31 January 2001
The Honourable Ralph Klein
Premier of Alberta
307 Legislature Building
Edmonton, AB
T5K 2B6
Dear Premier,
I am writing to you today on two issues.
First, I sent you a letter on 22 December 2000 (a copy of which
I have enclosed) which you indicated in your response to me dated
19 January 2001 had been passed on to the Honourable Mike Cardinal
for his response. I would like to report that I have not yet had
the courtesy of a reply.
Secondly, and more importantly, I would like to comment on
your speech to Albertans on 29 January 2001 with respect to the
electrical deregulation issue. I found your comments, in my view,
to be mainly inaccurate and many times misleading. I say that
for the following reasons:
- When asked if deregulation was the cause of high electricity
prices, your reply was "No" that only 1/6 of the high
prices could be related to deregulation. What about the other
5/6? You failed to explain that.
- Your comments of the Kyoto Protocol causing uncertainty made
some sense, but the protocol was "negotiated" in 1997
with agreement in 1998. This does not explain why no significant
new generation has been built in the past 10 years, at least
7 years before Kyoto.
- You stated that the high price of natural gas was responsible
for the high price of electricity since 40% of the electricity
generated in the province is from natural gas. First, natural
gas does not supply 40% of the generation (exclusive of cogeneration
which is captive to the firms generating it) but less than 25%
as per AEUB data. As well, it would be interesting to hear your
explanation as to why electricity prices were higher in August
2000 (when natural gas prices were lower) than January 2001when
natural gas prices are significantly higher. Additionally, one
would only believe that prudent firms would have long term supply
contracts for natural gas and would not be involved with spot
commodity prices.
- You mentioned that two long term plant failures were another
reason that has caused electricity prices to be higher. Our understanding
is that only Wabamum 4 has been down for an extended period and
that plant is rated at 279 megawatts which is about 3.5% of Alberta
generating capacity. Which other plant has been down for an extended
period of time?
- It is impractical for anyone to believe that all electrical
generating plants in the province will be running at 100% capacity
all of the time. To lose 3.5% of the province's generating capacity
should not be a major disaster! Shutdowns will always have to
be built into the system.
- You stated that new technology will allow for power production
from coal as per statements made to you by the generators. We
all hope that you are right so that there will be speedy environmental
approvals.
- You mentioned that there are at least three plants proposed.
You did not state their stage of development. It would be our
belief that they are only "proposed" announcements,
that ground has not been broken and that environmental assessments
have not yet been undertaken. For them to be onstream, I would
estimate a minimum of four years. Possibly you can prove that
I am wrong.
- You stated that the pain will be short lived and will be
there for the next year and a half to two years. I would suggest
that it will be a minimum of five years. Not only will additional
capacity be required, inefficient capacity will have to be replaced.
Your take on the reasoning for "the next year and a half"
would be very interesting.
- You stated that the rebate to industrial consumers has been
doubled. You failed to mention that the price to industrial consumers
has tripled through the deregulation process.
- You further stated that: "We have done a lot and perhaps
there is more that we can do." Maybe you can define this.
How much more will it cost taxpayers? Eventually the money will
run out!
- You mentioned the possibility of a future referendum on sales
tax. Would you be prepared to undertake a referendum on Electrical
Deregulation in Alberta?
I found your references to electrical deregulation to be lacking
in facts, substance, and detail.
I believe that the costs for Novatel under the Getty regime
will look like "petty cash" before the accounting for
the current "deregulation fiasco" is completed.
As a concerned citizen of Alberta, I look forward to your speedy
response to my concerns.
Yours truly,
R.W. Saari
c.c. The Honourable Dave Hancock, Q.C.
Minister of Justice and Attorney General
M.L.A. Edmonton Whitemud