Four transmission projects designated as critical transmission infrastructure (CTI) by the Alberta government continue to receive criticism from industry groups and landowners, but the Alberta Electric System Operator (AESO) says the lines are needed to accommodate the province’s growth.
“There’s no question that the transmission build and forecast is a big one,” said Greg Retzer said, director of transmission for AESO. “It’s an important debate to have but it’s also important to make sure that we get the right infrastructure in place, and we get it in place before the need so that we can help support investment and growth within the province.”
The demand for power doubled in the last 20 years in Alberta, and will double again in the next 20 years and grow three per cent each year, he said.
The Alberta Chamber of Commerce (ACC) previously issued a statement of support for the legislation. “We believe AESO’s plan to strengthen and expand our transmission backbone will prepare Alberta for sustained growth in all sectors of our economy,” wrote ACC President Ken Kolby in a letter to media in 2010.
CTI lines include two High Voltage Direct Current (HVDC) lines between Edmonton and Calgary and the Heartland transmission project, which connects the Ellerslie substation south of Edmonton to the proposed Heartland substation north of Fort Saskatchewan. Another CTI line is planned to go to Fort McMurray.
“The Heartland is in place to improve the reliability for northeast Alberta and the local Fort Saskatchewan area,” said Retzer.
Retzer welcomes oilsands co-generation but adds that while the area is a net exporter today, that will change in the next five to 10 years. “Because of so much of activity, it will flip, and Fort McMurray will become a net importer of power,” he said. The increase in pipelines and oilsands development in the northeast requires better infrastructure to improve reliability and capacity, he said.
AESO conducted the needs assessment the government used to decide to declare the four lines as CTI in Bill 50, the Electric Statutes Amendment Act, passed in 2009. CTI projects do not have to establish the need for the project at the Alberta Utilities Commission (AUC) public hearing.
“Under the Electric Utilities Act the Government of Alberta approved the need for four critical transmission infrastructure projects, including the Heartland Transmission Project. The need for the Heartland project will not be addressed in the AUC’s proceeding,” the AUC website said.
“When they did that they took away our rights as landowners,” said Sturgeon County resident Colleen Boddez. “The government managed to take away all of those policing systems that said whether or not (projects are) good.”
The proposed 500 kV Heartland line route was proposed to go across the back end of Boddez’s 80 acres parcel of land in Sturgeon County, but was later moved two kilometres east.
“I was fighting it because it wasn’t good for me, and decided to continue fighting it because if it wasn’t good for me, it wasn’t going to be good for my neighbour,” said Boddez, who is the president of Landowners Against Bills Society, a group critical of former Bills 19, 36, and 50.
With Bill 19, there is no recourse for people who do not want to live by Bill 50 power lines, Boddez claimed. “The Bill 19 made it impossible for people to really get what should be their proper compensation from a Bill 50 transmission line,” contended Boddez.
She said the Expropriation Act would not work, a view supported by land rights Lawyer Keith Wilson, but which is disputed by Minister of Infrastructure Ray Danyluk. Bill 19 gives landowners more rights than they had before, said Danyluk.
While Boddez said she has health risk reasons to opposed the Heartland line, her primary concern is the effect of former Bill 50 on property rights. Property values on land the lines are on will go down more than 20 per cent, she said.
She said at the time of the needs assessment, nine upgraders were planned in the Heartland area. Now only one is planned, which may produce its own energy, she said. AESO completed its predictions when Alberta was booming, she said, adding that after the recession, Alberta is no longer looking at that kind of growth. “They based everything on predictions of something that didn’t come to pass.”
She speculated that the transmission upgrades would export electricity, a claim denied by government.
Boddez agrees with the view stated in a letter from Alberta Direct Connect (ADC) and the Industry Power Consumers Association (IPCAA) to government written in October 2010, which said the cost of Bill 50 lines would put Alberta’s industrial competitiveness at risk.
All Albertans should be “scared as hell” because the province will also lose industry and jobs, said Boddez.
“We simply cannot afford this transmission development plan and it is unnecessary,” said the letter signed by Colette Chekerda, ADC executive director, and Sheldon Fulton, IPCAA executive director.
In response to IPCAA and ADC, Retzer said transmission forms only one part of the delivery cost of electricity. “Having a good transmission system does help reduce the overall cost of electricity,” he said.
“We’re opposed to the total cost of the magnitude of the build,” said Fulton in an interview with the Journal, a week after giving a presentation with Wilson in Vegreville. IPCAA supports some additional regional transmission lines, but does not support the magnitude of the build underway with Bill 50 lines, he said.
While there are transmission requirements in the Fort McMurray area, they can be covered by regional lines, he said. Bill 50 lines need an evaluation of the benefit cost and a lot more consideration of “behind the fence” generation, or on site electricity generation.
Today’s ratepayer should not have to pay the cost, he said. Atco and Altalink have applied to receive cost recovery during construction, which would set a regulatory precedent, Fulton said. “The impact of that is a significant cost increase for transmission, which we think will have some adverse economic impacts on industrial activity.”
The lines will create “grossly under-utilized capacity,” he said. “We don’t think (AESO has) done an adequate job at looking at the economics of on site generation and the impact of the transmission costs on those economics.”
AESO estimates the cost of the CTI projects at $5.6 to $6 billion. AESO plans for around 250 regional and customer projects across the province, which are estimated to cost $14.5 billion, including the four Bill 50 lines. For each billion dollars invested in the transmission system, a residential bill would increase $1 per month, said Retzer.
It would be difficult to estimate an average cost impact to industrial users because each industrial consumer has a broad and unique consumption and billing determinants, said AESO spokeswoman Dawn Delaney, in an email to the Journal. Transmission costs are charged to the consumer based on consumption, she said.
IPCAA has had some positive response from government recognizing the cost implications are significant, Fulton said. IPCAA estimates Bill 50 lines slightly higher than AESO at $6.28 billion. Fulton predicts the cost to grow when Atco files costs for its line. IPCAA also estimates total projects in the province slightly higher than AESO at $15.4 billion.The costs estimates for Bill 50 lines and construction costs of regional lines have increased significantly from 2009, Fulton said.
Industry uses 61 per cent of electricity and pays 61 per cent of transmission costs. In 2010, the total cost collected through the transmission tariff was $648 million from industry, Fulton said. In 2013, IPCAA expects the cost to increase to $1.44 billion.
By 2017, IPCAA expects the cost to rise another billion dollars, if the costs for lines remain the same as estimated today.
“It’s not that (industry) can’t afford it,” he explained.
“They’ll take steps to avoid that cost, if there’s a way to do it.” Industrials like petrochemicals and cement are looking for cheaper electricity in other jurisdictions outside Alberta, he said. IPCAA has no vested interest in whether or not the lines are built, he said.
“We don’t understand why the government wants to do that, and that’s why they need to rethink what they’re doing.”
Government should also rethink the way how consumers are charged for transmission, he said.
