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Originally Posted by Fozzie_DeBear
3-If these contracts were honoured...what would the impact on energy prices be in Alberta?
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Originally Posted by Weitz
Either way we will be paying for it. Higher electricity prices or higher taxes if I understand correctly.
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Originally Posted by Resolute 14
Others with better understanding than I have already debated that in this thread. Go back a few pages. The tl;dr as I understand it is, "it depends". Competition and race to the bottom could make it harder to raise the rates too much. At the same time, we own Enmax. So its losses are our losses. As Calgary taxpayers, we're screwed either way.
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There are 2 parts to this question that a lot of people are confusing.
Part 1 is the carbon levy which is the reason these clauses are being used.
Will this cost be passed on to the consumer? Partially.
The problem is you have a lot of power that is being produced that will be impacted differently by the carbon levy. Coal the most, natural gas less so, and wind/hydro not at all (other sources too, but these are examples). Companies will have to change how they bid, but the price will only go up so much, so coal produces are going to have to take a hit to their profitability (hence returning the PPAs), and thus will take some of the impact from that cost increase.
With a glut of power on the market as it is it's already a race to the bottom to sell power into the grid/market, so as consumers, how much of an impact this will have on our power bills is a complicated question. The answer is that no matter what happens with this court case, part of the direct cost of the carbon levy will be transferred to consumers, and some will be a hit to the bottom line of the produces/PPA holders, but how much is not precisely known.
The second part of this is the price differential that the PPA owners are currently eating.
(All of these numbers are being made up)
For example a PPA might currently have a power purchase price of $5/MWh
But Enmax can only sell that power at $4/MWh so they are losing $1/MWh that they buy/sell, and they are contractually obligated to buy so much at that $5 price by the PPA. So they can't pass that $1/MWh loss to the consumer because they can't sell it that high.
With the carbon levy in place and these PPAs going back to the trading pool, what used to be a $1 corporate loss for Enmax, or Captial Power, or TransCanada, will now show up on every consumers power bill as a PPA adjustment (check it out, it's there). That is the issue. What used to be a $2 billion corporate loss, will now be an additional $2 Billion that power consumers will have to pony up.
There are a few other points to make:
1) Saying that we will be hit with this no matter what because Enmax is owned by the City of Calgary, isn't the whole story. There are other companies (TransCanada, Captial Power) that are returning PPAs, so all Albertans will be affected by the return of PPAs from other city owned utilities, as well as public corporations.
2) It's not exactly "Taxpayers" who are getting hit by the return of the PPAs, it's electricity consumers, though really that point is just semantic.