Alberta Politics Thread

[Kjesse]

Originally Posted by DoubleK

How long did it take the Enmax Shepard generator to get online? It broke ground in 2011ish and was online in spring 2015? So 4 years for 800MW at a cost of $1.4B (likely more when you factor in the pool price being a lot lower than what they raised their capital at)?

Its actually worse than that. Keep in mind that the taxpayer-owned Enmax took on a financial infusion to stay on construction track, AFTER they broke ground: http://www.capitalpower.com/MediaRoo.../2012Dec5.aspx

And your post is exactly right. Who of these companies or start ups are going to fund development of even renewable energy when the outside money needed will no longer be willing to invest? Shepard was not developed with only local money, you just can't get that amount of investment given the risk, and now the risk looks even greater.

[Fuzz]

Originally Posted by DoubleK

To achieve the targets set in the Climate Leadership Plan, rough math is an average of 400 MW of new generation capacity on line per year every year for the next 14 years. That doesn't factor in demand growth. This is unprecedented generation development in any normal market. This is not a normal market. The pool price is at a 20 year low. What company would invest in a market like that?

Any company that believes the NDP will remain in power. If we lose the coal, prices are going to skyrocket because we won't have supply. So perhaps investing now would make a lot of sense. Well, not now, now...but after the government announces some sweet sweet graf for green power.

[CaptainCrunch]

Originally Posted by Fuzz

Any company that believes the NDP will remain in power. If we lose the coal, prices are going to skyrocket because we won't have supply. So perhaps investing now would make a lot of sense. Well, not now, now...but after the government announces some sweet sweet graf for green power.

I doubt any company is going to invest long term based on the concept of the NDP remaining in government after this first term.

I would tend to think most companies are going to take a long view on Alberta investment right now and wait to see what the results of the next election are going to be.

[Fuzz]

Well ya, that was kind of my point. The end result is we are going to get hosed here, really soon. I wish I had some way to personally bank this cheap cheap gas and electricity.

[calculoso]

Alberta's carbon prices will be highest in Canada by 2020: study
http://www.ctvnews.ca/business/alber...tudy-1.3004105

OTTAWA - Move over, British Columbia: Canada's oilpatch next door in Alberta is on track to have Canada's most aggressive carbon pricing system by 2020.

That's the conclusion of a new study that compares the coverage of various carbon taxes and cap-and-trade schemes in four provinces that have all embraced market-based approaches to cutting emissions of greenhouse gases.

The report from Canada's Ecofiscal Commission, an independent, non-partisan research body, comes as a federal-provincial working group is wrestling with ways to co-ordinate a new pan-Canadian price on carbon emissions.

[Weitz]

Originally Posted by calculoso

Alberta's carbon prices will be highest in Canada by 2020: study
http://www.ctvnews.ca/business/alber...tudy-1.3004105

Well, that is until the next election.

[CaptainCrunch]

Originally Posted by calculoso

Alberta's carbon prices will be highest in Canada by 2020: study
http://www.ctvnews.ca/business/alber...tudy-1.3004105

Well the great news strategically is that our carbon emissions will probably drop some, more because people are going to start leaving this province and going elsewhere as prices and the cost of living increase while the jobless rate increases as well.

I can guarantee that the next election is going to be fought on the carbon tax and the budget deficit.

[Bring_Back_Shantz]

Originally Posted by Slava

Right because until 2000 the legislation was amended to make it read "more unprofitable" as you've noted there. I guess I just think that this is an easy out for the companies and it's pretty clear with them all rushing to get out. The fact is they aren't profitable with this arrangement today, and the carbon tax isn't even in place yet. I'm surprised that so many here would want what basically amounts to bailouts though.

Like I posted before though, to the average guy it doesn't matter. We pay this cost one way or the other anyway.

Firstly, it's not legislation, it's a contract.
It's not like the government altered a pre existing law to add this change.
This was a clause that was altered/inserted prior to both parties agreeing to a contract. Either side could have objected and walked away/not signed on to the agreement.
Big difference.

Secondly, no we don't pay this cost one way or the other.
In this case with the PPAs going back to the balancing pool, the losses that these companines would have suffered themselves will be passed on to us, as now the Balancing pool has to purchase this power and sell it at a loss.

People who are saying that these losses/costs would just get passed on to the consumer if the PPAs weren't canceled have no idea how the power market works (As it seems, neither does the current Government).

Were the PPAs already unprofitable?
Yup

Are they now more unprofitable?
Yup

Do the PPAs include an out clause for specifically this kind of situation?
Yup, that's the whole issue.

Trust me, I wish that either this clause didn't exist, or that there was some way out of it other than suing and making stupid statements like "This Enron clause is illegal...rabble rabble rabble". I don't want that $2 billion in losses showing up on my electricty bill.
That is issue #1.

Issue #2 is that we now have a government who was clearly incompetent in this case, and even though they've admitted that the didn't read contracts that have been in force for 16 years, which has caused this debacle, they are now doubling down by suing over it.

That's exactly the kind of governing I want...."Why should we be expected to be held to these obligations we didn't bother to read?"

[CorsiHockeyLeague]

I can't believe that there are people taking the government's side in this. They didn't know about the applicable reg? It's on the QP! Do you have google?! I mean, they use your tax dollars to pay a whole swath of lawyers. Did they not, yknow, ask any of them "hey, can you do some research to determine whether or not we're offside here?" This is basic.

This was an episode of amateur hour, there's simply no two sides to it.

[Bring_Back_Shantz]

Originally Posted by CorsiHockeyLeague

I can't believe that there are people taking the government's side in this. They didn't know about the applicable reg? It's on the QP! Do you have google?! I mean, they use your tax dollars to pay a whole swath of lawyers. Did they not, yknow, ask any of them "hey, can you do some research to determine whether or not we're offside here?" This is basic.

This was an episode of amateur hour, there's simply no two sides to it.

Man, I wish I could be on the government's side here, mostly because it's going to cost Albertans $2 Billion.

But yeah, this is straight up incompetence.
They enacted legislation without understanding the consequences, and their excuse is "Well we didn't read it". And now they are trying to spin it to their side by calling it the "Enron Clause" (with all the associations that go along with that name), and saying it was a last minute addition....to a contract that was agreed to by all parties.

Trying to justify incompetence with tone deaf rhetoric and spin is so frustrating!

[Fuzz]

The ONLY argument that can be made on the NDP's side is that this clause shouldn't have been put in in the first place. They could have roasted the PC's on that. But once it was signed it has to be abided by.

[Weitz]

Originally Posted by Fuzz

The ONLY argument that can be made on the NDP's side is that this clause shouldn't have been put in in the first place. They could have roasted the PC's on that. But once it was signed it has to be abided by.

Except why would a company make a contract with a party that can change the rules and not protect themselves? This is a normal thing in business.

[SeeGeeWhy]

Originally Posted by DoubleK

What company would invest in a market like that?

Great post.

I agree that coal has to go, and fast, but describing the NDP approach as ham fisted is an insult to the gracefulness of the majestic pig. I really wonder how much of this was part of a grand strategy to make nice with the environmental movement's resistance to oil sands development, with the NDP braintrust assuming green policies would lead to a green light to measured expansion and export of Alberta's resources. Interesting idea but it could never be enough to balance increased corporate tax, royalty regime uncertainty (although I will admit they seem to have done a reasonable job so far in the absence of clarity on the "value add" projects they will be backing), questionable investments by the CCEMC and AIMco (not really an NDP issue but they have influence to do better now and aren't), and finally capped off by weak efforts with the US and other provinces to establish distribution lines to markets with demand. Especially when most outside of the environmental groups look at the carbon tax as a major negative, and those inside the environmental movement's making the most noise against AB oil are either puritan's who won't be satisfied until we live in dung huts or are paid by protectionist US oil interests bent on blocking Canadian imports. Yeesh.

But to address your question... who would invest in this market?

The caveat here being that I assume the coal plants will be shut in before their scheduled end of life. Which apparently may not happen (as an aside, doesn't this defeat the entire purpose of the carbon related legislation?), but let's assume it does.

In this case, three types of investors will act. True innovators, rent seekers, and siphoners.

The first type (and in my opinion, the proper) of investments to be made will be in generating assets that comply with or beat the carbon targets, and do so at a cost equal to or lower than coal/CCGT with carbon capture so they can ride out uncertainties in product price as the market rebalances. This would exclude renewables on economics. Everybody and their dog can guess what I am implying here, but those technologies are not yet commercially ready or accepted by the public. Hopefully they will be accelerated as viable options... utilities are like big oil companies in that they don't like to break new ground on their own. I fear there will be little to none of these actors in our little play.

The second will be investments made in technologies that comply with the carbon targets and can receive fixed prices subsidized by taxes, aka renewables. A slow step back towards regulated markets. This is how it has worked in Ontario and Germany and it does nothing to reduce carbon emissions or improve costs for the consumer. Brutal, and terribly predictable. There will be many of these actors.

Lastly, these companies do not have to operate assets in Alberta. That neat little district heating cogeneration plant on 9th Ave by the king eddy that enmax has is a pilot that is being used to explore building and operating similar plants outside of the province. More outflow of capital from AB generated revenues. Sad. There will be a lot of this as well.

It's a huge mess. Not reading the PPA contract language before putting the carbon legislation into place has to be a joke. Is that even possibly true? I am Joe schmoe and was aware of that exit the utilities had, it was a major point of discussion before the carbon tax was made law in my circles. So was the precedence of what happened in Washington state when their hippie government shutdown their coal plants early (hint hint: major payouts). How on earth were the people entrusted with making law unaware of the f-ing law they were directly challenging!?

So really what we are witnessing here is the concrete evidence that there is incompetence in the party. Not just a difference of opinions and philosophies, but flat out incompetence. I'm assuming this means ministers could be relieved of their titles or caucus positions, and that this gives great ammunition to opposition parties in the next election. Which is really... potentially the most damaging thing of all becuase public opinion could swing so far the other way that the coal plants don't get shut down, and there will be even more instability while laws race back the other way.

What a black hole this entire thing could become.

[Leeman4Gilmour]

Originally Posted by Bring_Back_Shantz

Man, I wish I could be on the government's side here, mostly because it's going to cost Albertans $2 Billion.

But yeah, this is straight up incompetence.
They enacted legislation without understanding the consequences, and their excuse is "Well we didn't read it". And now they are trying to spin it to their side by calling it the "Enron Clause" (with all the associations that go along with that name), and saying it was a last minute addition....to a contract that was agreed to by all parties.

Trying to justify incompetence with tone deaf rhetoric and spin is so frustrating!

That's my favourite part. How is that an excuse for a contract signed so long ago. The point at which any contractual term was added is completely irrelevant now.

Anyway, I'm pretty disappointed that the MLA's weren't given a crash course on contract risk analysis when they were appointed. They don't even need to know much about it, they just need to know to do it.

[CaptainCrunch]

Originally Posted by Bring_Back_Shantz

Man, I wish I could be on the government's side here, mostly because it's going to cost Albertans $2 Billion.

But yeah, this is straight up incompetence.
They enacted legislation without understanding the consequences, and their excuse is "Well we didn't read it". And now they are trying to spin it to their side by calling it the "Enron Clause" (with all the associations that go along with that name), and saying it was a last minute addition....to a contract that was agreed to by all parties.

Trying to justify incompetence with tone deaf rhetoric and spin is so frustrating!

This is actually going to be worse then the Ontario Gas Plant scandal that sent peoples utility bills through the freaking ceiling.

And that was only a 1 billion dollar f-up and lie. This is 2 billion and a population of 4 times the size of Alberta to force repayment from.

So now on top of the carbon tax crushing onto our bill, we're going to get stuck with this repayment?

So how much is this going to impact our utility bill, and what else is the government going to sneak into it.

If this government had any integrity they'd resign for looking like total idiots and embarrassing themselves and blundering every file and budget and appointment that they've put their hands on.

[Resolute 14]

Originally Posted by SeeGeeWhy

So really what we are witnessing here is the concrete evidence that there is incompetence in the party. Not just a difference of opinions and philosophies, but flat out incompetence. I'm assuming this means ministers could be relieved of their titles or caucus positions, and that this gives great ammunition to opposition parties in the next election. Which is really... potentially the most damaging thing of all becuase public opinion could swing so far the other way that the coal plants don't get shut down, and there will be even more instability while laws race back the other way.

What a black hole this entire thing could become.

This requires two extremely large presumptions:

1. That the NDP are self-aware enough to accept responsibility for their incompetence. Their history says it is far more likely they will simply continue to blame everyone but themselves.

2. That the NDP has any untapped candidates for those ministries that would be any better than what we have today.

[Resolute 14]

Originally Posted by Leeman4Gilmour

That's my favourite part. How is that an excuse for a contract signed so long ago. The point at which any contractual term was added is completely irrelevant now.

Anyway, I'm pretty disappointed that the MLA's weren't given a crash course on contract risk analysis when they were appointed. They don't even need to know much about it, they just need to know to do it.

My guess is that they rushed it in before they could find any friends from BC who had an understanding of contract risk analysis.

[The Yen Man]

I love how the NDP are arguing they have a case, just because it was "added last minute." I didn't know contracts can be broken up into time sensitive segments, and you can back out of certain parts of it if you've drawn an arbitrary time line in your mind. That's the way all contracts should work!

[Kjesse]

Using the NDP logic, we should have a re-vote of the last provincial election because, obviously, too many people made a last minute decision to vote for them, thereby screwing the province over.

[Wiggum_PI]

Sarah Hoffman seriously thinks the NDP has a good chance of winning in court, just crazy.

“The sooner we win the better but ultimately we’re in this to win,” says Hoffman, sounding confident the province stands a very good chance in court.

http://www.calgarysun.com/2016/07/26...ower-companies