Electricity Relief on Horizon for Albertans: Prices Expected to Drop to 10 Cents per kWh

The electricity market in Alberta has been a hotbed of discussion and reform initiatives recently. Nathan Neudorf, Alberta’s Minister of Affordability and Utilities, highlighted key aspects of these reforms at a Calgary Chamber of Commerce event, including the moratorium on renewable energy, a comprehensive review of the electricity market, and the scrutiny of economic withholding practices.
Post-event, Neudorf expressed optimism about concluding all reforms by February 2024. A significant increase in thermal generation is expected to drive down electricity costs. The province is also collaborating with the City of Calgary to address local access fees, with Neudorf confident about stabilizing and reducing costs to less than 10 cents per kilowatt-hour.
Albertans have been vocal about the steep increase in electricity bills, with prices soaring to nearly 32 cents per kilowatt-hour this summer under the regulated rate option (RRO). However, the government assures that initiatives following the ongoing studies will bring prices down. University of Calgary economist Blake Shaffer echoes this sentiment, citing forward market prices indicating a return to 10 cents per kilowatt-hour in the near future.
Shaffer explains that forward prices, agreements for future electricity delivery at predetermined rates, are signaling this decrease. According to him, the influx of new supply, including renewables approved before the moratorium and nearly 3,000 megawatts of new gas, will create an oversupply, leading to lower prices.
Shaffer clarifies that while government policy is crucial for long-term market dynamics, it won’t significantly impact the imminent price drop. This change in market conditions is expected to render fixed rates less of a priority for Albertans in the short term.
Addressing the renewables moratorium, Neudorf confirmed its conclusion by the end of February, irrespective of ongoing discussions and reviews. This decision comes amid the Alberta Utilities Commission (AUC) providing essential information and consultations with various stakeholders.
The opposition NDP, led by energy critic Kathleen Ganley, has been vocal in demanding an independent investigation into Alberta’s power prices. The NDP criticizes the current UCP government’s stance on renewables and coal phase-out as misleading and blames UCP policies for allowing excessive market control and profits by certain companies. The end of February will mark a significant turning point in Alberta’s energy landscape, with anticipated lower electricity prices and a renewed focus on renewable energy sources.