-alberta-1.6781057[/url]).

The United Conservative Party government says it's exploring a possible end to the RRO, a rate that is sometimes used by people who can't sign a contract because of low credit scores or an inability to pay an upfront cash deposit to energy retailers.

Rise Calgary, which offers a program to help low-income Calgarians cover the cost of utilities, says there's isn't enough money in their fund to help everyone who applies.

"Unfortunately, the fund does tend to run out around the first of the month because a lot of people apply," said Salimah Kassam.

Alberta's New Democrats would like to see the cap on electricity rates reinstated, but it's not saying what the number should be.

"The idea is to cap it so it's not volatile ... where people cannot afford their bills," said Calgary-Glenmore MLA Nagwan Al-Guneid, the party's critic for energy and climate.
Al-Guneid says the province's decision to pause renewable energy projects will put more pressure on prices.

"The moratorium shuts down supply, it blocks companies and people from building more energy projects which will impact supply," she said.
Future of economic withholding

Alberta's minister of affordability and utilities says the UCP government is looking at the future of economic withholding, but Nathan Neudorf says they must tread carefully because disallowing the practice could result in supply disruptions and higher prices.

"That could actually have the opposite impact that we want. It could quite literally drive prices higher," he said.

"We don't want to exacerbate the problem," said Neudorf.

He says the government will address the issue of economic withholding, but not as a standalone issue.

"It's really a supply-demand issue, if we have the right amount of supply and good competition that will drive prices down and we want to make sure that we answer both of those questions over the next few months."

As far as another price cap is concerned, Neudorf provided this comment in an email Friday.

"We have just begun an inquiry into the renewable sector to better address issues of reliability and affordability. Albertans need more than a band-aid solution, we need to address the root of the problem. Alberta's government is looking for a long-term solution to address affordability challenges facing Albertans."

Brown, the economist, wants to remind Albertans that the power generator's ability to withhold supply will be impacted next year as a major plant (900 MW) is expected to come online.

"The forward market price curve is much, much lower in 2024 than it is today," he said.

But customers will have to wait.

"It's just currently we're in an unfortunate period of really elevated economic withholding."

[chuckChuck]

And Blake Shaffer makes no mention of renewables as the cause on X! Not sure why the images came up when I copied from X. But read below.
Blake Shaffer ([url]https://twitter.com/bcshaffer[/url])

@bcshaffer ([url]https://twitter.com/bcshaffer[/url])

Many have asked why Alberta’s power prices are so high right now. You can pick your favourite vice, but the main reason continues to be higher offer behaviour from firms in pivotal (ie needed) positions. From yesterday’s Market Surveillance report:
[/URL]

[Hamloc]

Chuck2, you and I will never agree. My thoughts will never change your mind and yours will never change mine. Having said that here are my final thoughts on this particular topic.

The forced early elimination of coal by NDP legislation and carbon tax policy changed the make up of Alberta’s generation system. This early retirement permanently increased the cost of electricity in my opinion. Coal was always the cheapest source of electricity before higher carbon taxes made it more expensive. I don’t doubt that natural gas suppliers manipulate the system but the intermittent and unreliable nature of wind and solar put natural gas suppliers in the drivers seat. This fallacy that larger amounts of wind and solar will lower costs just doesn’t add up. There is no guarantee that the electrical generation will exist when required. There are frequent periods of almost zero wind production. This can’t be changed.

[wmoebis]

If coal is cheaper why did people change from coal to electric and natural gas heating and why are so many adding wood as a supplementary and back up again? Where do I find the different costs per BTU to heat a house or for electric generation?

[Guest]

Here ya go