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Photo by Supplied / TransAlta

Savage said Wednesday a capacity market would mean higher electricity bills for residential consumers who would need to pay for the extra capacity whether it gets used or not. But David Gray, an Edmonton-based electricity economist and former head of the Alberta Utilities Consumer Advocate, said sticking with the energy-only system benefits the incumbents in the electricity market and discourages the kind of innovation and competition that could lower prices in the long run.

“With no long-term deals in our electricity market, you need to have companies that can build power plants off their balance sheet, which really limits the amount of competition that there is in the Alberta electricity market, and I think ultimately that hurts consumers,” Gray said.

He added that relying on short-term price signals to make long-term capital decisions about future power needs is problematic, and pointed to the rolling blackouts witnessed in Alberta in 2012 and 2013 as an example of what can happen when demand exceeds supply.

“That was a big driver for the AESO, I think, in the first place to promote a capacity market as beneficial,” Gray said. “I think at some point soon, we’re going to see price spikes like we saw in 2012 and that gets to the point where it starts to hurt people, especially commercial consumers.”

Evan Bahry, executive director of industry group the Independent Power Producers Society of Alberta (IPPSA) said he isn’t overly concerned about price volatility for consumers under the energy-market system. He said the price of natural gas — which produces the bulk of Alberta’s electricity — has remained steady for years and consumers have about 30 power retailers offering a vast array of contracts, so users can shop around for the best deal.