Calgary municipal power company ups rates

Blaming higher-than-projected wholesale power prices, Calgary's municipal power company Enmax Corp. says it has received approval to raise electricity rates temporarily by as much as 25%. Power Pool of Alberta prices have averaged $64.90/Mw-hr in 2000, the company said, compared to $42.74/Mw-hr during the same period in 1999. Power pool costs have increased by more than 75% over Enmax's 2000 budget, company officials said.


Blaming higher-than-projected wholesale power prices, Calgary's municipal power company Enmax Corp. says it has received approval to raise electricity rates temporarily by as much as 25%.

Power Pool of Alberta prices have averaged $64.90/Mw-hr in 2000, the company said, compared to $42.74/Mw-hr during the same period in 1999. Power pool costs have increased by more than 75% over Enmax's 2000 budget. Tightness of supply relative to demand and rising natural gas prices are responsible for the increase, company officials said.

As a result, in its capacity as Enmax's sole shareholder, the city of Calgary approved a temporary increase effective Sept.1 through Dec. 31. Any outstanding balance will be collected during the first 6 months of 2001. In addition, the city has also agreed to change the rate-making policy to allow Enmax to respond more quickly to price volatility in the future.

Company officials said the actual percentage increase and timing of the temporary rate rider will depend on the outcome of industry-wide discussions with the provincial government over the next few weeks. These actions are in addition to Enmax's rate rebalancing initiative approved earlier this year.

"We are cooperating with the Alberta government to seek an industry-wide solution to higher-than-anticipated electricity costs throughout the province,'' said Enmax CEO Bob Nicolay. "No company wants to move into a competitive market with a rate increase, but we have no choice," he said.

"Our current rate structure is not responsive enough to accommodate changes in commodity prices, and Alberta's electricity market has not yet matured to allow effective hedging activity.''

For this reason, beginning July 1, the city also approved a change that will allow Enmax to change rates in the future within a limited range based on overall revenue. Company officials said this will allow Enmax to respond to future electricity price volatility faster. Beyond these limits, rate increases will need the city's approval.

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