Enmax fixed vs. floating rates...

[calgarygeologist]

Originally Posted by Sylvanfan

The way Calgary calculates the Municipal franchise fee, the market cost of the gas does impact that charge.

But that's supposed to stop and go to a consumption based model. Which as best as I understood was in the works to happen by 2027...and current regulations being the delay. More politicians saying they're making a difference when they're just taking out a barrier they previously created.

There's a lot of variation in that fee though. I'm in St.Albert where we pay 20.3% of the other fees to make up our franchise fee. In Edmonton its 35%. Looking at a list last night its anywhere from 10 to 37% depending on the Municipality

The UCP have said they will step in an make changes to the franchise fee structure much quicker because the city is dragging their feet on this because they want the money.

Mayor Gondek said:

"It was a revenue stream for us, but the time to focus on Calgarians and their stability is more important right now."

and the city claims it takes time but the AUC refutes that:

Calgary Mayor Jyoti Gondek said the city doesn’t have the ability to receive approval from Alberta’s utility regulatory body before 2027.

The Alberta Utilities Commission, meanwhile, says such applications are often processed in a handful of months.

“When (the city’s) applications have come before us in the past to process a change to their franchise fee arrangement, they’ve been processed within three months or two-and-a-half months,” said Geoff Scotten, senior communications adviser for the AUC.

https://www.msn.com/en-ca/money/tops...ed/ar-AA1nxFJO

[Sylvanfan]

Well right now with current rates, a Calgarian is paying less per GJ than what I would be. But last year it would have been more when gas was higher.

Unless they cap or standardize the percentage, it's not going to make a difference as the city will just up that percentage to get the revenue they want from that fee.

But even if they capped that fee, than municipalities would just raise property taxes to get the revenue back. So any changes made will hit someone.

[timun]

Originally Posted by PepsiFree

If this was in reference to my comment, it was more about the actual price of the gas/electric than the usage. I understand at a high level that it all goes up and down with consumption, my point was more that it seems like the difference between a rate of 2.79 vs 3.79 barely matters since it’s such a small portion of the bill.

Unless you’re telling me that all those other charges go up or down based on your rate as well.

No, it wasn't in reference to your comment; it was in reference to general kvetching I hear in real life. Based on that kvetching, it seems to me that most people think that it doesn't "all go up and down with consumption"; that it really does not matter how much energy they consume, because the delivery charges are just... arbitrary.

[DoubleK]

Originally Posted by calgarygeologist

The UCP have said they will step in an make changes to the franchise fee structure much quicker because the city is dragging their feet on this because they want the money.



Mayor Gondek said:





and the city claims it takes time but the AUC refutes that:



https://www.msn.com/en-ca/money/tops...ed/ar-AA1nxFJO

I believe this was an honest mistake by the Mayor. I'd have to look but I think the Enmax tariff is approved through 2026. So the next time they would be in front of the AUC would be 2027, unless they amended the current tariff. That's what the AUC comms officer was likely referring to in the statement.

The only issue I can see with amending the tariff is it really buggers the business planning as all of that is done before you bring your application to the commission. A fair chunk of that would require rework/replanning that adds no value to the ratepayers.

When electricity prices were low their rate scheme wasn't really an issue, this only became a problem when power prices spiked. One could argue that the problem takes care of itself if the forward price forecasts are accurate. That's not to say that this won't rear its ugly head again if prices spike again.

[bizaro86]

Originally Posted by DoubleK

What would you suggest as an alternative? Alberta Hydro?

I'd be in favour of that. When Berkshire Hathaway decided to buy Altalink at a premium to it's regulated rate base, that implies to me that the regulated returns on equity are probably too high. Because Berkshire is run by the best investor in the history of investing, if they think it's worth paying a premium for AB transmission assets then the rest of us are overpaying.

I appreciate (given your comment on five years of held prices) that you may not be able to comment on Altalink stuff, and so I should mention that I do respect Berkshire Hathaway Energy as operators of electricity infrastructure quite a lot. They've consistently been able to earn their returns with smaller price increases than other operators.

I'd love to see some sort of "Alberta Hydro" type arrangement where new capex is partially funded by the provincial government and then the returns from that capex are rebated back to consumers. I also think that would work on the generation side. We have a once-in-a-lifetime royalty bonanza from post-payout oilsands projects. We should be reinvesting that money for future albertans. But the heritage trust fund idea gets too political, so I think a bunch of government owned power infrastructure would attract less scrutiny/jealousy from other provinces as many of them already own stuff. Take this years royalties and build some dams in the north (eg Peace River on the AB side), and maybe a couple of big nuclear power plants. Stuff with long lives/low operating costs, re-establishing some of that "Alberta advantage".

[DoubleK]

Originally Posted by bizaro86

I'd be in favour of that. When Berkshire Hathaway decided to buy Altalink at a premium to it's regulated rate base, that implies to me that the regulated returns on equity are probably too high. Because Berkshire is run by the best investor in the history of investing, if they think it's worth paying a premium for AB transmission assets then the rest of us are overpaying.

I appreciate (given your comment on five years of held prices) that you may not be able to comment on Altalink stuff, and so I should mention that I do respect Berkshire Hathaway Energy as operators of electricity infrastructure quite a lot. They've consistently been able to earn their returns with smaller price increases than other operators.

The utilities would argue that the equity thickness (37%) and the generic cost of capital (8.25% if memory serves) are both too low. My opinion is they need to be juicy enough to incent investment but contrasted with managing the risk in the event of insolvency.

I do believe Berkshire has been good for Albertans as they have a much better reach than SNC did into capital markets and by far a much better public reputation. That said, they aren't dumb and know a good deal when they see it. I do not believe for one second that they overpaid for AltaLink, there were other bidders, we just don't know exactly who they were. We only know that SNC agreed to sell to Berkshire.

I left AltaLink in September for greener pastures. Nothing I've posted would be considered 'inside information', everything I posted is publicly available.

[bizaro86]

Originally Posted by DoubleK

The utilities would argue that the equity thickness (37%) and the generic cost of capital (8.25% if memory serves) are both too low. My opinion is they need to be juicy enough to incent investment but contrasted with managing the risk in the event of insolvency.

I do believe Berkshire has been good for Albertans as they have a much better reach than SNC did into capital markets and by far a much better public reputation. That said, they aren't dumb and know a good deal when they see it. I do not believe for one second that they overpaid for AltaLink, there were other bidders, we just don't know exactly who they were. We only know that SNC agreed to sell to Berkshire.

I left AltaLink in September for greener pastures. Nothing I've posted would be considered 'inside information', everything I posted is publicly available.

The equity thickness piece you can argue either way based on risk tolerance.

But any argument for higher ROE is basically founded on, "we think our customers should pay us more money." I'd like that in my business also.

But AB regulated transmission assets all trade for a price to book value of >1, which means the ROE is so attractive investors are willing to pay more than $1 for a dollar of alberta transmission assets. As long as that remains true the ROE should be declining not increasing, because that means there would be no issue attracting capital for new investments.

Also, I wasn't saying BHE overpaid for Altalink, quite the opposite. They're shrewd investors and wouldn't overpay. Since they're willing to pay more than the assets regulated cost base that implies Altalink is getting too good a deal from power consumers and their return on equity could be dialed back to benefit consumers.

[BigNumbers]

With the current rates, when should we roll off fixed price power and into floating? is that big payback cost for the cap done yet?

[BigNumbers]

I am fixed at 11.29c kwh... Looks like RRO was $6.8c last month... fwd curve is liek $50mwh... seems to make sense to roll back off to floating, unless I am missing something?

edit:

Just looked - seems as though the RRO rate is still inflated, presumably to pay back the cap... So probably stat at 11.29 through the summer/until payback... I am using 2,600kwh on average a month.

[timun]

Originally Posted by BigNumbers

I am using 2,600kwh on average a month.

Holy ####amoly...

[CaptainYooh]

Originally Posted by timun

Holy ####amoly...

That crypto ain’t gonna mine itself.

[bizaro86]

Originally Posted by BigNumbers

. I am using 2,600kwh on average a month.

Username checks out

[BigNumbers]

Nothing crazy. Decent sized house with a bunch of kids who never turn anything off…. Maybe my neighbours are tied into my power! Hahaha.

[CaptainYooh]

Don’t feel bad. We use about 2,000/month and the kids have all left the house already.

[Sylvanfan]

I thought my usage was crazy. But I think I average 1350 a month peaking in the summer thanks to AC or poor architecture...

I have 2 sets of appliances due to an inlaw suite, 2 extra freezers plus 4 different aquariums. So I figure that's why I use so much.

[photon]

I only used 891 kWh last month, will go up a lot in the summer with AC I'm sure but that too is with 2 sets of appliances, 1 extra freezer, etc.

[Zary's-Mustache]

Originally Posted by BigNumbers

I am fixed at 11.29c kwh... Looks like RRO was $6.8c last month... fwd curve is liek $50mwh... seems to make sense to roll back off to floating, unless I am missing something?

edit:

Just looked - seems as though the RRO rate is still inflated, presumably to pay back the cap... So probably stat at 11.29 through the summer/until payback... I am using 2,600kwh on average a month.

Floating is about 8 cents. Not sure if that's worth switching although I did.

[accord1999]

Unless you're using the second electric stove and oven every day, I wouldn't expect them to meaningfully increase electric consumption that much. And fridges and freezers have gotten really efficient, you're looking at just 1 - 1.5 kWh/day (edit) consumption for a typical fridge these days.

[Fuzz]

nm

[timun]

Originally Posted by BigNumbers

Nothing crazy. Decent sized house with a bunch of kids who never turn anything off…. Maybe my neighbours are tied into my power! Hahaha.

Originally Posted by CaptainYooh

Don’t feel bad. We use about 2,000/month and the kids have all left the house already.

Originally Posted by Sylvanfan

I thought my usage was crazy. But I think I average 1350 a month peaking in the summer thanks to AC or poor architecture...

I have 2 sets of appliances due to an inlaw suite, 2 extra freezers plus 4 different aquariums. So I figure that's why I use so much.

Originally Posted by photon

I only used 891 kWh last month, will go up a lot in the summer with AC I'm sure but that too is with 2 sets of appliances, 1 extra freezer, etc.

Spoiler!