Enmax wants more time for deregulation

Edmonton, AB -- - The president of Alberta's second-largest electricity retailer has pleaded for patience from Tory MLAs who grumbled that their constituents are unhappy with the price of power deregulation.

Enmax president Robert Nicolay, addressing members of the government's standing policy committee on energy and sustainable development, said benefits to electricity deregulation are now becoming more apparent, despite the tumultuous switch from a regulated market.

"Definitely, energy deregulation has had growing pains, but there's no perfect solution to any transition in the marketplace. There are challenges," said Nicolay.

Among them, said Leduc MLA Albert Klapstein, is that his constituents pay one-and-one-half times the rate for power that people in Calgary do, despite being the first and only area in Alberta to have a fully deregulated market.

"The experience has not been pretty ... It doesn't look too positive to me," Klapstein said.

Nicolay said Enmax, too, has had to make adjustments. Alberta's 21/2 years of deregulation have seen the company's share of the retail power market in Calgary -- its home base -- shrink from 100 to 80 per cent as competitors moved in. But the company is expanding its business elsewhere across the province.

In the long term, consumers are getting more choice, said Nicolay. There are 24 retailers in Alberta's electricity market, although aside from Epcor, Enmax and BP-Amoco, most are concentrating on the lucrative industrial and commercial markets.

That is expected to change over the next few years, too, he said, as the industry comes to grips with problems that have led to price spikes and billing irregularities.

High power prices in late 2001 coincided with high natural gas prices. But the price of power has shrunk from a high of 11 cents a kilowatt hour 18 months ago to just under six cents today, Nicolay said. The rolling average for the last 30 days has been 4.5 cents and the year-to-date average is 6.9 cents, according to the Power Pool of Alberta.

As well, he said early problems with billing, as industry players shifted roles, have today resulted in a 98-per-cent accuracy rate.

Edmonton-Goldbar MLA Hugh MacDonald, Liberal energy critic, said afterwards that he found Enmax's tying high natural gas prices to electricity costs suspicious, given that most power in Alberta is fuelled by coal.

He also said the last thing that consumers paying higher power bills want to hear is that it is going to take yet more time to see benefits from deregulation.

And despite Enmax's rosy assessment of the deregulated electricity industry, government MLAs expressed continuing unhappiness with power bills and what they perceive as a lack of choice.

Tory MLAs Moe Amery of Calgary East, Klapstein, Edmonton-Manning's Tony Vandermeer and others all told stories of constituent dissatisfaction with the electricity market.

Nicolay asked for patience and said further cost reductions and other benefits of a competitive, deregulated market should become apparent over the next few years. "Please stay the course and don't relent."

Nicolay said the government's best course of action would be to ensure market rules are clear and stable to entice new players that will drive down costs.