Power line costs mounting
A boost in the cost estimate for a major Edmonton-to-Calgary power line won’t be the last, and Alberta consumers will bear the brunt, says the Wildrose environment critic.
Earlier this month, AltaLink submitted to the Alberta Electric System Operator (AESO) an updated cost estimate of $1.65 billion — up $200 million from an earlier estimate — for the 500-kilovolt power line. The increase falls within the $1.3 billion to $1.7 billion range anticipated in January 2011, the company notes.
Rimbey-Rocky Mountain House-Sundre Wildrose MLA Joe Anglin said he is not surprised costs are already mounting.
“I predicted it. There will be more to come,” he said on Wednesday.
Since AltaLink can apply to boost power rates to cover all construction costs and provide a profit, there is no need for the company to rein in costs, he charges.
“There’s incentive to spend. There’s no incentive to be frugal and sort of responsible,” said Anglin. “The incentive is to spend outrageously because the more money they spend the more they make.”
Anglin has long criticized the province’s power line upgrade plan as a massive, unnecessary over-build.
The real losers will be power consumers, whose bills will skyrocket in coming years, he predicts. Those most hurt will be small business owners and people on low or fixed-incomes, including seniors.
Alberta Utilities Commission (AUC) spokesman Jim Law said there is a process in place to ensure that costs and companies’ rate forecasts are scrutinized.
The initial cost estimate is reviewed by the Alberta Electric System Operator, which also must approve significant changes.
The AUC has also gotten involved in reviewing cost increases. When ATCO, which is building a 500-kilovolt north-south transmission line on the east side of the province, submitted a higher cost estimate the AUC demanded an explanation. A similar request is likely with AltaLink, said Law.
“As part of the process which adds costs of transmission to bills they come under scrutiny at a public hearing where intervenors can argue before the commission that some costs are not reasonable to include,” said Law.
In the last few months, the Alberta government has extended the power of the AUC to review costs by removing what was known as the “presumption of prudence” by power companies.
“What we determine is whether these costs are reasonable to include (on power bills),” said Law.
AltaLink says the power line project’s budget was adjusted because of rising construction costs.
“Alberta’s hot construction market continues to put pressure on project cost estimates,” says Dennis Frehlich, AltaLink interim president and CEO in a statement.
“We will continue to carefully manage this important project to keep costs as low as possible.”
The 350-km Western Alberta Transmission Line was approved last December and will carry energy from power generators in Genesee southwest of Edmonton to Langdon east of Calgary.
It is needed to meet growing power demands and to upgrade transmission lines that have seen little expansion in the last 30 years, says the Alberta Electric System Operator (AESO), which oversees the province’s power grid.
“As a province we’re really catching up on the aging infrastructure within the province,” said AESO spokesperson Dawn Delaney, who said the need for transmission capacity to serve the province was identified a decade ago.
“We need to add more capacity. And we’re building it once, we’re building it right, in an effort to not go back to landowners in a couple of years to add additional capacity.”
Delaney said that the cost of new projects, based on a 10-year average, is expected to add $1.10 per month for each $1 billion worth of power line construction to residential electricity bills.
It should be noted, said Delaney, that transmission costs only represent about 20 per cent of the typical residential bill and about 25 per cent of the bill for industrial users.
Besides AESO and the AUC’s involvement, a provincial committee was set up called the Transmission Facilities Cost Monitoring Committee to monitor costs.
“There are avenues for people to keep an eye on these project costs,” she said.