Southern Alberta Council on Public Affairs (SACPA)

There are two stories from Alberta that illustrate the unintended consequences of utilities trying to beat the returns available from full regulation. One is the story of the phase-out of coal-fired generation. The other is the story of the treatment of regulatory assets that are not used and useful. In both cases, utilities have sought to get better than normal returns but are now paying the price for the chain of events they set in motion. Starting with the story of the coal-fired generators, the previously fully integrated electricity companies in Alberta were about 50/50 on deregulation when it was being rolled out as a policy. A compromise was reached that would allow the previously regulated plants to continue to be paid as if they were fully regulated through Power Purchase Agreements established by the Government. Since that timid beginning, all the companies have come around wanting to make more out of their assets than the previous regulatory model would allow. Arguable, they are big on the upsid