For a government that is only going to be in power another three years, the one led by Alberta Premier Rachel Notley has no shortage of chutzpah.
Of course, the Alberta New Democrats think that they will be re-elected and are gambling the breakneck speed of their reforms will create enough momentum to carry them to a second term.
So earlier this week, the Notley government breathlessly announced it had struck a deal with power companies over plans to phase out the use of coal in the generation of electricity.
The NDP government will pay three coal-fired electric generating companies $1.36 billion for the province’s decision to close their plants early.
As reported in the Financial Post, Energy Minister Marg McCuaig-Boyd said the province will pay Capital Power Corp., TransAlta Corp. and ATCO Ltd. a total of $97 million per year, beginning next year and payable every year until 2030, to shut down six of their 18 power plants early.
The other 12 coal-fired electric generating stations in the province are scheduled to close, or convert to natural gas, before 2030.
Alberta’s government has mandated that all coal-fired power plants either cease operations or eliminate all their emissions by that date as part of sweeping climate change legislation announced last year.
The payments, says the minister, will not affect rates, because they will come out of the government’s carbon tax that is scheduled to be imposed at the start of the New Year.
That the Notley government somehow thinks this is a win-win says everything about the delusional state of mind that permeates NDP thinking.
Rates, after all, may not be affected by the payment, but the taxpayer will be paying for the government’s largesse.
In other words, the money is coming out of the left pocket, rather than the right pocket. Albertans will pay for the phaseout one way or another.
Worse, this initial payment is just the first step in the wholesale transformation of electricity generation and delivery.
Currently, the province has a deregulated market-based system which has allowed prices to fluctuate. Currently they are low. Demand is low. Supply is abundant. It is Economics 101.
That’s a good thing for the consumer, but it’s a bad thing for a government Hell-bent on reducing CO2 emissions at all possible cost, because it discourages investment in new technologies. Why buy a pricey Tesla when the old Ford pickup still does the job?
So the Notley government wants to move to a system that is more like that followed in the United Kingdom where the risk of adding new production is borne by ratepayer and not the producer. The latter will be basically guaranteed a return on their investment.
The province hopes to have it all in place by 2021.
Like I said, the New Democrats are an optimistic bunch.
How this system will actually work, though, is anybody’s guess. On one hand, the government is capping rates. With the other hand it is guaranteeing a return to producers. If rates are not sufficient to pay for new production, who will make up the difference?
The obvious answer is the taxpayer.
So Albertans will end up paying for the conversion to this low-emission world one way or the other.
And the bill isn’t going to be cheap.
Experts figure that the cost of getting to this green Nirvana by 2030 will be around $20 billion.
It boggles the mind.
After all, every single MW of renewable energy that will be brought online over the next decade will have to be backed up by fossil fuels for the simple reason that the wind doesn’t always blow and the sun doesn’t always shine.
Albertans aren’t stupid. In three years time, the Notley government will be voted out of office. Wasteful, expense policies such as this ensure voters will choose any party besides the New Democrats to govern.