Most power plants won't be built, report says Natural gas plant proposals likely to be abandoned

Grant Robertson Calgary Herald; Southam Newspapers

Less than one-third of the badly needed power plants proposed for Alberta have a realistic chance of being built, says a new report on the province's electricity market.

A whopping 4,250 megawatts of new generation -- roughly half of the province's existing capacity -- have been proposed for construction by the end of 2006.

But it is unlikely many of those will ever become a reality, says a report due out next week from Optimum Energy Management.

The Calgary-based consulting firm gives just 1,300 megawatts worth of new power plants a better than 80-per-cent chance of being built. The plans that are most likely to be abandoned before construction begins are proposals for natural gas plants, said Duane Reid-Carlson, an analyst with Optimum.

"As the price of natural gas climbs, coal becomes more attractive," he said. "But it's first-come, first-serve. Whoever gets their plant built first will have an effect on what other plants get built."

The new plants are needed to ease Alberta's power supply crunch, which has been worsened by rapidly growing demand for electricity. But high natural gas prices threaten to turn gas-fired plants into inefficient money burners, compared to coal-burning generators.

Natural gas prices are expected to remain high for the next five years, say analysts.

The proposals for new plants include about 1,700 megawatts of coal-fired electricity and 2,230 megawatts of gas-fired power.

Despite skepticism from industry watchers, the provincial government is confident most of those generators will be built.

Proponents of natural-gas fired plants, such as Virginia-based AES Corp., which is building a gas-fired plant near Calgary, have touted the fuel as a cleaner way of generating electricity compared to coal. The plants are also cheaper to build.

But Epcor, one of the province's largest natural gas and electricity retailers said it is also putting its faith in coal.

Plans are under way for a massive 400-watt expansion of Epcor's coal-fired Genesee station.

"One should not be surprised if a lot of those (gas-fired) plants are not built," Epcor president Don Lowry told industrial consumers in Calgary Wednesday.

"It's a very turbulent time for natural gas . . . and many of those plants aren't going to be able to compete with the price of coal."

http://www.edmontonjournal.com/business1/stories/010315/5005733.html

-- Martin Thompson (mthom1927@aol.com), March 15, 2001