CALGARY, AB --Deregulated electricity markets such as Alberta's may need government to step in and require surplus power generation to be built, a meeting of the North American industry heard Thursday.
Allen Williams, a lawyer who advises the U.S. power industry on deregulation, said market forces aren't doing enough to encourage the construction of extra generation to guard against shortages.
"Reserves are taken for granted," Williams told a power sector restructuring conference in Calgary.
The conference was hosted by the Canadian Energy Research Institute.
"It's not good when supply equals demand, we need excess capacity."
Alberta, which has boosted its generation capacity by more than 20 per cent since 1998, faces a continuing power crunch as the addition of new electricity is consumed by an expanding economy.
A major electricity crunch two years ago in California has raised concerns about shortages, though there have been few instances of other widespread power shortages in North America in recent years.
Williams suggested jurisdictions could be taking a risk by letting the market decide how much new power is built, a process that hasn't resulted in widespread construction of generation plants.
Alberta, which had very little excess power when it opened the electricity market to competition in 2001, has widened its supply gap slightly.
However, critics say growing demand will soon keep pace.
Provincial Energy Minister Murray Smith told the conference he is pleased with how Alberta's market has unfolded, despite concerns that there are only two major power retailers for household consumers to choose from.
Competition has also been slow to develop in Ontario's power market, which was deregulated in May, the conference heard.
Patience may be the key, said a researcher with the University of Cambridge who has studied deregulation in Britain.
During the past decade, competition has flourished and power prices have dropped by more than 25 per cent in the British market, said Stephen Littlechild.
Critics of deregulation in Alberta, though, say the province's relatively small population make it hard to open the market, because there aren't enough consumers to attract power companies.
But Littlechild said the biggest problems facing deregulation have come in the initial rule-making process which has seen many jurisdictions "doing too little too late."
Source: Calgary Herald
