11 PPA’s Expire in 2020 – No Incentive to Run After

The construction of two multibillion dollar power lines between Edmonton and Calgary would be too much too soon, Capital Power said during the first day of public comment on the projects. The Edmonton-based generator, which controls 10 per cent of Alberta’s marketed power, told a review panel in Calgary it was unlikely the province would require as much transmission as the two high voltage, direct current power lines would provide. The Alberta Electric System Operator predicts demand for electricity will nearly double within 20 years, and that 13,000 megawatts of new generation will be required to meet those needs. Concern is also mounting about a possible shutdown of the province’s aging coal-fired plants in 2020 when current contracts under PPA expire. The plants — 11 whose PPAs expire Dec. 31, 2020 — currently supply 4,300 MW of power, or more than 40 per cent of the province’s electricity, and could still represent nearly a third of the province’s supply by 2020. In addition to concerns about low power supply and high electricity prices, consumers will also have to pay the cost of decommissioning plants and reclaiming their sites if they close when the PPAs expire – power companies that own the plants will be on the hook for the full costs if they continue to operate after 2020. If that isn’t incentive enough for power companies to mothball their plants, federal rules limiting the life of such facilities to 45 years and requiring them to upgrade the plants to meet stringent rules for greenhouse gas and other emissions could also come into play. The Brattle Group advises Alberta raise the cap on the hourly electricity market price to $3,000 per megawatt from current $1,000, and giving electrical generators more time to decide whether they want to continue operating past 2020. Power plant operators currently have to indicate one year before the expiry date whether they will keep running.