Electric industry wants the same rules for all players

August 29, 2002

Electric industry wants the same rules for all players

Evan Bahry for the Calgary Herald

If you are going to play in a competitive industry, you have to play by the same rules as everyone else. This is why the provincial government wants the Alberta Energy and Utilities Board (EUB) to have final approval of parts of Calgary and Edmonton's electricity businesses.

Presently, Edmonton and Calgary own electricity retailers and they own the distribution wires that these businesses - and their competitors - operate through. The problem is the cities also regulate, or approve, the cost of these wire businesses.

The cities also approve the cost of the regulated rate option, which sets the price of electricity for customers inside their boundaries. So, the cities are in the distribution business and the business of providing regulated power rates and they are allowed to determine the charges for both. Yet, private companies in the distribution business and the regulated rate business, such as ATCO Electric and UtiliCorp Networks Canada, must have the EUB approve their rates.

The Independent Power Producers Society of Alberta supports the government's decision to have the EUB oversee these regulated businesses. We recognize that this decision ultimately benefits Alberta's electricity consumers. Here's why:

The first benefit of this decision is that it brings the EUB's experience to the setting of these important rates. The EUB will review Enmax's and Epcor's rates to determine if they are designed to the same standards as are the rates of other players in the same industry, and can reduce these rates if they think they are unfair. The EUB has professional staff, dedicated to dealing with electricity rate issues and its process is public.

The second benefit of this decision is that it brings the EUB's independence to the setting of these important rates. As it stands now, if you don't like the rates charged by Enmax or Epcor, you can try to appeal to their city councils for a change.

Again, these are the same city councils that own these entities and have a vested interest in protecting their revenues.

The third benefit is that it ends the patchwork of regulation in Alberta. All private companies that operate these same regulated services as Enmax and Epcor already have their rates approved by the EUB. The cities' self-regulation is an obvious duplication and overlap of an existing process.

The fourth benefit is that it ends a barrier to entry for new competitive investors in Alberta's power industry. If you want to be a new electricity retailer in Alberta, would you be comfortable in disputing Enmax's or Epcor's rates and terms and conditions to the councils that own those retailers?

For these four reasons, the provincial government's decision is that right one. However, there has been opposition. It has been argued that this decision may create new costs. Yet, the reverse is also true. Scrutiny by the EUB could also result in savings. Again, this decision will ensure the cities' rates have the same parameters and scrutiny as similar rates in Alberta.

It has been argued that the cities may have less revenue as a result of this decision. These cities chose to be in a competitive industry and there are no guarantees over how much revenue you are going to make.

Finally, it has been argued, this decision ends the control cities have had to set rates or that it is part of a plan to force them to sell Enmax or Epcor. We disagree. The cities should not be able to own a monopoly wires service, own a retailer that competes on that service, set their own rates and have those rates free from independent, expert scrutiny.

IF these cities choose to play in a competitive industry, they have to play by the same rules as everyone else.

Evan Bahry is Executive Director of the Independent Power Producers Society of Alberta. IPPSA is a not-for-profit association representing 185 member companies involved in Alberta's electricity industry. Members include power producers, power marketers and their supporting industries.