Joe Anglin's response to Ms. Miranda Keating-Erickson:
Where is our FREE electricity?
In a letter to the editor, Miranda Keating-Erickson, the Alberta Electric System Operator’s (AESO) Director of Market Design described Alberta’s wholesale electricity market and wrote, “Generators compete to offer their supply to the grid. This competition benefits Albertans by ensuring they pay the lowest price possible for electricity.”
On the website www.ctrc-ab.ca Albertans can actually listen to an audio recording of the AESO executives describe the wholesale electricity market, as “elegant”. The remarks, and description of the market are located in the audio version of AESO’s overview testimony; they can be found at the 1:30:49 mark on the time scale.
According to Ms. Keating-Erickson’s letter to the editor, electricity generators don’t want to give their electricity away for free. They are just willing to accept nothing in return, for giving their electricity away. Think about this for a minute! If the electricity generators are willing to accept nothing, why don’t we just offer $0 a megawatt to all the generators and we can all go home happy? The fact is the wholesale electricity market is biased and favours the generators. All the generators are paid the highest price offered, even when many of them are willing to sell for much less. This is just one of the reasons why Albertans are getting gouged each month.
For example: If demand is constant and the AESO requires 10,000 MW to serve the demand for the next hour. Ten generators could offer to sell a combined 9,999 MW for $0 to the market. Another generator could offer to sell the last megawatt (MW) to the market for $500. In this example, the total cost of the 10,000 MW is $500 for the hour. Under AESO’s elegant pricing system, all the generators are paid $500 for each megawatt (MW). Instead of costing Albertans $500 for the hour, the AESO’s elegant pricing system ensures Albertans will be charged $5,000,000 for the hour. How does this pricing system ensure Albertan get access to the lowest price electricity?
Ms. Keating-Erickson states in her letter that at least six different times in 2011 the hourly price of electricity actually settled at $0 dollars a megawatt (MW). What Ms. Keating-Erickson failed to disclose in her letter is: Albertans don’t get free electricity. The AESO states on page #41 of its 2008 annual report (www.aeso.ca), “There have been periods when the pool price has settled at $0/MW. This situation requires system controllers to follow supply surplus procedures to clear the market.”
“Clear the market” is a technical term that means Albertans don’t get access to free electricity. Albertans don’t need an elegant pricing system. We need a system that allows Albertans to pay the exact price generators are willing to sell electricity.
Alberta is flush with cheap electricity. The problem with access to this electricity is not transmission lines. It is a systemically flawed and biased organization called the Alberta Electric System Operator (AESO). It’s time for a change!
Joe Anglin
Rimbey, AB
(403) 843-3279
Where is our FREE electricity?
In a letter to the editor, Miranda Keating-Erickson, the Alberta Electric System Operator’s (AESO) Director of Market Design described Alberta’s wholesale electricity market and wrote, “Generators compete to offer their supply to the grid. This competition benefits Albertans by ensuring they pay the lowest price possible for electricity.”
On the website www.ctrc-ab.ca Albertans can actually listen to an audio recording of the AESO executives describe the wholesale electricity market, as “elegant”. The remarks, and description of the market are located in the audio version of AESO’s overview testimony; they can be found at the 1:30:49 mark on the time scale.
According to Ms. Keating-Erickson’s letter to the editor, electricity generators don’t want to give their electricity away for free. They are just willing to accept nothing in return, for giving their electricity away. Think about this for a minute! If the electricity generators are willing to accept nothing, why don’t we just offer $0 a megawatt to all the generators and we can all go home happy? The fact is the wholesale electricity market is biased and favours the generators. All the generators are paid the highest price offered, even when many of them are willing to sell for much less. This is just one of the reasons why Albertans are getting gouged each month.
For example: If demand is constant and the AESO requires 10,000 MW to serve the demand for the next hour. Ten generators could offer to sell a combined 9,999 MW for $0 to the market. Another generator could offer to sell the last megawatt (MW) to the market for $500. In this example, the total cost of the 10,000 MW is $500 for the hour. Under AESO’s elegant pricing system, all the generators are paid $500 for each megawatt (MW). Instead of costing Albertans $500 for the hour, the AESO’s elegant pricing system ensures Albertans will be charged $5,000,000 for the hour. How does this pricing system ensure Albertan get access to the lowest price electricity?
Ms. Keating-Erickson states in her letter that at least six different times in 2011 the hourly price of electricity actually settled at $0 dollars a megawatt (MW). What Ms. Keating-Erickson failed to disclose in her letter is: Albertans don’t get free electricity. The AESO states on page #41 of its 2008 annual report (www.aeso.ca), “There have been periods when the pool price has settled at $0/MW. This situation requires system controllers to follow supply surplus procedures to clear the market.”
“Clear the market” is a technical term that means Albertans don’t get access to free electricity. Albertans don’t need an elegant pricing system. We need a system that allows Albertans to pay the exact price generators are willing to sell electricity.
Alberta is flush with cheap electricity. The problem with access to this electricity is not transmission lines. It is a systemically flawed and biased organization called the Alberta Electric System Operator (AESO). It’s time for a change!
Joe Anglin
Rimbey, AB
(403) 843-3279
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