Ralph Klein has gone and it is time to retire Ralph's World. Thanks to all of you who have supported this venture by contributing material and through your comments. It has been fun.

Should we get another blog underway? Let me know your thoughts by e-mailing me at johnnyslow@gmail.com.

John Slow
January 1, 2007

Thursday, February 26, 2004

More Deregulation Problems 

Today I received a copy of a letter that Allan Dane, a retired power transmission engineer, sent to Murray Smith, our Minister of Energy. That letter is reproduced here and as is our custom here at Ralph’s World, we will publish Minister Smith’s response when it is received. This government has never responded to any of our letters yet but hope springs eternal. Click here to see their response record.

Mr. Dane points out a couple of problems with deregulation which he asks the Minister to address.

Co-generation power plants are generation facilities built by private industry primarily to supply their own electrical energy needs but they sell the excess into the Alberta Interconnected System (AIS). This leftover power is available for residential and commercial users. The questions posed by Mr. Dane are these.

As these co-generation owners need more power to supply their expanding industries (oil sands, chemical plants etc.) the leftover power needed by the rest of us will become in short supply. Short supply leads to both high prices and increased risk of power outages. So two of the supposed features of de-regulation, lower cost and more reliable supply actually result in higher costs to consumers and a less stable supply. Could you please explain how this benefits Albertans?

The second issue addresses a lack of planning in the transmission facilities. Co-generators typically build near their own industry so they don’t need to care about transmission facilities as long as they can supply their own industry. How does the de-regulated electrical power industry address this problem?

Good questions.

Here is Mr. Dane’s letter.

February 18, 2004

Hon. Murray Smith
Minister of Energy
404 Legislature Building
Edmonton, Alberta, T5K 2B6

Dear Mr. Smith:

I received your letter to me of February 11, 2004 and I have carefully reviewed the attachments.

I notice that most of the larger generating units that were added to the AIS in the 1998-2002 period were co-generation. I presume that these co-generation units were larger than the owner needed for his facilities at the time they were placed in service so the owner could sell power and energy to the AIS until the owner needed to expand his facilities at which time the initial excess capacity would no longer be available to the AIS.

It is of great interest to me to know how much power is available now to the AIS from each of the co-generation units which have installed capacity 100 megawatts or more, and what fuels they use. For example I suspect that TransAlta’s 120 megawatt unit at Fort Saskatchewan may soon become unavailable to the AIS and its 360 megawatt unit at Fort McMurray definitely will become unavailable in the future if the expansions of the oil sands projects occur.

The point I make in regard to power generation needed by the petroleum and natural gas industry is that it mostly leaves the Province of Alberta in the form of chemical energy and only a small portion will be available for manufacturing industries that will be constructed here or are already here.

The untutored person might be greatly impressed with a total new generation of 2,307 megawatts on line in 1998 - 2002 but I do not draw the conclusion that 2,307 megawatts of new power was made available to the AIS because most of that power is co-generation and I suspect that most of it is fuelled with natural gas which will increase in cost as the years pass. In other words, I very much doubt that the AIS will have access to much of that 2,307 megawatts in the year 2010.

Of the new generation additions of first quarter 2003 only 200 megawatts, in my opinion, likely will be available to the AIS in 2010 and, even then, I may be optimistic.

Hydro power, particularly in Southern Alberta, is a “sometimes” thing as is wind. When they are available use them but don’t rely on them.

The most encouraging features of your projections in the 2003 - 2006 time-frame are EPCOR’s Genesee III, Fording’s 1,000 megawatt powerplant near Brooks and TransAlta’s Keephills III.

I was aware that EPCOR was actually constructing Genesee III but I was unaware that TransAlta had started construction of that huge 900 megawatt unit at Keephills! That is very good news, if true.

If a total of 1390 megawatts is added to the Genesee - Keephills area, as an electric power transmission engineer I can tell you that you will have more than your share of grief in getting that additional power to the market unless you manage to get the transmission lines in that region upgraded to 500 kilovolts before those units start spinning! Actually, 1390 megawatts would justify 765 kilovolts but, unfortunately, those circuits were not constructed for 765 kilovolt operation...

I have reliable information from Fording that it has sold all of its heating coal properties to Sherritt. I knew, of course, that Fording had wanted permission to construct a powerplant, near Brooks, as early as 1992, a time when Alberta’s electric utilities operated in a regulated environment. Deregulation probably had nothing to do with the sale of their heating coal interests to Sherritt but it certainly cannot be argued that deregulation had increased their interest!

Please make sure that a 500 kilovolt circuit is constructed from the proposed site to the switchyard at East Calgary and please make sure that it is available before the powerplant at Brooks is ready to spin! That powerplant would relieve considerable congestion in the Edmonton - Calgary corridor even if it were only 800 megawatts which was the capacity that Fording wished to construct.

Did Fording increase its plans or does your staff confuse MVA with MW? 800 MW at 80% powerfactor would mean 1000 MVA and most alternators are designed for 80% powerfactor.

May I suggest that you check that TransAlta is constructing that 900 MW unit at Keephills and that Sherritt is constructing that 1,000 MW powerplant near Brooks? The last news I had received with regard to Keephills III indicated that TransAlta was unwilling to commit to future environmental requirements and had decided not to construct. If these two plans are not actually in the construction phase at this moment, your estimates of powerplant capacity for 2006 will be in excess of reality by at least 1,900 MW.

Yours very truly,

K. Allan Dane, M.Sc. (EE)
Premier Klein
Mr. Hugh McDonald
Dr. Kevin Taft.
Dr. Brian Staples
Dr. Raj Pannu
Mr. Brian Mason
Paula Simons

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