Electricity sells at 5-year high

EDMONTON -- - A heat wave and five simultaneous power-plant outages has sent wholesale electricity prices to their highest levels in five years.

"It was tight," said Wayne St. Amour, spokesman for the Alberta Electric System Operator, commonly known as the Power Pool.

A total of 1,342 megawatts of power, out of approximately 10,000, were shut down for scheduled maintenance or mechanical problems.

The supply crunch led the pool to issue an "emergency alert" on its Web site.

High-cost plants such as Clover Bar in northeast Edmonton and hydro facilities west of Calgary that do not usually operate were brought on line.

The systems operator also imported as much as 600 megawatts from British Columbia and 150 megawatts from Saskatchewan producers -- at very high prices.

The peak price on the provincial exchange occurred Tuesday afternoon. Wholesale power between 3 p.m. and 6 p.m. sold for between $990 and $999 per megawatt-hour, spiking the daily average to $287.

The last time the daily average hit that level was in 1998, when temporary blackouts in Calgary and Edmonton darkened hundreds of homes, said St. Amour.

The average price in 2003 has been $70 per megawatt-hour. In 2002, the average was $44, and in 2000 -- in the middle of energy-industry restructuring -- it was $133.22.

Pool prices moderated Wednesday, ranging from $37 to $313, indicating that Tuesday's spike will be short term, said Alberta Energy spokesman Gordon Vincent.

Most industrial, commercial and residential retail customers are either on long-term contracts or regulated rates. But if wholesale prices remain high, they eventually force retail prices to rise.

Edmonton residents on an Epcor Inc. regulated rate are currently paying 5.925 cents per kilowatt-hour, which would translate to $59.25 per megawatt.

Even higher power costs in 2000 and 2001 were capped by the government, with the result that consumers in 2002 and 2003 have been paying surcharges to catch up with past expenses.

Then as now, one factor in the price spike has been the high cost of natural gas, which fuels most new power plants. But there are other reasons for this week's problems. A Battle River unit with 148 megawatts was down this week for scheduled maintenance, said Alberta Energy. The 184-megawatt co-generation unit at Shell Scotford is off-line.

And single generating turbines at Wabamun, Sundance and Sheerness -- all low-cost coal-fired units -- shut down for a variety of unplanned mechanical problems. As of Wednesday evening, those three were still not operating.

The 30-plus heat wave in the province compounded the crisis. At mid-day Wednesday, for example, air-conditioning and agricultural irrigation drew 8,190 megawatts from the provincial grid, a volume close to the 8,570 high recorded in December, 2002 -- a period when all plants were operating.

Another major culprit this week was temperature-control systems in urban office towers, which kicked in with a vengeance during the hottest hours. Vincent said such events are the reason why Premier Ralph Klein has instructed the Alberta Advisory Council on Electricity to re-visit the province's electricity changes and investigate persistently high power bills.