1/ The report cited below is flawed. It is akin to a report finding the UCP cutting spending by 50% would have a devastating effect on public services--regardless of whether that is actual policy.
In short, the report does NOT analyze actual Fed carbon policy.
2/ The report assesses the cost impact of a $50 carbon tax and assesses the competitiveness effect on energy-intensive trade-exposed industries. It mentions Fed policy includes an “output-based pricing system” to mitigate these concerns, but *excludes* it from the analysis.
3/ Report: “firms make decisions based on marginal costs whereas the OBPS rebate will be a lump-sum transfer and thus will not have much effect at the margin”.
This is wrong. Output-based allocations depend on… output! By their very nature they affect decisions at the margin.
5/ The report attempts to value the OBPS, but only in an App'x, not in the main text.
Appx B correctly includes OBAs in the marginal decision (contradicting the earlier description as lump-sum) but the analysis relies heavily on a subtle assumption: increasing marginal emissions
6/ What does this mean? As you produce more, you emit more to produce 1 more widget than the last 1. This would be true for a coal plant going from 90->100%, but not likely when going 60->70%. Also not likely true for SAGD oil sands, where scale can lower marginal emissions.
7/ The numerical analysis relies on a specific functional form of the emissions curve: E=a*Y^b. When b>1, this is increasing marginal emissions (think of a curve starting flat and bending higher). When b<1, the opposite is true: more output means decreasing marginal emissions.
8/ To make the arg against OBPS, the report uses 7 b’s that are ALL>1. In other words, the marginal emissions are always increasing.
To be fair, this is a ripe area to look at, but it’s a *very strong* assumption that ALL industries, ALL firms are increasing marginal emissions
9/ Without this assumption OBPS would dampen most of the cost increase from the carbon price, fully obviating the headline findings of this report.
Ignoring OBPS and using a skewed example does a disservice to those wanting to better understand the real effects of carbon pricing
10/ One thing I will say is the report notes many caveats:
- carbon pricing would be less costly than alternative actions
- behavioral changes in response to higher energy prices such as input substitutions, technology adoption, or production process changes are excluded
11/ Yet, sadly, these nuanced caveats don’t make it to headlines, nor the politically motivated retweets.
In sum: This report ignores the core policy to deal with competitiveness concerns, leading to conclusions that grossly exaggerate those of actual policy.
/end.
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Some thoughts on a wild night for Alberta power yesterday…
[thread]
First, @theAESO operators deserve a shout out. They managed the grid smoothly through a tense situation.
Also, HUGE shout out to the thermal fleet operators. Only 1 plant (Milner) tripped during this cold snap. That’s incredible performance given the conditions.
Second, the emergency alert looks to have triggered a 150MW response. That’s inline per capita with the 2100MW Cali got from a similar event in 2022. Well done, Albertans. This highlights the capability of demand flexibility but emergency alerts are not a sustainable solution.
For those wondering how long this might last, expect the emergency alert to continue until at least 10pm, if not later if we see another plant go offline
Milner is still struggling to get back online and wind remains very low. Also BC imports are 1/4 of yesterday’s.
Load (demand) falls from here. The only question is whether we don’t see a plant trip. There’s nothing left in the AB supply stack to call on right now and looks like reserves are being fully dispatched.
So tomorrow @theAESO is presenting their assessment of the implications of the proposed Clean Electricity Regulations to a media-only audience.
A thread on what i'll be looking for... 🧵 #ableg #abpower
1. AESO is an independent agency. They are not the government. I'll be looking for an independent voice and assessment. That means a matter of fact assessment that reflects their role, and avoids any hyperbole.
2. Given the Govt has a press conference planned for 1 hour after the AESO presentation, it's a safe bet the AESO report is more critical of net zero plans than the $300k ICF report the Govt bought and paid for last year and has yet to release. x.com/EmmaLGraney/st…
So I've been rather persistently telling all who'd listen to get on a fixed rate for a while now. I figure it's saved the avg hh ~$1500 since then (you're welcome 🤗)
Now it's *almost* time for a new recommendation! 🧵
If you believe the forward markets, the tops are in for Alberta power. August rang the bell for highest month, in part thanks to the 2.5c/kWh adder from the Q1 rate cap.
Going forward, prices are expected to weaken.
Should you go Fixed or Float?
The next few months will benefit you to be fixed, but then come March 2024, floating RRO prices are expected to be at or below the current fixed offers.
Hey Calgary, how do you feel about this chart? #yyccc
A thread on Calgary's "Local Access Fee" for electricity and how it is set completely differently than the rest of the municipalities in the province and why that doesn't make sense ... 🧵
First, what is a "local access fee" (aka franchise fee)?
This is a charge a muni imposes on the local distribution company in lieu of property taxes to use land for electrical equipment (power lines, substations, etc). The cost gets passed through to customers.
Most munis in the province set this fee as a "cents per kWh" adder to the bill and update that number annually. May be annoying on the bill, but it's justified and stable. The idea is for the muni to collect some expected sum of $$$ in lieu of property tax.