Carbon tax — dressed like Robin Hood

By February 23, 2016 General No Comments

See below an article written by Nick Clark at Utilitynet, giving some insight on the possible Carbon Tax:

Albertans enjoy the lowest electricity rates in Canada today because of a plan designed in 2000 to encourage free enterprise.

The strategy–based on a competitive electricity market—was created to inspire investment for new generation power. The strategy worked.

As a province, we are fortunate to have over 16,000 MW of installed capacity, more than 9,000 MW in recent years. Alberta currently has approximately a 40% surplus in supply outstripping consumer demand. The good news is there is zero debt on the public books and the investment in new power was funded by the private sector.

Consumers can buy electricity today for only 3.5 cents per kWh.
What are you paying?

Will low prices last into the next decade? Or will new NDP policies end low consumer prices and cause an increase in the volatility of electricity rates?

The other bit of good news which seems to have escaped journalism media is that, last year, the amount of installed capacity for natural gas in Alberta surpassed that of coal generation. The market already is moving in the right direction – albeit not as fast as the environmentalists might like to see. Without government interference, the mix in generation has moved towards the reduction of our dependency on coal and shifted to natural gas and wind.

Alberta also now ranks third in Canada with an installed wind energy capacity of over 1,400 MW.

Ask yourself: Why risk destroying a market that already is moving in a healthy direction? Market Installed Generation Capacity:
39% Coal, 44% Gas, 9 % Wind, 8% Other.

The industry went through the building process with periods of high price volatility which, in turn, was driven by unprecedented economic growth in Alberta. Consumers remember the pain of utility bills over 10 cents per kW.
Previous government policies spurred economic development and jobs in the province. Today, we are faced with an energy sector that is in freefall and increasing unemployment rates, as companies continue to lay off workers and outsource jobs offshore.

Questions to the NDP: In the past, the carbon tax collected was used to fund climate change and emissions initiatives managed by CCEMC. Investments focused on clean energy production plus research and development projects dedicated to environmental initiatives.

• The last financial report issued by CCEMC was published in May 2014. We understand the May 31st, 2015 Financial Statement still sits on the desk of someone in the NDP and it has not yet been approved for release. Why not? The longer these financials sit, the more we should fear the lack of transparency.

• What happens if the NDP is not openly transparent with regards to millions of dollars collected and spent? Should this be of concern? We would argue, the answer is, “Yes.”

More important, there will be 100s of millions of carbon tax dollars collected and paid out in the future. We all know the economics tell us that, business that are taxed, simply pass increased costs to the consumer in terms of higher prices. And if generation plants are closed prematurely, get ready: periods of high volatility in consumer electricity prices will return and days like today of 3.5 cent electricity will disappear.

• Will the new tax collected be funnelled into general revenue rather than to the CCEMC? Carbon tax previously allocated to the CCEMC provided the necessary stewardship of investment in environmentally responsible initiatives. We propose the answer is, “No.”

Prediction:
Here’s how I see this government rolling out…if Albertans don’t speak up:
• The new carbon tax on industry passes to consumers in terms of a price increase;
• The government applies the tax to general revenue rather than to fund CCEMC mandated initiatives;
• The money will be used to artificially fund high profile and politically motivated green-projects;
• This action indirectly increases government debt through the purchase of Renewable Energy Certificates from new green generators;
• Minister Joe Ceci adds to his general revenue pot of cash, as a social payment program. Funds will be given back to low income people facing an increased cost of living that the carbon tax caused in the first place.

All this makes for a compelling Robin Hood story.

Let’ dig a little deeper into the problem: In addition to generators dealing with record low energy prices, the retailers including ATCO, Direct, ENMAX and Just Energy all have moved jobs out of Alberta. Surely, Alberta Energy knows that an old, established utility such as ATCO recently sold a crown jewel called Atco iTek to Wipro of India and that customer of ATCO’s new retail division (which they are marketing as a Fresh Start) is being serviced out of the province.
ENMAX, likewise, laid off Calgary IT staff and outsourced systems control to the Tata Group in India.
Direct Energy is another utility profiting from the government’s Regulated Rate; their billing services and customer care are managed by HCL in India.
The problem of outsourcing utility jobs is real and in our opinion fundamentally wrong, especially when Alberta is facing tough economic times. Please don’t ignore these actions when it comes to job losses for Albertans.
Recommendation: Prudent regulations are required. We encourage this Government to understand the negative economic impact of unintended consequences by increasing taxes and using those new tax dollars in ways that are not in the best interest of Albertans.
The NDP also needs to be honest with consumers about the outsourcing of core utility jobs.

Stand up and say, “NO” to ATCO, ENMAX and Direct Energy.