Brian Zinchuk is editor and owner of Pipeline Online
If you think tripling the maximum price of power in Alberta is insane, guess what – it’s coming by 2032. How many hour do you need at $5.98 to make up for one hour at $2999.99?
Here’s how to get unelected as the Alberta government in a few easy steps:
- Restructure the electricity market.
- In so doing, triple the maximum price for power.
- Introduce negative pricing.
- Wait for days when the wind doesn’t blow and the sun doesn’t shine.
- See people’s power bills skyrocket.
- Lose next election.
And as a bonus, have a jurisdiction with more coal, oil and natural gas than God (because God gave all of his to Alberta) go into grid alerts, as the Alberta grid did yet again at 18:54 on Monday, Sept. 8.
Twitter/Alberta Electric System Operator
On Aug. 27, the Alberta Electric System Operator (AESO) released its final report on its “Restructured Energy Market.” While there’s all sorts of stuff in there to supposedly fix the grid, there’s one item in particular that, if it remains, could cost the United Conservative Party the next election, or the one after that.
I will freely admit I wasn’t great at calculus when I attended engineering college, which is why I’ve been a pipeliner and reporter since then. But I did understand the concept of the integral being the area under the graph, and that is immensely crucial in this analysis.
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Typical day
On a typical day in Alberta, it’s common to see the deregulated market AESO pool price float around $20 per megawatt-hour (MWh). So, if that’s an average day, 24 hours x $20 per megawatt-hour x one megawatt gives you $480 for 24 megawatt-hours. With me so far?
SaskPower often says that a megawatt is enough to power 1,000 homes. So one megawatt-hour would power those 1,000 homes for one hour.
So let’s look at two recent days from comparison – one which had low prices, including a limit-low, and another which higher prices, including three hours of limit-high – and see what the impact will be on the ratepayer.
Here’s what the AESO says about the final “Restructured Energy Market” under “updated pricing”:
The energy market offer cap will increase to $1,500/megawatt-hour (MWh), rising to $2,000/MWh in 2032, with a price cap of $3,000/MWh. These increases strengthen investment signals, while staging allows market adjustment.
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The price floor will initially remain at $0/MWh but will decrease to -$100/MWh in 2032
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The increase to the price cap and eventual decrease to the price floor attracts additional supply/demand response and promotes flexibility in the market
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Scarcity pricing will reflect the value of the ramping product to set prices between the energy offer cap and the price cap at times when ramp capability is limited
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Now, there’s a lot more to the restructuring of the market, including stuff like “Day-Ahead Reliability Market.” And maybe that will reduce volatility in the market. Or maybe it won’t. But let’s focus on the new pricing.
You see, one thing that is clear to me from following the Alberta electrical grid is that whatever the market limits are, both high and low, arbitrary or not, they are often tested. That means whatever those limits will be, they will be reached. Currently the limit is zero dollars for the limit-low, and $1000 for the limit high (which ends up being $999.99 per megawatt hour).
So if, in 2032, the limits stretch from -$100 per megawatt-hour to $2999.99 per megawatt-hour, you can bet your sweet bippy it will hit that.
Thanks to the awesome logging of AESO data by X account @ReliableAB and its corresponding website https://reliableab.blogspot.com/ , I transcribed the prices as well as the wind and solar outputs for two 24-hour periods in close proximity to each other. The reason I focused on renewables is because they are by far the largest variables, and natural gas-fired power generation responds to backfill to their vagaries.
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The first was the evening of Sept. 5 into the evening of Sept. 6, which for all intents and purposes was a great day for renewables on the Alberta grid. At 23:00 on Sept. 5, there was enough wind to see the power price fall to zero and then float around just a few bucks for several hours. Some people would say this is great. We shall see. This is the grid in green, with the limit low bolded.
Two days later I did the same for the evening of Sept. 7 into the evening of Sept. 8. This day saw wind generation fall to 49 megawatts out of a capacity of 5,688 megawatts, or 0.9 per cent of nameplate capacity. And it did this at the absolute worst time – during the supper hour, as solar output was falling like a stone and demand was spiking. The result was three hours of limit-high pricing, or $999.99 per megawatt hour. This is the orange grid, with the limit high bolded.
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Note: Just before I started writing this, the AESO declared a “grid alert” at 18:54 on Sept. 8, but did not publish it on their X page as per usual. @ReliableAB’s logging of the AESO date detected a low level of dispatched contingency reserve at 18:59. A grid alert is issued when the grid is running low on reserves and could potentially have more demand than supply. If that happens, the grid’s frequency could drop. And if that happens by more than a small amount and/or for too long, it could lead to cascading failures across the grid.
The AESO said in its RSS feed, “Due to maintenance on the Alberta-British Columbia tie line, a generator outage, and solar dropping off at sunset, we’re currently using reserves to meet demand and maintain system reliability. We will provide an update when system conditions return to normal.” Notably it did NOT reference wind output falling to 0.8 per cent of capacity, which is essentially a lie by omission. Why is solar blamed but wind bottoming out gets a pass? You can see from the orange grid there was plenty of solar still on the grid when prices hit $999.99.
AESO pricing varied from $5.98 to $999.99 per megawatt-hour in just one day on Sept. 8. AESO
Back to the analysis: If you were buying 1 megawatt of power per hour on the open market on the first day (in green) you would have paid an average of $22.95 per megawatt-hour and a total of $550.85 for the day. (This is the area under the graph I was referring to earlier.) That was Sept. 5-6, and as I said, it was a good day for renewables and pricing on the grid, if you’re a consumer.
But step forward 48 hours to Sept. 7-8. The 24 hour average hit $309.22 per megawatt-hour, and the total price for the day was a whopping $7421.38!
That means the second day was equal to 13.5 days equivalent to the first day, or roughly half a month. Put another way, one bad day’s pricing was equal to just under two weeks of good days’ worth of pricing.
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New pricing simulation
So let’s do an experiment with the same data set, changing only two factors. This time, I substitute the one hour of limit-down at 23:00 on Sept. 5 with the new limit-down price of -$100 per megawatt-hour. That’s the blue grid. And on Sept. 8 I replace the three limit-up hours with the new $2999.99 pricing. That’s the purple grid. In both instances, I made the substitutions bold and in red.
You can see the stark difference immediately. On the “good day,” the average price fell to $18.79 per megawatt-hour, with the 24-hour total of $450.85.
But the “bad day” was a really bad day. The average price was now $559.22 per megawatt-hour (nearly double the average price, with current pricing). But the whopper was the total price for the day: $13,421.38 for 24 hours of power at one megawatt. Doing the same ratio calculation as above, one “bad day” with just three hours of limit-high pricing is equal to 29.8 “good days.” As I go to post this, there have been nine hours of pricing over $700, and six of those have been over $933.
This is where the area under the curve really adds up. One low-wind output day could result in the equivalent pricing of an entire month of good-wind-output days.
And in recent weeks we’ve had at least four days where wind output hit less than 2 per cent in Alberta. Granted, it was only Sept. 8 where I saw prices hit limit up. But from 45 months of observing the Alberta grid, in almost all instances where the price goes limit-up, there is a strong correlation of wind output going to next to nothing. In some cases, wind output hits zero. Nada. Zip. And I’ve reported on that many times.
According to @ReliableAB, over the previous 30 days, there have been three hours at $999.99 and 27 hours at $0 per megawatt-hour (or at a phrase I coined, “less than a Timbit.”)
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Sell low, buy high, again
What was also seen, yet again, is that Alberta tends to export a lot of power when the price is next to nothing. At 04:00 on Sept. 8 it was exporting 768 megawatts at $5.98 per megawatt-hour ($4,595.64 for that hour). But it was importing 51 megawatts at $999.999 per megawatt-hour ($50,999.49 for that hour).
That’s actually an exceptional circumstance, because often Alberta imports hundreds of megawatts when wind bottoms out. There are frequent occurrences of Alberta selling low and buying high, which does nothing to help the ratepayers.
And that’s who is going to pay for all of this. To some, those arbitrary limits are just theoretical. They provide “price signals” to the market. But some poor bastards, also known as the Alberta ratepayers and Alberta industry, get to pay those rates. And just as sometimes the wholesale price goes to $999.99 per megawatt-hour now, it will go to $2999.99 per megawatt-hour in 2032. And somebody has to pay that. If you live in Wild Rose country, that somebody will be you.
And on the flip side, whenever the price currently goes to zero, it is invariably when there is a lot of wind power generation available. So whenever wind has a good day, all other generators on the grid, including natural gas, biomass and hydro, will have a bad day, because they will be subjected to negative pricing and actually have to pay to produce power.
When those chickens come to roost, there’s going to be more than power bills to pay. There will be hell to pay, and those elected to government are going to have a seething populace chasing them with pitchforks and torches.
Tripling the maximum power rate is a sure path to getting unelected, if not a lynch mob.
Good luck with that.
Brian Zinchuk is editor and owner of Pipeline Online. He can be reached at brian.zinchuk@pipelineonline.ca.
At 1 p.m. on Tuesday, Sept. 9, Zinchuk and Bronwyn Eyre will have guest Andrew Roman on the Pipeline Online Podcast to discuss how climate activists are using the Charter of Rights to challenge environmental policies and how they are using children to front their legal efforts. You can watch live on:
X at https://x.com/Pipeline_Online (best option)
Facebook at https://www.facebook.com/pipelineonlineca
or YouTube at https://www.youtube.com/brianzinchuk
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- 0095 Fast Trucking nearly 70 years good at it0095 Fast Trucking nearly 70 years good at it
- 0053 Kingston Midstream Westspur Alameda Click Before You Dig0053 Kingston Midstream Westspur Alameda Click Before You Dig
- 0092 Turnbull projects big and small0092 Turnbull projects big and small
- 0046 City of Estevan This is Estevan Teaser0046 City of Estevan This is Estevan Teaser
- 0087 Lori Carr Coal Expansion0087 Lori Carr Coal Expansion
- 0077 Caprice Resources Stand Up For Free Speech0077 Caprice Resources Stand Up For Free Speech
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- 0061 SIMSA 2024 For Sask Buy Sask0061 SIMSA 2024 For Sask Buy Sask
- 0051 JML Hiring Pumpjack assembly0051 JML Hiring Pumpjack assembly
- 0049 Scotsburn Dental soft guitar0049 Scotsburn Dental soft guitar
- 0041 DEEP Since 2018 now we are going to build0041 DEEP Since 2018 now we are going to build
- 0032 IWS Summer hiring rock trailer music
- 0022 Grimes winter hiring
- 0021 OSY Rentals S8 Promo
- 0018 IWS Hiring Royal Summer
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- 0002 gilliss casing services0002 gilliss casing services
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