Home | Headline News | Alberta Strikes $1.36 Billion Deal with Coal Companies as Part of Plan to Shut Down Plants Early

Alberta Strikes $1.36 Billion Deal with Coal Companies as Part of Plan to Shut Down Plants Early

CALGARY  — The Alberta government will pay three coal-fired electric generating companies $1.36 billion for the province’s decision to close their plants early, while also potentially avoiding a lawsuit with other power companies in the province.

The province’s Energy Minister Marg McCuaig-Boyd announced Thursday the province will pay Capital Power Corp., TransAlta Corp. and ATCO Ltd. a total of $97 million per year, beginning next year and payable every year until 2030, to shut down six of their 18 power plants early.

The other 12 coal-fired electric generating stations in the province are all scheduled to close, or convert to natural gas, before 2030. Alberta’s NDP government has mandated that all coal-fired power plants either cease operations or eliminate all their emissions by that date as part of sweeping climate change legislation announced last year.

“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,” Energy Minister Marg McCuaig-Boyd said.

The transition payments mark the third major announcement affecting Alberta’s deregulated electricity market this week, after government officials announced Tuesday a cap on electric prices and on Wednesday changes to the way the electric market is regulated and structured.

The payments will be made out of revenues collected from the province’s newly implemented price on carbon and were announced at the same time that the government announced it had settled lawsuits, initiated by the province, with other power companies .

The province has now reached an agreement with Capital Power, and tentative agreements with AltaGas Ltd. and TransCanada Corp., to avoid a lawsuit over the cancellation of the contracts. The government is still negotiating with Enmax Corp., Calgary’s city-owned utility, and has yet to come to an agreement.

Those companies cancelled contracts they held to purchase power in the province after the government imposed higher carbon prices on emissions, a move which made those power-purchase contracts less profitable.

Alberta’s government has said the changes it has made to the electricity market as necessary to attract new, greener power plants in the province to offset the mandated closure of coal-fired generating stations 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,” Environment Minister Shannon Phillips said in a statement.

Terry Boston, a former electricity executive in the U.S. hired by the province to negotiate a coal phase-out with the private sector, said the transition payments “support Alberta’s commendable transition to a low-carbon economy and will go a long way in securing a positive investment climate in Alberta.”

Boston released a letter to Premier Rachel Notley on Thursday that said the province could develop more hydro-electric generation to replace coal-fired power.

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