The agreements will see the companies, which own six coal-fired electricity units originally slated to operate beyond 2030, provided with transition payments for investments that have been reduced in value by the transition away from coal-fired generation – funds that can be reinvested into Alberta’s electricity market.
This approach is part of a larger government commitment to building a stable, reliable electricity system while ensuring that workers, communities and affected companies are supported and treated fairly during the transition from coal-fired electricity generation.
“The government’s decision to provide transition payments to these companies demonstrates our commitment to building a low-priced, reliable, investment-friendly electricity system for Albertans. The government is committed to working with existing Alberta businesses as we transition away from coal, and we are making good on that commitment today.”
This approach, which will be accompanied by additional action in support of coal communities, was recommended to the government by energy expert Terry Boston. The electricity companies will receive annual payments until 2030, totalling $1.1 billion in 2016 dollars. The payments will be fully funded by Alberta’s price on industrial carbon emissions – not by consumer electricity rates.
“I believe that these transition payments to support Alberta’s commendable transition to a low-carbon economy will go a long way in securing a positive investment climate in Alberta.”
This approach reflects the three principles the government committed to in November 2015 for phasing out coal generation: maintaining reliability, encouraging investment and providing price stability for all Albertans. These agreements will ensure that Alberta will achieve objectives laid out in its Climate Leadership Plan and meet a recently announced federal requirement to phase out coal-fired electricity emissions by 2030.
“Alberta is by far the largest source of coal pollution in Canada, with greenhouse gas emissions that exceed the sum of every car from British Columbia to Manitoba. We are phasing out coal pollution in a measured, financially responsible way that will improve air quality and the health of Albertans.”
These agreements are a cost-effective way to reduce greenhouse gas emissions, with the total payments representing less than $10/tonne of emissions eliminated. This represents approximately one-tenth of the government subsidy typically required to retrofit coal units with carbon capture and storage.
The government will work with the companies, the Government of Canada and affected communities to explore options for the future, including coal-to-gas transitions, hydro-electricity and economic development initiatives.
“This announcement will allow our Advisory Panel on Coal Communities to proceed with their mandate, which is to create long-term transition plans for communities to succeed and workers to have opportunities as Alberta moves to phase out coal-fired emissions by 2030.”
This announcement follows other government actions to guarantee Albertans a future supply of reliable power at stable, low prices. They include:
- Putting a price cap of 6.8 cents per kilowatt hour in place for families and small businesses on the Regulated Rate Option from June 2017 until June 2021
- Announcing the creation of an electricity capacity market by 2021
“Ending coal pollution in Alberta will save lives, prevent chronic heart and lung diseases, make breathing easier for those with asthma and reduce health-care costs by reducing emergency room visits and hospital admissions. We found an accelerated Alberta phase-out will prevent 600 premature deaths and 500 emergency room visits and will avoid nearly $3 billion in negative health outcomes.”
**The government also announced that it has reached a settlement with Capital Power on its litigation associated with Power Purchase Arrangements. Tentative agreements have been reached with AltaGas and Trans Canada Energy.**
Editor's Note: News release updated to include tentative agreements.