Carbon Levy condo board energy budgeting

Actual reality of what is happening

Canada has or will have a federally mandated price on carbon in 2018. This means that regardless of the NDP’s involvement in the price structure of the Alberta Climate Leadership Plan, there will be a level playing field on carbon emissions across Canada. This is good news as it will likely curb an exodus of small time power generators fleeing to Saskatchewan, but there are challenges that are presented by both the Alberta and Federal plans.

The end of coal fired power

From the Alberta Government's Climate Leadership Policy

The addition of a Carbon Tax and the removal of Alberta’s coal fired power generators will increase the cost of electricity in the province. How much the increase is likely to be is up for debate. Large scale carbon emissions producers, like power plants, have been paying a levy on carbon emissions since 2007. The substantive change the NDP wants to charge more tax to coal fired power generation so that they can redistribute it to stimulate renewable resource energy generation investment in the province. They want to do this by changing the way the Alberta Electrical Systems Operator pays companies for generation. At this time Albertan’s pay for the amount of power being used. The NDP wants to pay for power it is possible to generate as a baseline and then float a smaller premium for what is being currently used in the province.

Blue is the fixed rate, red the regulated rate and grey the floating rate.

What does this mean for your energy expenses? It means you will pay more. Now, you’ll pay more because we’re in a depression and we’re paying incredibly low rates for energy in the province. The question of how much energy prices will rise is up for a lot of interpretation. The provincial government has put a cap on energy prices at $0.068/kWh until 2021 for detached homes. What will the bulk energy price that a condominium pays me? There is not a lot of consensus. Instead we’re in a holding pattern waiting for a recovery in oil and gases prices in the province to stimulate the industrial sector. In the 24 hours that followed the OPEC announcement about production cuts on November 29, 2017 there was a $5 per barrel increase in West Texas crude prices. This combined with announcements from the Trudeau government of the approval of two pipeline projects has generated optimism that there will eventually be a recovery in Alberta, but the timeline for that recovery is unknowable.

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