Klein says power firms broke deal

Jan.4, 2001

Klein says power firms broke deal

Tom Olsen & Grant Robertson

Premier Ralph Klein lashed out at power companies Wednesday, accusing them of reneging on a deal with the province that would reduce elecricity prices for small and medium-sized industry. The deal, an apparent handshake agreement with Epcor and Enmax, saw the government raise the cap on residential electricity rates following a meeting Dec.13, with executives of both companies.

In exchange, Klein said the companies were to offer five-year contracts to small and mid-size industrial power consumers of no more than 11 cents per kilowatt-hour, instead of market prices which nearly double that ammount.

Enmax spokesman Tony McCallum said he was not aware of any such arrangement between the power companies and the province.

Klein said he has been taken aback that three weeks after the Calgary meetings the power companies have failed to move.

"I thought we had a deal. We gave our solid commitment and we followed through," the premier said.

Industrial power rates have been a controversial part of the province's deregulation of the electricity industry, which took effect Jan.1.

Power pices have soared on the open market because of a shortage of electricity supply in the province.

Substantial generation capacity isn't expected on-stream for two or three years and the province has been searching for eays to deal with rising prices.

The government capped residential rates last year at eight cents a kilowatt-hour for 2001, including a rebate for consumers that would see power rates stay about the same as last year. But power companies, led by Epcor, said the cap would cost them hundreds of millions of dollars in losses from selling the power at below market value.

Klein said the province agreed to raise the residential cap again to 11 cents while doubling the rebate for homeowners. The rebate kept electricity rates level for most Albertans, but the rate hike allowed the power companies to recoup more of their losses.

But with no cap on industrial power rates for 2001, businesses face massive power bills, which many say will lead to layoffs or shutdowns.

Klein said he also agreed to a doubling of a 1.8 cent per kilowatt-hour rebate for industrial power users.

Large consumers use more than 250,000 kilowatt-hours monthly.

Klein said the power companies were expected to have offered contracts to small and medium-sized businesses by now.

"We said, 'go back and renegotiate this, be reasonable and we'll guatantee the rebate for a year… and perhaps more."

"We thought we had a agreement from the companies that they would renegotiate the contracts at no more than 11 cents per kilowatt-hour."

Despite such attempts to secure deals which would assist small and medium-sized companies, large industrial consumers are still waiting for help.

Many have not yet signed contracts for power and are facing plant shutdowns or layoffs because they can't afford to pay their power bills.

Dan Macnamara, director of the Industrial Power Consumers and Cogenerators Association of Alberta accused Klein of trying to blame the power companies for the high prices industrial power consumers face.

"If the premier wants to be mad at someone, he should be mad at himself," said Macnamara. "He's the one who has created this."