Energy
minister Ken Hughes' announcement of changes to electricity
purchasing rules, as if it were some kind of benefit to consumers, is
simply another example of government saying one thing, while doing
something else.
Yes,
it is entirely possible that extending the forward-buying powers of
power utilities for four months, instead of the current six weeks,
will result in some savings in the cost of power.
But
those savings will be so small that very few of us will be able to
see the change on our monthly bills. Far more likely, the savings
will just disappear into the bottom line of the utilities.
More,
if consumers could actually realize a drop in price, I doubt a whole
lot of us could find the appropriate numbers on their statements to
prove how many pennies were saved over the period of a month by this
announcement.
The
critics are right about Alberta's foray into deregulation of
electricity; the government just doesn't get it.
Nobody
should need an economics degree and maintain a constantly-updated
spreadsheet program to make the comparisons that will determine if
they're getting a fair deal in Alberta's so-called free market in
power. Buying power is not like going to the grocery store and
comparing the cost per hundred grams of the various sizes of canned
beans.
You
can almost see Hughes throwing back his hands and rolling his eyes,
when he's asked why so few Albertans lock their power rates into long
term contracts with suppliers. Why do the majority of Albertans —
me included — opt instead for the floating rate?
The
answer is simple. We don't have any data presented in an
understandable form that would show how locking in is a good idea for
anyone other than the utility. The utilities simply won't provide it.
Stemming from that is the perfectly understandable response of
widespread consumer distrust of the utilities.
In
our household, we've tried the long-term fixed rate option and the
floating rate option, with three different providers over the years.
In our experience, there is no difference between them. The bills
only go up over time.
No
matter how diligent you are in unplugging things that are not used,
if you switch to more efficient lighting and run around turning
things off all day long, there is no noticeable savings in the
monthly bill. You may feel better about your carbon footprint for
your effort, but there is no financial reward to a residential
customer for conserving power.
Simply
put, if everyone in Red Deer was as much a cheapskate as me, the drop
in demand would have absolutely no effect on the cost of supply. And
even if it did, you would notice no more money in your pocket at the
end of the month for your diligence.
The
cost of the power is such a small portion if your monthly bill, you
would need to severely crimp your lifestyle for conservation to have
a noticeable effect.
Demand
— therefore presumably (laughably?) price — is driven by
industrial consumers, not by people in their homes who only use their
clothes dryers in the middle of the night.
That's
how power deregulation in Alberta has evolved, and neither forward
buying by utilities, nor university-level price comparisons of
delivery options will save you the price of a cup of coffee per
month.
When
ranting about free markets and deregulation of power, one must also
acknowledge that under Alberta's system, the total cost is more
honestly expressed. It's more costly, but it is more honest.
In
Saskatchewan, for instance, the whole system is owned by SaskPower.
The province (that is, the taxpayers) own the generators, the power
lines, the power meters and the whole billing system.
Customers
there don't fully know what portion of their bill is due to costs of
production, infrastructure, delivery and administration. More than
likely, parts of some of these costs are contained in the general tax
system. Pension costs for retired SaskPower employees comes to mind, as one small example.
Therefore,
monthly bills will be lower — consumers are mostly likely paying
for some of it elsewhere in the provincial budget.
But
we pay through the tax system, too. The investors in private power
generators, and the private builders of power lines get significant
grant and tax support from taxpayers. That, plus a guaranteed minimum
rate of return, with profits built into the power rates, access fees,
admin fees and every other confusing thing you see on your bill.
Tory
ideology says that private industry is always better — at
everything. The profit motive always makes products and services more
efficient and cheaper for the consumer, than, say, the same services
provided in Saskatchewan by the government.
You'll
just never see it on your power bill. Ken Hughes should stop
pretending otherwise — it's embarrasing.