Alberta is on its way to coal-free electricity. The province has struck a deal with three major power producers to formally end coal-fired electricity by 2030.
Environment Minister Shannon Phillips announced Thursday that the province will pay three major power producers a total of $97 million a year over the next 14 years to compensate them for the shut down and to help them transition to cleaner forms of energy.
"This is a made in Alberta plan for Alberta's electricity market," Phillips said, noting that the federal government recently announced it will act to phase out coal-fired electricity in the same time frame.
According to CTV News the payments will be spread amongst TransAlta, Capital Power and Atco. The money will come out of the carbon levy on heavy industrial emitters. Talks with a fourth player, Calgary-based public utility Enmax, are ongoing.
Phillips said the deal will not result in higher power bills.
Under the terms of the deal the power producers are to keep their headquarters in Alberta, continue to invest in the province and work to provide support to the communities affected by the shutdown.
There are 18 coal-fired electricity units in Alberta. All but six of them are already scheduled to shut down before 2030.
Deputy Premier Sarah Hoffman, told 680News that Capital Power will pay the province $39 million and in return will be allowed to give back to the province a money-losing contract to purchase electricity.
"We've hit a big milestone," Hoffman told reporters Thursday.
"By working together we are preventing Albertans from bearing the full cost of business losses through our electricity market."
Hoffman also discussed the controversial Power Purchase Agreements (PPA) with TransCanada Energy and AltaGas.
Acording to 680News, under the PPAs, the firms bought power from generators and then tried to sell it at a profit.
The province filed a lawsuit against the companies in July after the companies pulled out, effectively returning the money-losing deals to ratepayers.
The power companies said changes to the electricity system under the province's new climate change plan had made the deals "more unprofitable," thus triggering a contract clause that allowed them to pull out.
The province, however, said low power prices — not the climate plan — were to blame for the losses, and that the actions of the power companies could leave ratepayers on the hook for $2 billion.
The province also argued the PPAs' "more unprofitable" exit clause was crafted illegally under questionable circumstances under the former Progressive Conservative government and therefore had no legal validity.
"We have never blamed these power companies for taking advantage of the mistakes that the former (Progressive) Conservative government made," said Hoffman.
According to the Calgary Herald, the moves have triggered controversy among players in the power system. The big changes are also expensive.
The agency that oversees the province's grid estimates it will cost up to $25 billion to replace coal plants, meet the government's targets for new renewable power generation and meet future customer demand.
Terry Boston, a US electricity veteran hired by the government as a consultant on the coal deal, pegs the cost at $20 billion to $30 billion.