Wednesday, June 25, 2008

The Economics of Power LInes in Alberta.

The Economics of Power Lines in Alberta.

It has been a few years since Mr. Lougheed said that he was moving ATCO away from pipelines into building power lines as the pipelines only paid at cost plus 10% whereas the power lines paid a cost plus 15%

Cost Plus: In this province that means an unaudited free for all in a grab the cash game. All eyes are on the supply side of things, not the cost. This leaves the door open for private sector kick backs and double dealings through associated companies.

There is no ceiling on the costs in Alberta. A few million dollars here and there is of no consequence when you consider it is taken from the users of the power in the province. A one cent per kwh increase in your home bill produces 2 million dollars in revenue per day over the system.

The more that is spent, the greater the profit!

The 800 million for the cost of building the Edmonton to Calgary power lines needed for the export of electricity to the US has been around for 3 years or more.

800 million would offer a minimum of 120 million dollars in profit for the builders.
On the other hand, a 1.6 billion dollar construction would offer profits of 240 millions!

This Government has not managed anything since the beginning of time. Everything is shelled out of General Revenues not budgeted. Cost plus negates any need for this Government to follow costs or hold people to their bids.

At 19% oil royalty you have to wonder how we survive! And, EPCOR and ENMAX are not in the business of “saving” anything.

John Clark
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