On November 2, Alberta’s largest electricity generation company Transalta announced that it was acquiring the province’s third largest electricity generation company, Heartland Generation.
If this deal goes through one company will have control of 46 per cent, nearly half, of Alberta’s dispatchable electricity assets. (Dispatchable in this case means electricity assets you can turn on and off at your control, like natural gas plants, unlike renewable assets like solar or wind.)
That puts Transalta in a dominant position in Alberta’s very complex and bad energy-only electricity market and means that Transalta can now “economically withhold” to its hearts’ content.
Economic withholding is the technically legal process of a corporation turning off electricity generation assets it controls in order to jack up prices and reap profits. Companies with competition can’t do this easily (unless they collude, illegally) but if you control 46% of the market, manipulating it isn’t hard. The general consensus of energy economists in Alberta today is that the power companies here have already been driving up our power bills this way for five years. These same economists predict that Transalta dominance will make things even worse.
Blake Schaffer, an electricity market expert and associate professor at the University of Calgary has done some very useful analysis of this proposed acquisition that I’m leaning on heavily here. Schaffer says: “this isn’t tenable.”
Kent Fellows, an assistant professor in economics also at the University of Calgary, has his worries too:
“It creates more market power. Without some other remedy this will lead to higher prices… this is a big deal,” Fellows told me while I was investigating this matter..
Electricity consultant and former executive director of the Utilities Consumer Advocate office David Gray is a lot more forceful in his analysis of this proposed acquisition.
“It’s a catastrophe… it’s nuts,” said Gray, who believes the only reason this transaction is going ahead is so that Transalta can maintain its ability to control the market. The 900 megawatt natural gas Cascade project is set to come online soon, which could affect Transalta’s market power. Fellows agrees with Gray that this acquisition by Transalta would negate the entrance of the Cascade plant.
Gray has also been a vocal public voice against the practice of economic withholding.
“Billions of extra profit have been harvested from Albertas via this monopoly pricing power. Markets have no morals and we need to stop expecting that they will all of a sudden acquire them,” said Gray.
All the media reports say that this acquisition is subject to regulator approval, presumably from the Canadian Competition Bureau. We’ve reached out to determine if that is the regulator in question and what the process and factors are that go into their decision. Stay tuned because we will be doing more reporting on this.
- Danielle Smith’s Sovereignty Act is finally being put into action and even Danielle Smith concedes it’s largely for show. I won’t spend too much on this but to say that being a part of the country of Canada means you have to follow Canadian law. The federal clean energy regulations she’s fighting won’t be in effect until 2035 but politically connected legal firms will no doubt make a fortune. The most hilarious part of the announcement was Smith announcing her intention to create a crown corporation to handle electricity generation, just like how Alberta did it before Ralph Klein privatized and deregulated electricity in the 1990s. Time is a flat circle.
- A little over a year ago Ken Sim and his municipal political party were swept into power in Vancouver with the help of the Vancouver Police who were heavily publicizing the trend of stranger assaults. It turns out that stranger assaults went down prior to the election and the VPD were lying in order to get their candidate elected. Sim and his council colleagues just inked a deal making the VPD the highest paid police officers in Canada.
- Lauren Boothby at the Edmonton Journal came through with a wild scoop today after she investigated why city councilor Jennifer Rice is churning through an incredible number of staffers. Rice has somehow gone through nineteen assistants since she was elected in 2021—so many that the city itself had to send three of its own admin staff to help run her office.
In October Suncor self-reported a 662 cubic metre spill of mine runoff from a containment pond into the Athabasca River. This is rain and snow runoff that was supposed to be held back from drinking water and fish and aquatic wildlife because it can contain all sorts of nasty things. It turns out that the spill was something closer to 10,000 cubic metres (Suncor and the Alberta Energy Regulator don’t know) and that due to a faulty valve the spill may have been ongoing since June 2022. The AER wasn’t too concerned with bringing this to public attention: updated information was released by the AER at 6pm on a Friday. This is on top of another spill at the Imperial Oil Kearl oilsands mine, which has faced intense scrutiny over ongoing leaks of toxic wastewater.
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