Anyone care to explain what is meant by "capped spot market" and "frozen rates":
"TransAlta doesn't have long-term contracts with the province and it's not worthwhile for the company to produce more power in the capped spot market. ... Ontario's electricity market was in a state of flux after the former Progressive Conservative government retreated from plans to deregulate the industry and instead froze rates after residential bills rose too high." ?
The IESO (formerly IEMO) shows fluctuating spot market prices for electricity, with no indication of a cap (peak hourly prices typically well over $100/MWh, sometimes over $200/MWh and occasionally over $300/MWh). Ontario Power Generation, being a provincial crown corporation, is mandated by the Ontario gov't to pay back some (all?) of its earnings over a given rate cap. Thus OPG ends up paying several hundred million dollars per quarter to subsidize the retail rate (this subsidy should be lower now, given that the RETAIL rate cap has been raised). But TransAlta is a private generator and should be able to sell its electricity at whatever the market will bear.
Some clarity, please.
From: Jerry Cuttler [mailto:firstname.lastname@example.org]
Sent: February 3, 2005 1:35 AM
To: Canadian Nuclear Discussion List
Subject: [cdn-nucl-l] TransAlta seeking talks on co-generation plant;
runs below capacity
Gas prices are too high for gas-fired competition with other options.
Toronto Star, Feb. 2, 2005
TransAlta seeking talks on co-generation plant
Wants provincial input on Sarnia
Power facility runs below capacity
CALGARY-Power generator TransAlta Corp. hopes to start ``senior-level
discussions" with the Ontario government in the next two months to bring the
company's Sarnia power plant to full capacity.
The $500 million co-generation plant is nearly two years old and still
running at only about one-third of the 575-megawatt capacity because
TransAlta doesn't have long-term contracts with the province and it's not
worthwhile for the company to produce more power in the capped spot market.
"We continue to meet with Ontario government officials and press for a
solution to our market-related problems," TransAlta president Steve Snyder
told analysts yesterday after unveiling a 42 per cent boost to
Ontario's electricity market was in a state of flux after the former
Progressive Conservative government retreated from plans to deregulate the
industry and instead froze rates after residential bills rose too high.
The changing rules in the province have limited new investment in power
generation despite a growing electricity crunch, and many private power
companies are keeping a close eye on what happens with TransAlta's Sarnia
The current Ontario Liberal government is trying to build new legislation to
bring stability to the sector while Queen's Park seeks bids for new power
The government also created the Ontario Power Authority to ensure the
province has an adequate long-term supply of electricity.
TransAlta said it realizes that the Ontario reforms will take time.
Still, the company is keen to resolve long-standing issues.
"We continue to be optimistic that there will be a resolution for this
facility," said Snyder.
Ontario Energy Minister Dwight Duncan was unavailable for comment.
Earlier yesterday, TransAlta said it earned $62.1 million, or 32 cents per
share, in the final three months of 2004, up from $43.8 million, or 23
cents, a year earlier.
Revenue rose to $712.5 million from $661.5 million.
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