Despite the fact that bids were considered well below whatgovernment officials hoped, Alberta soon expects to be the firstCanadian province to successfully deregulate its power industryafter five companies won the rights to sell electric power in thecoming retail marketplace, which opens Jan. 1, 2001.

The winning companies, all with offices in Canada, were EPCORUtilities, TransCanada PipeLines Ltd., Engage Energy, Enron CanadaPower Corp. and Enmax Energy. All total, they bid nearly C$1.17billion for the right to sell 4,249 MW of electricity to Albertaresidential, industrial and residential customers over the next 20years.

More than 6,500 MW of power from 10 Alberta plants — about 85%of the power available in the province — was available at theauction. Generation capacity at four plants attracted no bids,while production from Engage Energy will be subsidized. The fourplants that failed to receive bids carried the highest debt andcosts, according to officials.

The auction opened Aug. 2 and concluded last Monday with 69bidding rounds between seven companies. PanCanadian Petroleum andUtiliCorp United of Kansas failed to win any power contracts in theauction.

Alberta government officials kept the bidders in limbo for 72hours while they decided whether to accept all of the bids orreject them. Even though officials had hoped for higher bids,Alberta Minister of Development Mike Cardinal said that thosetendered by the five winning companies represented the fair marketvalue.

“We believe we had a competitive auction,” Cardinal said. Heacknowledged criticism that suggested more revenue could have beenobtained, saying “you have to look at economic realities.”

Cardinal also said that the government soon will unveil aredistribution program that will use the money raised in theauction plus revenue from other Alberta plants, to offset risingelectricity costs. In the past year alone, the average price ofpower per kilowatt hour at the Power Pool of Alberta has increasednearly 100%. Industrial and commercial users have seen compensatoryincreases in their bills.

Critics, including the Industrial Power Consumers andCogenerators Association of Alberta, charged that to be a success,the auction needed to raise between C$3 billion and C$4 billion forthe “balancing pool.” The pool is set up to pay off debt incurredunder the coming deregulation and to lower consumer costs. Theassociation members consume more than 50% of the power produced inAlberta.

And, in a study released last week, Canadian Energy ResearchInstitute noted that industry data shows electric utility customerswill change providers only if they can obtain a significantly lowerprice.

Alberta Liberal finance critic Lance White charged that thegovernment’s acceptance of C$1.7 billion in bids was a “sell out”that resulted in C$3 billion less than what the Alberta taxpayersshould have received.

If the government had not accepted the auction results, thederegulation plan would not have been able to into effect at thebeginning of next year.

Enmax, based in Alberta and Calgary’s municipal utility, bidC$315 million for 1,314 MW from two Alberta plants. Enmax receiveda 20-year contract for the Keephills PPA and a three-year contractfor the Wabamun PPA. EPCOR, the principal utility for the City ofEdmonton, bid C$253 million for 1,373 MW to obtain PPAs for BattleRiver and Sundance C generating facilities.

Enron Canada Power bid successfully for 706 MW offering to payC$294.8 million for the Sundance B PPA. TransCanada bid C$212million for the 560 MW Sundance A facility.

Engage, a partnership of Houston’s Coastal Corp. and Vancouver’sWestcoast Energy, won two bids: the Rossdale plant, with 203 MW,and the Rainbow plant with 93 MW. It paid no money for the RossdalePPA but will pay C$350,000 a month over five years to manageRainbow’s power.

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