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Alberta appoints U.S. power executive to guide coal phaseout

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.


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.

Premier Rachel Notley's NDP government named Terry Boston, recently retired chief executive officer of Valley Forge, Penn.-based PJM Interconnection, to develop options for maintaining the system's reliability, minimizing costs for consumers and dealing with stranded capital tied to numerous coal-fired plants.

The policy has a major impact on generators, including TransAlta Corp., Capital Power Corp. and Atco Ltd., and they have been anxiously awaiting the appointment of a facilitator to start dealing with the transition from the carbon-intensive fuel source.

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The Premier made the coal phaseout central to her government's plans to cut greenhouse gas emissions. Under the NDP government's "climate leadership plan," which also included capping emissions from the oil sands and increasing and expanding the province's carbon levy, the province will eliminate coal-fired power pollution by 2030. Two-thirds of the gap will be made up by renewable energy sources, Ms. Notley said.

Alberta Economic Development Minister Deron Bilous told reporters in Edmonton that the NDP expects that it will have a deal in place with the energy companies by the end of September, when Mr. Boston's final report is due. "In terms of negotiating with coal companies, our priority is to get the best deal for Albertans," he said. "We have hired the best in the business to go to bat for Albertans in these discussions. I'm confident Mr. Boston will be tough and fair."

Mr. Boston was president and CEO of PJM from 2008 to 2015. The organization co-ordinates power grids in 13 U.S. Midwest, Northeast and mid-Atlantic states, as well as the District of Columbia, a franchise serving 61 million people.

The government is also studying ways to help Alberta coal-mining communities that will be losing their main source of employment over the next decade-and-a-half. Mr. Bilous had no details on the government's plans to help those communities.

The climate policy has already caused dislocation in the province's power sector. Last week, TransCanada Corp. cancelled its contracts to buy electricity from coal-fired stations, saying that the costs tied to the plants are rising and expected to keep doing so over the life of the agreements.

It is returning the power-purchase agreements to the provincial regulator, and the company said it will take a writedown of $175-million after tax, representing the contract's current book value.

Coal-fired power currently accounts for 17 per cent of Alberta's emissions.

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Each of Capital Power's four wholly or partly owned coal plants face early retirement. They are all part of the Genesee and Keephills complexes west of Edmonton. The company said on Wednesday it looks forward to working with Mr. Boston in dealing with the financial impact.

"We're pleased to see the process of implementing Alberta's climate leadership plan moving forward, both through the appointment of Mr. Boston and the [Alberta Electric System Operator] consultations on a renewables procurement plan that operates within Alberta's electricity market design," Martin Kennedy, Capital Power's vice-president of external affairs, said in a statement.

Six of the 10 units in which TransAlta owns fully or has a stake are likely up for early shutdown.

In January, TransAlta took significant action to deal with the impending closings, including slashing its dividend, shifting to non-recourse debt and redoubling efforts to shift to natural-gas-fired and renewable energy generation.

Its shares tumbled on the day of the announcement but have climbed 55 per cent since then.

Editor's note: An earlier digital version of this story incorrectly stated that Capital Power has five wholly or partly owned coal units; however, it has four. This version has been corrected.

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