U.S.power company plans $450-million plant in Calgary<b/>
Lily Nguyen
Thursday, December 21, 2000
CALGARY -- Attracted by Alberta's electricity deregulation and skyrocketing power prices, a U.S. company says it will invest $450-million to build a new generating plant in Calgary.
AES Corp., an international power generating company based in Arlington, Va., said yesterday it will seek approval to build a gas-fired plant capable of generating 525 megawatts of electricity -- enough to supply half of Calgary's power needs. The company said construction could begin as early as next summer and the plant could be up and running by fall of 2003.
The announcement, made at a news conference in Calgary, was hailed by Alberta Resources Minister Mike Cardinal as evidence that the market can bring needed supply to energy-starved Alberta.
However, the announcement failed to silence critics of the provincial government's energy deregulation policies, which they say have resulted in sky-high prices in the short term.
"This new project is a clear sign the market is responding," said Mr. Cardinal, who attended the conference.
Allan Warrack, a business professor with the University of Alberta, who predicted the energy shortage more than two years ago, said the news brightened the future outlook considerably.
"That's big," he said of the power plant. "I'm frankly very pleased because we need the capacity so desperately."
The announcement provided ammunition to the Alberta government to challenge its critics, who have charged that government policy has resulted in an energy crunch, sending prices through the roof. At a recent auction of generating capacity targeted at large industrial and commercial users, bidders paid more than $150 per megawatt hour of electricity, compared with an average of roughly $40 a year ago.
"Our deregulation of the electricity industry will give Albertans faster access to new generation," Mr. Cardinal said, who was in Calgary to announce a plan to distribute $1-billion in proceeds from the auction of electricity.
Mr. Cardinal said the government will use the money to double rebates announced earlier on power bills.
Residential users now will get $40 off their monthly bills while commercial users will get 3.6 cents per kilowatt hour shaved off their costs.
But the net effect on residential users is expected to be nil because the government also raised a price cap that it had instituted on Nov. 30 for their 2001 rates.
The cap will rise to 11 cents per kilowatt hour from 8 cents, wiping out the latest residential rebate.
Mr. Cardinal said the price cap had to be raised to better reflect current higher market prices, which he said the government had not anticipated.
Power retailers, including Epcor and Enmax, the utilities of Edmonton and Calgary, had said they would lose hundreds of millions of dollars selling their power at 8 cents.
Bob Nicolay, a spokesman for Enmax, said the higher price cap means the company might no longer be facing huge losses. |
