What We Believe
The Alberta Liberal Opposition supports a robust and responsible energy sector, industry diversification, and creating safe and reliable modes of transportation to expand our export markets.
Our government must focus on helping industry get the best possible prices for our products while ensuring strong environmental protections. Short-term revenues cannot come at the expense of sustainability.
The government also plays an important role in encouraging value-added products and renewable energy initiatives, as well as easing electricity price swings without imposing arbitrary taxes that disadvantage retailers. However, the energy industry needs stability and predictability for industry, not sudden radical changes.
The knowledge-based energy industry is another area of opportunity for incredible growth. Our unique geography has spurred countless innovate technologies and a wealth of expertise which we can share with the world.
Deregulated Electricity Market
As the only province in Canada with a deregulated electricity market, Alberta has a unique set of challenges relating to its energy production, use and sale. One of the features of the NDP government’s Climate Leadership Plan involves shifting power generation away from the coal-fired plants which provide over 50 per cent of Alberta’s electricity, bringing many of these challenges to the public’s attention.
At present, Alberta’s power generation operates under a system of Power Purchase Agreements (PPAs). Created in 2000-2001 as part of the deregulation of the electricity market, electricity buyers purchase the right to sell power from electricity generators. Power that is not purchased by private entities is held by the Balancing Pool, which is owned by the government and mandated to return savings to consumers in the form of credits on their power bills.
The Alberta Liberal Opposition believes that Alberta’s energy market must put the needs of consumers first. This not only applies to consumer pricing – for which we have introduced policies to reduce costs to Albertans – but also to our regulatory structure.
PPAs and the Climate Leadership Plan
In 2015, the NDP government made changes to the Specified Gas Emitters Regulation (SGER), a statute introduced by the 2007 Progressive Conservative government to encourage large emitters to reduce their CO2 output. Under the original terms of the SGER, companies that failed to achieve the target reductions were fined for emissions over a predetermined limit. The changes lowered the limit and increased the fines for noncompliance in order to more strongly encourage reductions in CO2 emissions.
In response, several PPA holders terminated their agreements with coal-fired power generators, citing a provision in the terms of the original PPA legislation that allows buyers to end their contracts if a change of law makes the agreement “unprofitable or more unprofitable.” The government accused the holders of using the provision as an excuse to pass losses caused by historically low electricity prices on to the taxpayer, and announced that it was seeking a court order to declare the “change in law” provision void. They alleged that the words “or more unprofitable” had been added in a backroom deal by lobbyists for Enron Corporation and exceeded the mandate of the Alberta Energy Utilities Board.
Although it appears that the NDP government and the PPA holders are in the process of negotiating settlements that divide the losses between the two parties, the entire debacle reflects poorly on Albertan governments both past and present. While the government’s claims have yet to be proven, it is clear that the opt-out clause included in the PPA structure was designed to protect electricity producers, passing all risk on to the taxpayer.
The NDP government’s actions in this area have been disastrous. Had it conducted its due diligence before making changes to the SGER they would have been able to address this issue without recourse to an expensive and time-consuming court challenge. Indeed, the Alberta Liberal Opposition repeatedly called on the government to be measured and transparent in their approach, to avoid unanticipated consequences such as these. At present, the government’s decision to take legal action has not been beneficial; not to the PPA holders, and certainly not the taxpayers or consumers.
Solutions for Tomorrow
Some of the energy policies that the Alberta Liberal Opposition will champion in the legislature include:
- Reducing volatility and high cost of residential electricity bills.
- Banning economic withholding and bring in penalties for electricity generators and utilities that match the magnitude of the offense.
- Increasing the powers of the Market Surveillance Administrator.
- Granting all requesting stakeholders standing at Alberta Energy Regulator (AER) and Alberta Utilities Commission (AUC) hearings.
- Legislating a new urban resource extraction policy, which requires mandatory consultation with urban municipalities before approving energy development projects within their boundaries, ensures licences are compatible with municipal development plans, and grants municipal governments veto power over the final licencing decision.
- Amending the Responsible Energy Development Act to include a requirement that the regulator must consider whether resource development applications are in the public interest, and reinstate the right of landowners to appeal environmental decisions affecting their land to an independent Environmental Appeals Board.