REPORT FROM THE PRESIDENT AND CEO
The past year was a pivotal one for the Balancing Pool and Alberta’s electricity industry. Policymakers stepped away from the implementation of a capacity market and the Renewable Electricity Program, and instead recommitted to the energy-only market that has been in effect since the inception of deregulation.
The Balancing Pool believes strongly in the fair, efficient, and openly competitive electricity market in Alberta, and we are committed to managing the Power Purchase Arrangements (“PPAs”) we hold in the market in a commercial manner. To that end, we continued to forge ahead with the strategic direction we charted for ourselves in 2018.
In 2019, our focus remained on the commercial management of the PPAs. We continued implementing and refining our strategies related to offering PPA capacity into the market, mitigating greenhouse gas expenses, and resolving commercial matters with PPA counterparties. In a large part thanks to these efforts, the performance from our portfolio of PPAs continued to improve significantly, which in turn allowed us to reduce the long-term debt of the Balancing Pool far ahead of schedule. In 2019 alone, we repaid 24 percent ($228 million) of the debt outstanding.
Alberta’s electricity consumers have directly benefitted from our improved financial results through the Consumer Allocation. The Consumer Allocation went from a collection of $3.10 per megawatt hour (“MWh”) of consumption in 2018, to $2.90 per MWh in 2019, and now to $2.50 per MWh in 2020. In aggregate, the Balancing Pool has remitted a net amount of over $4.2 billion to electricity consumers over the course of our mandate.
The upcoming years will mark a period of transition for the Balancing Pool. We will continue implementing our commercial strategies in the market until the PPAs expire at the end of 2020. Beyond 2020, the Balancing Pool will retain a number of legislated responsibilities and PPA-related obligations and risks that will continue to exist for several years to come. These responsibilities, obligations, and risks primarily relate to ongoing commercial and legal matters that are ultimately funded by consumers through the Consumer Allocation; the Balancing Pool will continue to vigorously protect consumers’ interests as these matters are advanced and ultimately resolved.
The Balancing Pool has demonstrated strong results over the course of 2019, and I have been energized and motivated by the commitment of the people around me as we have all worked towards our common goals. I would like to express my gratitude to our highly engaged and effective Board of Directors and to our strong team of dedicated and talented employees. I would also like to recognize Greg Clark, our recently appointed Board Chair, for his support and leadership and thank our outgoing Chair, Robert Bhatia, for the leadership he provided while he was in the role.
With the emergence of the COVID-19 crisis, we all begin 2020 facing unprecedented challenges, but after a solid year in 2019, the Balancing Pool is well positioned to handle what lies ahead. We will continue to execute our mandate and do our part to support our industry and our province.
President and Chief Executive Officer
April 17, 2019