Transmission line costs worry business leaders

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Alberta Transmission Line Costs pressure electricity rates as AUC hears Epcor and AltaLink's 500-kV Heartland project, affecting industrial power, consumer bills, competitiveness, and investment across Alberta's manufacturing and energy-intensive sectors.

What This Means

Costs for new 500-kV lines passed to consumers and industry, raising power rates and eroding competitiveness in Alberta.

AUC hearings focus on route options, not project necessity.
Epcor/AltaLink propose a 500-kV Heartland line near Fort Saskatchewan.
Overhead cost est. $580M; partial underground could reach $1.1B.
AltaSteel warns power bills may rise from $15M to $34M by 2017.

Power bill hikes resulting from the construction of new electricity infrastructure could be drastic enough to push Alberta companies into bankruptcy or force them to relocate, a group of business leaders warned at the Heartland transmission line hearing.

The presenters, which included a major steel producer, an industrial paint producer and a frozen dessert maker, said increased utility expenses could be the “final nail” for companies already facing increased international competition, soft global markets and local labour shortages.

“The last two years have been very difficult due to the economy and this kind of additional cost to a business is going to risk a lot of job losses,” said the head of AltaSteel, Chris Jager, who told the hearing his 500-employee operation is already at a power disadvantage compared with out-of-province competitors.

“It would have a big impact on our profitability and make it a bigger challenge to attract investment to grow our business.”

The Heartland hearing, which the Alberta Utilities Commission first convened more than a month ago, is being held to determine whether Epcor and AltaLink should be allowed to proceed with a new 500-kilovolt transmission line designed to bring electricity from Wabamun-area power plants, including TransAlta operations in the region, to the industrial heartland area near Fort Saskatchewan.

It’s one of several new lines and upgrade projects in the works across Alberta that some believe could together end up costing as much as $15 billion. Some or all of the costs are expected to be passed onto consumers through their utility bills.

While business leaders spoke passionately about their concerns, there is a question of whether their testimony at a transmission line hearing can even be considered by the commission.

Controversial legislation passed by the province confirmed the need for new high-voltage lines, which means the hearings are largely limited to concerns about proposed routes. But much of the testimony focused on socio-economic impacts of the upgrades, and in B.C. a premier-designate taking on BC Hydro has underscored how political these issues can become, which could be interpreted by the commission as improperly challenging the worthiness of the projects.

Jager said AltaSteel, which recycles scrap steel into new industrial products, currently spends about $15 million on electricity each year. The company estimates that bill will more than double to $34 million by 2017, largely due to increased transmission costs. Jager said such an increase would make AltaSteel’s products more expensive than those produced by its four main competitors in Manitoba, Seattle, Indiana and Utah, all of which already pay less for power.

Jay Esterer of Endura Paint said his business also faces stiff competition from overseas companies, and in the U.S. American transmission plans are reshaping regional power costs.

“My competitive edge would be eroded by the types of fee increases being discussed here, and I’d have to consider moving to Manitoba to remain viable,” he told the hearing.

Another presenter, Jonathan Avis of Saxby Foods, said his frozen-dessert company came to the province 15 years ago for the Alberta Advantage, but has since seen those benefits wane. He said his company, which relies on electricity to keep its freezers going, lost $1 million last year because U.S. producers came to Canada and underbid Saxby, and studies like the Alberta-Montana power line analysis highlight how cross-border dynamics affect markets.

“This could be the final nail in my coffin,” he said.

Karen Shaw, whose family runs a cattle farm beside the proposed transmission route, said no one has shown her a cost-benefit analysis of the need for massive upgrades to the electric system, even as Canadian grid repair needs are widely discussed in policy circles.

“It’s like if we bought a 500-horsepower tractor to clean our driveway. It would work, but it wouldn’t be economical.”

Tim le Riche, spokesman for the Heartland project, said reliable, low-cost electricity will be key to keeping businesses and jobs in Alberta long term, with options including a B.C.-to-Alberta power line under federal discussion.

The Heartland line is expected to cost $580 million if it is built above ground along the eastern edge of Edmonton — Epcor and AltaLink’s preferred route. The companies have said a 20-kilometre section of the line could be buried underground but that would balloon the costs to nearly $1.1 billion.