By November 25, 2016 0 Comments Read More →

Alberta to pay $1.36 billion to power companies affected by coal transition

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Alberta government plans to phase out coal from electricity by 2030

Alberta government also reached settlement with Capital Power on litigation associated with Power Purchase Arrangements

The Government of Alberta has announced agreements with TransAlta, Capital Power, and ATCO to end coal-fired emissions on or before Dec. 31, 2030.

The agreements will see the companies, which own six coal-fired electricity units originally slated to operate beyond 2030, provided with transition payments for investments that have been reduced in value by the transition away from coal-fired generation – funds that can be reinvested into Alberta’s electricity market, the government said in a press release.

The electricity companies will receive annual payments until 2030, totalling $1.1 billion in 2016 dollars. The payments will be fully funded by Alberta’s price on industrial carbon emissions – not by consumer electricity rates.

“The government’s decision to provide transition payments to these companies demonstrates our commitment to building a low-priced, reliable, investment-friendly electricity system for Albertans,” said Energy Minister Margaret McCuaig-Boyd.

“The government is committed to working with existing Alberta businesses as we transition away from coal, and we are making good on that commitment today.”

TransAlta CEO Dawn Farrell says the announcement is the culmination of negotiations with the provincial government over the past year.

“We have reached a mutually beneficial agreement on the transition payments to enable the coal retirements in the post-2030 period and memorialized our intention to work collaboratively with the government in a manner that supports TransAlta’s future investment in Alberta”, she said.

The payout is part of the Alberta Government’s commitment to phase out coal generation in the province.

The agreements will achieve objectives laid out in its Climate Leadership Plan and meet a recently announced federal requirement to phase out coal-fired electricity emissions by 2030, according to the press release.

“Alberta is by far the largest source of coal pollution in Canada, with greenhouse gas emissions that exceed the sum of every car from British Columbia to Manitoba. We are phasing out coal pollution in a measured, financially responsible way that will improve air quality and the health of Albertans,” said Shannon Phillips, minister responsible for the Climate Change Office.

The government claims the agreements are a cost-effective way to reduce greenhouse gas emissions, with the total payments representing less than $10/tonne of emissions eliminated. This represents approximately one-tenth of the government subsidy typically required to retrofit coal units with carbon capture and storage.

The government will work with the companies, the Government of Canada and affected communities to explore options for the future, including coal-to-gas transitions, hydro-electricity and economic development initiatives.

This announcement follows other government actions recently. They include:

  • Putting a price cap of 6.8 cents per kilowatt hour in place for families and small businesses on the Regulated Rate Option from June 2017 until June 2021
  • Announcing the creation of an electricity capacity market by 2021

The government also announced that it has reached a settlement with Capital Power on its litigation associated with Power Purchase Arrangements. Tentative agreements have been reached with AltaGas and Trans Canada Energy.

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Posted in: Canada

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