Costs of Overhead Transmission Lines in Alberta

P1060536The Alberta Government issued a news release  July 26 that says, “Under new regulations, the onus is now on electricity transmission companies to prove the cost of transmission lines is reasonable”.  Of course this implies that up until now, power companies have not had to justify the costs of their transmission lines. This has indeed been the case in Alberta.

The Alberta Energy Minister’s following quote certainly supports the fact that Alberta electricity consumers have been getting ripped off for years, “We have taken action to ensure that Albertans aren’t on the hook for unjustified costs associated with building transmission lines. Transmission companies now must defend every cent they charge consumers.”

RETA and many others including the Industrial Power Consumers Association of Alberta, Alberta Direct Connect, other power consumer associations, Alberta Food Processors Association, local governments, provincial opposition parties, and residents appearing at power line hearings have repeatedly pointed out that electricity prices in Alberta are among the highest in the country for the following reasons:

1. The Alberta Government passed Bill 50 in 2009 that legislated the building of massive 500kV  transmission lines without any justification.

2. Many overhead transmission lines are being built in Alberta that are not needed. For example, the Heartland power line will be energized to only 15% of its total capacity until 2027 and after that to only 30% of its capacity. There are currently no actual customers for Heartland line power.

RETA dollars in money bag image3. There is no competitive bidding on high voltage transmission line projects in Alberta. Companies like AltaLink and ATCO are simply handed projects on a silver platter based on private company “territories” in Alberta negotiated behind closed doors.

4. Private transmission companies in Alberta assume no risks building new lines because Alberta consumers pay 100% of the cost of the lines while the companies are guaranteed a minimum 9% annual return on our investments.

5. Overhead lines are expensive to build, and have higher maintenance and transmission loss costs than do underground lines.

6. There has been little or no attempt by the Alberta Government, the Alberta Electric System Operator (AESO), the Alberta Utilities Commission (AUC) or the Alberta transmission industry to minimize costs of high voltage lines. This is because these 4 entities have had too cozy a relationship for too many years.

7. Companies like Quebec-based SNC-Lavalin, AltaLink’s parent company, charge very high construction and construction management fees. Almost all of AltaLink’s transmission infrastructure is being constructed by SNC-Lavalin, which has been caught up in Canadian and international corruption scandals during the past few years involving alleged bribery, fraud and money-laundering.

Unfortunately, the horses are already out of the barn in Alberta because some of the largest and most expensive transmission projects have already been approved under the old system which had no checks or balances. For example, initial cost estimates for the Heartland line were less than $400 million, then escalated to $500 million, then to $580 million during the AUC hearing, and then following the hearing went up to $610 million, and no one knows what the final cost will actually be. And this doesn’t even include the $21 million spent to move 185 Colchester Elementary School students 10 km away to another school or the millions of dollars in property devaluation already experienced by residents who live near the Heartland route. The Heartland line could have been buried for far less than the cumulative costs associated with the above-ground line currently under construction.

Based on the cost of the Heartland line, double circuit overhead 500kV lines cost about 4 to 5 times as much to build in Alberta as in the U.S.A. How is this possible? Alberta consumers pay about twice as much for power as consumers in Saskatchewan. In other provinces and territories, the costs of new transmission infrastructure have to be justified. So, in effect, this latest announcement by the Alberta Government simply means that we are finally catching up with the rest of Canada in terms of being more transparent when it comes to electricity costs. We still have a long way to go.

~ by RETA on July 29, 2013.

 
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