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Power struggle  

Credit:  By Graham Hicks, Edmonton Sun | www.edmontonsun.com 14 July 2012 ~~

Blame it on the lack of wind, or blame it on the inherent weakness of Alberta’s deregulated power system.

Blaming Monday’s rolling power black-outs, on the hottest day of the year, on the lack of wind is a bit of fun.

But the deeper reality is the black-outs are the result of an entire electrical system that needs fixing.

The wind argument first.

If Alberta’s electricity producers were not so dependent on wind power, there’d have been no need for the rolling blackouts.

Seven per cent of Alberta’s power-producing capacity comes from wind-powered turbines. We’re a “leader” in wind power, primarily because of the wind corridors of Southern Alberta. Lethbridge isn’t called the Windy City for nothing.

But on Monday, the great weakness of wind power was exposed.

No wind.

The Alberta Electrical System Operator (AESO), the folks who are supposed to ensure electricity is flowing nice and evenly all over the province, want to have 7% more power available than is being consumed, especially during peak periods.

With no wind, most of the desirable excess capacity was knocked out, leaving a negligible (by electricity production standards) safety margin.

Then, for whatever reasons, six major power generating units went out of commission, in effect taking the safety margin into negative territory. Let that go on for too long, and disaster can happen.

One can just imagine the tension in the AESO command centre, as the safety margin disappeared before their eyes. Too much demand and too little supply can cause power systems to shut down on a grand scale.

The emergency plan went into action, and the AESO, as mandated by the provincial government, ordered major municipal electricity distributors – i.e. EPCOR in Edmonton and Enmax in Calgary – to reduce demand, NOW!

Hence the major inconvenience of rolling neighbourhood power black-outs on the hottest day of the year.

The current system, with its backbone of five major coal-burning complexes, a plethora of smaller natural-gas fired plants and a smattering of hydro, wind and even bio-mass, is usually reliable. It was the first time in six years the AESO went to what’s called an Energy Emergency Alert 3.

Where’s the supply?

But this emergency happened, and it calls into question the ability of Alberta’s deregulated power system to handle peak demand.

Alberta’s deregulated electricity system makes a ton of money for electricity generators during those intense, but usually short, peak demand periods. Electricity that’s not pre-sold is known as “merchant” power – electricity that’s priced on a literally minute-to-minute basis depending on supply and demand.

When demand is up, like last Monday, the price of merchant power can soar.

Any electricity economist can tell you it’s in the electricity producers’ interest, in any deregulated power system, NOT to create too much capacity. It’s in a tight supply situation that they make the most money.

“Alberta’s deregulated power system,” says a now-retired utility executive, “is inherently designed to be gamed.”

“Deregulated” power pricing has been in place in Alberta since 2001, when the Klein government stopped telling the power companies what they could charge for their electricity.

The big power producers – those with coal-fired plants – usually have a few gas-fired turbines on the side.

Normally those turbines sit idle. But the moment the AESO puts out the call for more power, they roar into life … and the price for that power produces windfall profits.

The way the system works, power producers make big, big money during those periods of peak demand.

The way the system works, it’s to the producers’ interest to have a shortage of power.

The way the system works, the power producers did quite well while those six generating units (four coal, two natural gas) out of commission … because their back-up gas turbines were producing electricity worth way more, thanks to the shortage.

Ethically speaking, I can’t see any major power company in Alberta deliberately shutting down some generators during a shortage to make more money out of others.

But it’s a system “designed to be gamed” and there’s been no shortage of electricity supply manipulation scandals in the deregulated United States electricity industry in the recent past. Remember Enron?

It would truly surprise you, but a great number of Alberta business people – including major players in the power industry – would agree with the Alberta New Democrats and willingly return to a fully regulated provincial power system.

For if there’s a scandal, it’s about an entire deregulated power system that is not in the best interest of Albertans as a whole, a system that encourages power producers – because of windfall profits during periods of peak demand – to keep supply and demand as tight as possible.

There was a time when 18% excess capacity, not 7%, was the gold standard for security of electricity supply.

What’s needed for the province as a whole is an electricity system with the capacity to easily handle peak loads … as happened last Monday. And for a retail price that households know is fair … and doesn’t show up as gobbly-gook on our electricity bills.

And, of course, for the wind to never stop blowing.

[rest of article available at source]
Source:  By Graham Hicks, Edmonton Sun | www.edmontonsun.com 14 July 2012

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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