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Alberta strikes $1.36-billion deal with power companies to end coal-fired electricity by 2030

The Keephills 3 power plant located about 70 kilometres west of Edmonton. The Alberta government has appointed a high-profile U.S. power executive to lead talks with generators and the provincial grid operator as the province proceeds with its plans to phase out coal-fired electricity.

Transalta

Alberta has struck a $1.36-billion deal with three major power producers to formally end coal-fired electricity in the province by 2030.

Environment Minister Shannon Phillips announced Thursday that the province will pay three major power producers a total of $97-million a year over the next 14 years to compensate them for the shut down and to help them transition to cleaner forms of energy.

"This is a made in Alberta plan for Alberta's electricity market," Phillips said, noting that the federal government recently announced it will act to phase out coal-fired electricity in the same time frame.

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"There are two choices: we can either act on a made-in-Alberta plan or wait for policy to be imposed on us."

Related: Alberta moves to partially regulate electricity market

Related (for subscribers): Canadian business leaders back carbon-pricing policies

Read more: Ottawa to phase out coal, aims for virtual elimination by 2030

The payments will be spread amongst TransAlta Corp., Capital Power Corp. and Atco Ltd. The money will come out of the carbon levy on heavy industrial emitters.

Phillips said the deal will not result in higher power bills.

Under the terms of the deal the power producers are to keep their headquarters in Alberta, continue to invest in the province and work to provide support to the communities affected by the shutdown.

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There are 18 coal-fired electricity units in Alberta. All but six of them are already scheduled to shut down before 2030.

Ending coal-fired electricity is one pillar of the climate change plan introduced last year by Premier Rachel Notley's government.

The province plans to replace the coal-fired electricity with natural gas fired power and a mix of renewables, including solar, wind, and hydro.

It is also introducing a broad-based carbon tax on gasoline at the pumps and home and business heating bills, starting on Jan. 1.

The coal shut down plan is based on a report from Terry Boston, a U.S.-based retired power executive.

Boston estimates the transition to new gas-fired generation and renewables will require $20-billion to $30-billion worth of investment.

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He said the key to a smooth transition will be allowing about half of Alberta's 18 coal-fired plants to be converted to natural gas by changing out the burners in existing boilers.

He said transitioning to a greener energy mix is achievable, given the abundance of natural gas.

Boston added that wind energy is abundant in the south and east, that solar power will grow as solar panel costs decline and that hydro can be developed in both western Alberta and the north.

Opposition critics said the plan needs more specifics on how communities affected by the transition will be supported.

"What about the small business in Hanna whose business is going to close now, (or) the homeowner in Forestburg who is seeing the value of their home disappear?" said Don MacIntrye of the Wildrose party.

"The devil is in the details," added Rick Fraser of the Progressive Conservatives.

"We feel for these communities. We're talking about thousands of people in Alberta that don't know where their jobs are going to wind up."

Phillips' announcement was the latest in a string of new initiatives announced this week detailing how province is transforming the energy market.

The government will cap electricity costs at 6.8 cents a kilowatt hour in the short term to prevent homeowners from being hit by price spikes during the transition.

Alberta will also begin revamping the system to one where private producers will also be able to bid on contracts to expand storage should the transition threaten electricity capacity.

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