The new reforms could include new elements like negative wholesale power pricing and a day-ahead market
Alberta’s electricity market has been through a series of topsy-turvy changes over the past decade.
Think about the mandatory phase-out of coal-fired power generation, large losses at Alberta’s Balancing Pool, the rise of renewables, or the abandoned attempt to replace the energy-only market structure.
Today, another shift is coming — and it’s the largest revamp since the province deregulated the electricity market more than two decades ago, according to the head of the Alberta Electric System Operator (AESO).
AESO chief executive Michael Law rolled out the conceptual elements of the overhaul this week, with reforms expected to be in place by the end of 2026. It could include new elements like negative wholesale power pricing and a day-ahead market.
The moves are designed to ensure Alberta’s electricity system is reliable and affordable, while decarbonizing the grid by 2050 — no easy feat.
“The realities of our power system are changing,” Law said in an interview Tuesday after speaking at the Independent Power Producers Society of Alberta (IPPSA) annual conference in Banff.
“We need to make some changes in order to have a stable market structure that can facilitate investment, but also ensure appropriate pricing and protect consumers … This is, without a doubt, the biggest shift that we had over 25 years.”
For Alberta’s power system, that’s saying something.
Alberta Power Pool prices have been volatile, jumping from an average of less than $47 per megawatt-hour (MWh) in 2020, to $162 two years later, before dipping to $134 per MWh last year.
Demand has increased coming out of the pandemic and several grid alerts have underscored the bumpy transition.
It’s not abandoning the current energy-only system for a capacity market — an idea proposed by the former NDP government, but later halted by the UCP in 2019 — where generators are paid for having electricity available, regardless of how much is sent into the grid.
(In the energy-only market, generators are only paid for electricity produced and sold.)
In the short term, the province unveiled changes Monday to limit the current policy that allows economic withholding by generators. The shift is slated to take effect in July and remain in place until 2027.
The longer-term reform will include day-ahead pricing in the wholesale market to reduce price volatility, locking in prices before the operating day.
“We will know well in advance of the actual real-time which generation is available, how much of it is required, so we won’t find ourselves in situations where units that are needed are not actually online,” Law said.
If proposed changes are adopted, the Alberta Power Pool will also permit negative pricing, meaning “generators would actually pay to continue to generate and consumers would actually get paid for using,” Law noted.
It would also allow for pricing above the current wholesale price cap of $999 per megawatt-hour (MWh) in Alberta during limited periods of scarcity.
The idea of economic withholding — a feature of the current market that allows generators to offer electricity at prices “sufficiently above marginal cost that the generator is not dispatched, and the pool price is increased as a result,” according to the Market Surveillance Administrator — will also change.
With the proposed longer-term overhaul, higher prices during moments of scarcity will be set administratively by the AESO, “not left to market participants,” Law noted.
But in the complex world of electricity markets, details matter.
The impact on consumers, as well as companies looking to build new power generation as electrification continues, will be key.
“There’s confusion about what this means, not just for the renewable developers, but generators in general,” Bellissimo said in an interview Tuesday.
“It would be very difficult to go to an investment committee right now and say, ‘Alberta looks attractive,’ because we don’t know what it looks like.”
Edmonton-based Capital Power said it was encouraged by the government’s commitment to the energy-only market, while noting the details will be critical.
Shares in both Capital Power and TransAlta Corp, two of the province’s largest generators, both fell on Tuesday.
The temporary changes to economic withholding rules could crimp the ability of generators to recoup their capital costs and potentially affect future investment decisions, said Duane Reid-Carlson, CEO of electricity consultancy EDC Associates.
For consumers, he noted power prices are expected to fall in the next three to five years as a surge of new gas-fired electricity generation and renewable energy arrives on the scene.
“Industry is eager to invest and get on with all of this. They just want to see some certainty,” Reid-Carlson said.
Adding a day-ahead market should help the system by allowing for better co-ordination and helping smooth out last-minute spikes — to a degree, said University of Calgary economist Blake Shaffer, an electricity industry expert.
Exploring negative power prices is a common feature in other electricity markets, he noted.
“We don’t have an investment problem for the next several years. But in the five-to-10-year period and beyond, the question marks will remain on how are we going to get the things built that we need,” Shaffer added.
Law said the AESO feels “reasonably comfortable” that supply levels will be adequate into the middle of the next decade, based on the new generation that is expected to come online. It also wants to ensure it compensates generating units that are flexible and dispatchable, ensuring the lights stay on.
The AESO will seek feedback on the proposed design changes, with the market’s technical design completed by year’s end and implemented by the end of 2026.
“This is a substantial change,” Law added.
Indeed, change is the one constant in the province’s ever-shifting power system.
Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.
The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.
Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.
The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.
Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”
“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.
“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”
Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.
The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.
It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.
Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.
It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.
“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.
Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.
The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.
Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.
The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.
“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.
Asked how long that environment could last, he said that’s out of Telus’ hands.
“What I can control, though, is how we go to market and how we lead with our products,” he said.
“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”
Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.
On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.
That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.
Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”
“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.
“We will continue to monitor developments and will take further action if our codes are not being followed.”
French said any initiative to boost transparency is a step in the right direction.
“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.
“I think everyone looking in the mirror would say there’s room for improvement.”
This report by The Canadian Press was first published Nov. 8, 2024.
Companies in this story: (TSX:T)
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
Companies in this story: (TSX:TRP)
The Canadian Press. All rights reserved.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
Companies in this story: (TSX:BCE)
The Canadian Press. All rights reserved.
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