New questions are surfacing over the Stelmach government’s plans for $14 billion in power line projects, as newly released U.S. diplomatic cables reveal the province and American officials have been eyeing additional Alberta electricity exports but that more transmission capacity is necessary.
Premier Ed Stelmach and his ministers have maintained the new power lines are necessary to keep the lights on in Alberta and ensure reliable flow of electricity on a system that hasn’t seen any major upgrades in more than 20 years.
WikiLeaks cables released over the past few weeks show the Alberta government promised senior U.S. government officials as far back as 2003 that there would be abundant electricity exports available from Alberta, but that limited power line transmission was the major impediment to the juice flowing south.
A 2003 cable from Paul Cellucci, U.S. ambassador to Canada at the time, says then-Alberta energy minister Murray Smith -who went on to serve as Alberta’s representative in Washington -promised the U.S. government that additional electricity generation from oilsands projects would provide abundant supply to ship stateside in future years.
The electricity exports were dependent, however, on new power line transmission capacity coming online, the cables note.
“Smith and others also want to make sure that the (United States government) is aware that over time there will be tremendous electricity cogeneration available as a result of the huge thermal needs of the oilsands refining process,” says the 2003 cable.
“This could over time make significant new electricity exports available to the United States, but at least for now there is limited capacity to move this west and then south through British Columbia and on to our Pacific Northwest.”
Less than two weeks after the 2003 cable was produced, Smith made a surprise announcement that Alberta power consumers would pay the entire cost of building new electricity transmission lines between Fort McMurray and Calgary.
The ministerial order overruled a decision by the former Energy and Utilities Board that said new transmission line costs would be “shared equally between electricity generators and consumers.”
Smith said around that time that Albertans must embrace the controversial idea of exporting large amounts of power to the United States to ensure a strong electricity market at home. A separate 2008 cable from then-U.S. ambassador David Wilkins noted that an American embassy study concluded Canada’s potential for new electric power development was growing, but that electricity exports to the U.S. would likely decline unless “transmission constraints” were addressed.
The diplomatic note also explains that Canada -including Alberta -continues to have “enormous undeveloped generating potential” and that many Canadian players are interested in tapping into it and opening export opportunities.
“There was considerable potential in hydro resources in other regions … and in oilsands cogeneration in Alberta,” says the 2008 cable.
It also says that large coal, oilsands, wind and hydroelectric resources across Western Canada cannot be developed without placing huge strains on the limited existing transmission grid.
“In order to be developed, these huge generating resources will require new transmission capacity within Canada and/or in adjacent states.”
The cable noted the potential for future electricity exports via the Montana-Alberta Tie Line that will interconnect the electricity markets of the province and northern state through wind energy.
It also identified the potential for TransCanada’s Northern Lights power line project -which is currently on hold -that would run electricity from the oilsands to Oregon, where it could be sent to other Western U.S. markets.
Alberta’s opposition parties argue the cables are further evidence the province’s plans for billions in power line projects are to export electricity to the United States.
“Pretty clearly this points very much to the government deceiving Albertans about their true intentions,” charged NDP Leader Brian Mason. “The government is not telling Albertans the truth and forcing them to pay for power lines they don’t benefit from.”
Liberal finance critic Hugh MacDonald said it’s clear to him the provincial Tory government has for years been promoting electricity exports to the U.S., but needed additional transmission lines to make it happen. “We are obviously building transmission capacity for large-volume electricity exports,” MacDonald said.
But Alberta Energy Minister Ron Liepert said it’s ludicrous to think the transmission projects are for power exports, noting there’s barely enough generation for Alberta. All new cogeneration that comes online will be needed to support the province’s rapid growth, especially in southern Alberta, he added.
“Anybody who thinks we’re going to be exporting power is living in a different world,” Liepert said. “I don’t know where this bogeyman stuff is coming from.”
Yet, the newly released report from the Premier’s Council for Economic Strategy recommends the Alberta government capitalize on the province’s vast coal supplies for future electricity generation by advancing clean-coal technology.
The report says Alberta must be a leading innovator in producing energy from high-carbon resources, such as coal, and that new interconnections could improve access to electricity but also provide “additional markets for Alberta power.”
Smith, the former energy minister, said the thinking in 2003 was to encourage more electricity generation in the province to keep prices low for consumers, but that the additional generation was only possible if there was sufficient transmission capacity.
However, he said natural gas prices tanked to levels that almost discouraged additional electricity generation in the province. Furthermore, the provincial government’s push for more transmission is solely for reinforcing a decades-old system and has nothing to do with electricity exports to the U.S., he said.
“The two are not at all related, either directly or indirectly,” Smith said.
Smith’s 2003 policy announcement on who would pay for new transmission would have profound impacts down the road, including for the provincial Tory government’s Bill 50, the Electric Statutes Amendment Act, which was passed in the legislature in late 2009.
Designed to expedite construction of “critical” new power line transmission, the bill eliminates the legal requirement for public hearings on the need for transmission lines.
All told, additional transmission upgrades in the queue, totalling $14.5 billion over the next six years, could see Albertans pay possibly triple the cost to bring power to their homes, potentially about $175 more a year on their electricity bills.
Last October, two associations representing industrial power users sent a private letter to all members of Stelmach’s Tory caucus, warning the government it shouldn’t proceed with its exorbitant power line projects.
Alberta Direct Connect and the Industrial Power Consumers Association worry that cost overruns will impose much higher fees on consumers.
The plan is “not affordable,” the groups said in the leaked document, warning the whole plan is uncompetitive and will drive business out of the province. For homeowners, the extra costs would range between $154 per year and $413, they argued.
“We simply cannot afford this transmission development plan and it is unnecessary,” the groups said.
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