What’s the deal with these PPA’s and this government lawsuit?

By now you may have heard that the Alberta Government is suing a handful of electricity companies in the province over a contract or Power Purchasing Agreement (PPA). We at Peace Power wanted to take you through exactly what is going on with this lawsuit so you, the customer, can be informed and not have to wait until it shows up in some horrible iteration of Law and Order: Divorce Court.

The beginning of this case basically involves a few electricity companies walking away from a PPA. What is a PPA? Essentially, it is the way that power companies purchased electricity to sell on the market. A generation facility put power up for bid. The winner of the bidding process then earned the right to sell the power to the consumer.

The idea of selling electricity through a PPA came about due to deregulation with the idea that the bidding process would allow for competition, which in turn, help lower prices for the consumer. By and large, this seems to have worked as we have seen record low electricity prices.

What has happened now though is these electricity companies cited irreconcilable differences, walked away from the agreements, and stuck the government, by way of the balancing pool, with the cheque. The fall out of this is where things get problematic and the government is sending “take me back” letters in the form of a subpoena.

The issues lay with the aforementioned balancing pool. This balancing pool is an arm’s length entity of the government and is responsible for managing PPA’s and any electricity that isn’t purchased by a PPA. This is how it has been since deregulation occurred and is there as a backup power supply of sorts. Electricity from the balancing pool can be purchased by other companies if needed and the money on these sales are given to the consumer as a deduction on their bills (Click here for more).

Since the electricity companies have reneged on their PPA’s, the electricity they agreed to purchase reverts back to the balancing pool and they will now be on the hook for the costs of these PPA, approximately 2 Billion. What this means is the cost of maintaining these agreements will cause the deduction line on the bill mentioned above to become a cost line. The cost is the responsibility of the balancing pool and will filter down to the consumer. This has become the bullet in barrel of the divorce.

But why did these power companies decide to leave their agreements? Simply, new laws and regulations like the carbon tax have made the PPA’s, according to these power companies, unprofitable. As it stands, this situation is completely legal due to a clause in the contract (a little gift from a company called Enron that shows their legacy is more than just a bad documentary on channel 66, for more click here).

The government is mad and slighted by all of this and have taken these power companies to divorce court….provincial court. Their defence is that the clause that allows them to leave was illegal and should be void.

Whether you think the contracts were negotiated fairly or the clause was underhanded is purely on how you view the situation. Some think it was simply a lack of foresight by the government and the introduction of the carbon tax has gotten them into this mess as the power companies feel it has made their agreements unprofitable. Others feel that the government is trying to protect consumers from higher costs they will have to face from unfair contract manipulation The choice is yours, of course, but whichever way you cut it the government isn’t signing divorce papers yet and will be looking to get as much alimony as possible.

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The true reason for high electricity bills.

Good day!

As many of you already know, your electricity bill includes charges for transmission/distribution costs, municipal access fees, as well as the cost of electricity you have used. It is important to know that while the price of electricity has been lower since deregulation, the additional fees have not. Below is a letter written by Nick Clark, a partner of UtilityNet, which was sent to Alberta opposition party leaders. The information in the letter will be of interest to you but also to your individual legislative members. Please feel free to distribute this information to your MLA and let them know where the problem truly is with electric utility costs. Only by asking the right questions and making our legislative representatives work for us can we hope to see change in this area.

Dear Brian, Ric, Greg and David,

As leaders of the opposition, I hope you find this letter of interest and we trust that this information will be of help to you in your quest to be of service to your constituents.

For years the NDP, as a party, has been fixated on re-evaluating the “Regulated Rate Option (RRO)” pertaining to the energy price-setting-policies that impact what consumers pay for electricity (in particular those who are still on the old regulated rate plan).  Un-knowledgeably, the NDP often talks about “Smart Re-Regulating the Industry”; yet they turn a blind eye to the real problem: Regulated Distribution Costs!   In simplistic terms; a consumer’s utility bill is made up of three parts. (1) the cost of Energy (which was Deregulated by way of generation and retail), (2) the cost of Distribution (which is still Regulated) plus (3) the Local Access Fees (as set by the local municipality as a franchise access tax, which the individual municipalities have control over).

Are consumers mad about the high cost of their monthly utility bills?   Sure, some are.   To understand the problem there are only two things you need to know:

A.   The Positive News: The cost of energy is at an all-time low.  Why on earth would anyone in their right mind what to re-regulate it!  Under deregulation (and the competitive market structure), consumers are paying less today than they were in 2000 (that’s 15 years of inflation let alone market forces).  There is no need to change existing policies and disrupt the competitive market.  It is working and consumers are benefiting.  The only cost on the consumer’s utility bill that has actually gone down is the portion that was deregulatedthe cost of energy.

B.   The Problem: The cost of distribution has increased by 100% over the last 10 years.  Some consumers today are paying as much as 3 to 4 times for the regulated wires distribution fees compared to the cost of energy they consume.  (Remember this is the regulated part of the equation – and has absolutely NOTHING to do with the parts of Alberta’s energy industry that were deregulated, specifically generation and retail.)  Consumers in the ATCO Electric territory are paying twice as much for distribution fees compared to rural consumers in the FortisAlberta territory (both are rural) and over 300% more for the distribution services compared to a residential consumer in the City of Edmonton.

Are your constituents mad over the cost of their utility bill?  They should be!  But make sure you are focusing your anger in the right direction.

As a sidebar note:  The following should also be of concern to your political parties and hopefully you can bring pressure on the NDP to do the right thing.  If they want to focus on “Getting it Right” here is something that they should be looking at:

Outsourcing Jobs:  We all know that firms like Shell laid off 700 people, Tervita Corp cut 15% of its work force, TransCanada is scheduling to lay off 20%, Cenovus is cutting 540 jobs, and the list continues.  Ok, in a tough economic time such as now, why then has the Department of Energy and the AUC turned a blind eye to utilities like ENMAX outsourcing IT jobs to the Tata Group in India; ATCO sold its IT division to Wipro in India; Direct Energy outsourced billing and customer care to HCL in India; and as well, Just Energy’s customer care and billing operations are centered in Ontario and Connecticut in the States.  Our provincial regulators are allowing the utilities and the big box retailers to continue to profit and benefit by doing business in Alberta and at the same time exporting jobs out of the province: this needs to stop.  Albertans can fulfill these jobs! Alternatively, and possibly simultaneously, stop allowing further rate increases in distribution tariff fees until this problem is resolved.
As the opposition parties; please take a stand.  Protect Alberta jobs and try to convince the NDP to bring back the utility jobs that ENMAX, DIRECT, JUST and ATCO have shipped out of the province.

Thank you.

Regards,

Nick Clark, Managing Partner
Utility Network & Partners Inc.
1316  9th Ave SE., Calgary AB, T2G 0T3

Please feel free to send any information or questions you might have to your own MLA. Please use the MLA Directory to find your representative’s contact information.

Thank you and have a wonderful day!

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Our Lowest Rates Ever and Exclusive Chamber of Commerce Rates!

Peace Power has some incredible news to share with you!

We are happy to announce that we are offering the lowest fixed rates on electricity we have ever had for new customers! With the rates below you can lock in until the end of 2018. That’s three and a half years!

Discount Rate: 6.60 cents/kWh + Security
Base Rate: 6.90 cents /kWh
Senior (60+) Discount Rate: 6.30 cents/kWh + Security
Chamber Discount Rate: 6.30 cents/kWh + Security
Chamber Base Rate: 6.60 cents/kWh

For your ease of comparison, here are our competitor’s current rates:

Direct Energy (3 year plan)                    6.99 cents
Encor (3 year plan)                                7.45 cents
Enmax (5 year only)                               6.99 cents
Just Energy (4 year plan)                       7.99 cents

Rates this low will not last long so enroll with us as soon as possible! Remember, our service agreements are non-binding and you can leave anytime if you are not satisfied, penalty-free, with only 10 days notice. Fixed electricity rates are at their lowest levels ever in Alberta, and Peace Power is very proud to bring the best deals we can to our customers.

Are you a member of a Chamber of Commerce in Alberta?

Another great piece of news is our partnering with the Chamber of Commerce to bring members exclusive rates!

If you or your employer is a member of any Chamber of Commerce in Alberta you can access the Peace Power Advantage Program and the “Chamber” rates you see above!  Simply enter your local Chamber’s name in the ‘Referred By’ field of our online Sign Up form and select either of these great rates!  Peace Power is happy to work with the various Chambers throughout the province and we hope you can take advantage of this exclusive offering!

Wherever you are in Alberta, you can enroll with Peace Power and receive Alberta’s best utility experience! Sign up today and take advantage!

Cheers,

Chad Mielke
Owner/Operator

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Peace Power’s First Contest and Another Great Month for Electricity!

Greetings from Peace Power!

We have two great pieces of news for you all!

The first is we are excited to say we have a contest running right now! We are giving you a chance to attend the Opening Day of the FIFA Women’s World Cup 2015 in Edmonton on June 6th! It will be a fantastic day cheering on Team Canada in their first match as well as seeing the opening ceremonies with performances by Sarah McLachlan and Tegan and Sara! If you share the post, or sign up for service with us, or are a current customer you will get extra entries so be sure to enter yourself and tell your friends!

Click here to enter!


The second is that the month of April set a new record low for electricity prices dating back to the birth of deregulation of Alberta’s electricity market. The Power Pool price for April 2015 closed at $20.52 per MW.  During 2015 prices have been slowly sliding downwards and Peace Power has been happy to make sure our customers are benefiting.

Here are a few things that have been happening in the Alberta market which has helped to lower prices:

·         The Sundance power plant is back online, the new Shepard plant is now into production, and new wind production has added to the fleet of generation. This has helped create an imbalance between supply and demand as Alberta is generating more supply than is being used, thus driving down the price.
·         Gas prices are very soft, resulting in lower generation costs.
·         There are no longer transmission bottlenecks which historically have been a problem.
·         Mild winter temperatures helped set records.
·         The availability of good inter-tie connections between Alberta and Saskatchewan, BC, and Montana, critical infrastructure needed to transfer electricity between these regions, eliminated a bottle neck in supply.
·         Alberta is an ‘Event Driven” market and there have not been any events that resulted in price volatility.

While the immediate future looks promising you might be wondering what the future market looks like. Higher market prices will be driven by the retirement of coal generation plants in 2018 and 2019, however, until then we will most likely be looking at a period of price stability and low prices.


At the end of the day, consumers are benefiting and deregulation is working quite well. We are also very happy to say that Peace Power is succeeding in offering significant savings to Albertans! During April, residential customers buying from Peace Power on our floating rate (indexed directly to the Power Pool price) paid only 3.28 cents/kWh, 37% less than the government’s regulated rate.  In fact, over the past 12 months our floating rate customers have saved 24% compared to the regulated rate!

Buying electricity on the floating rate from Peace Power is the best kept secret in Alberta’s deregulated market. Visit www.peacepower.ca to take advantage!

Cheers,
Chad Mielke
President, Peace Power Corporation
chad.mielke@peacepower.ca

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Have you seen our floating rate on electricity?

We are very happy to tell you March was a big month in the world of Alberta electricity. The average Power Pool price for March was the lowest ever since Alberta deregulated power, at $20.67 per MWh.

The Top 10:  The chart lists the lowest average monthly prices recorded over the last 15 years.

What this means for the consumer is a floating rate of approximately 3.5 cents per kWh for the month of March. If you have yet to sign up with Peace Power, consider the floating rate which has averaged 6.01 cents/kWh over the past 12 months. Remember, should the floating rate start to eclipse the fixed rates we offer, you can always make the switch with 10 days notice, penalty free.

While that is huge milestone for the electricity retail market it’s not the whole story. The big picture is showing that deregulation of the Alberta electricity market is working and retailers like Peace Power are playing a significant role in saving Albertans money every month. Considering that fixed contracts promoted by Just Energy, Direct Energy, ENCOR and ENMAX have prices that are 100% more than our current floating rate (excuse me, I just spit out my coffee), it is good to know that you have the choice to shop, compare, and save. Hard times come and go but we like to think we can help make things easier on everyone. Every bit counts!

We would also like to remind you that we will soon be breaking into the natural gas and green energy retail markets! While I wish we had a confirmed date that this will be happening, please know we are working very hard to get every piece in place to give you a more comprehensive utility experience in the next few months!

We love to hear questions and comments from you regarding our service and how the Alberta electricity market is doing. Please hit us up on social media or shoot us an email!

Kirk Clavelle
Chief Information Officer
Peace Power Corporation
kirk.clavelle@peacepower.ca
www.peacepower.ca

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2015 Brings New Lower Rates

Happy New Year!  As our headline above describes, the new year has brought with it new lower rates that we are very excited to share with you!  Given the steadiness on the supply side of the market, low oil prices and a solid market forecast, we were able to secure rates lower than ever before.  Rates that are significantly lower than anything the big boys like Enmax, Direct Energy, Just Energy and Encor are offering now or anytime in the past number of years!

What’s more, we’ve lowered our Senior’s Rateminimum age to 60!  If you are 60 or know people who are, take advantage and make the switch!

Furthermore, if you are a business that consumes a lot of power each month, feel free to get in touch with us directly as we may be able to improve on our rate offering below.

Residential & Farm Plus7.2 cents/kWh
Residential & Farm 7.5 cents/kWh
Senior’s Residential 6.9 cents/kWh

Commercial Plus 7.1 cents/kWh
Commercial7.4 cents/kWh

Non-Profit Organization7.0 cents/kWh

*Note that our Plus and Seniors rates require a security payment
*Rates in effect until June 1, 2015 or while supply lasts

As we look back at 2014, the average market price paid for power to the generators for the year closed at just over $50/MWh, the 3rd lowest year since the birth of deregulation and 36% lower than 2013.  This is great news for the Alberta consumer as it will have a net effect of lowering power costs for everyone, especially with prices anticipated to stay low well into 2015.

As I write this newsletter, the 30 day average price is sitting at $34/MWh which translates into a floating rate in the 4.5 cents/kWh range.  If you have yet to sign up with Peace Power, you may also want to consider our floating or dynamic rate.  The dynamic rate is very low right now, even markedly lower than our fixed rate offerings, and should continue to stay this way for the next while barring any big upsets in the supply side of the market.  Should the dynamic rate start to eclipse the fixed rates we offer, you can always make the switch with 10 days notice.
In market news, the Alberta Government put out a press release on December 18th regarding changes to the electricity system based on recommendations of the MLA Retail Market Review Committee.

The highlights include:

– clarifying that the Local Access Fee on bills is set and collected by the municipality in which you live

– changing the name of the Regulated Rate Option (RRO) to the Default Rate – this is a name change only, nothing in the policy changed

– retail advertising material can no longer be inserted into the billing envelopes for those customers still on the Default Rate

While none of the changes will help consumers save money on electricity, they are nonetheless positive steps taken by the government to help educate Albertans, increase transparency in the market, and level the playing field between competitive and Default Rate providers.  Slowly but surely things are changing for the better in our marketplace.

To read the full press release, click on the link below:
Click Here For AB Government News Release

Cheers / Chad

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