With the impending sale of AltaLink, Alberta’s largest electricity transmission company, it’s feared the people of Alberta are in for a shock.
Warren Buffett, American billionaire and owner of Berkshire Hathaway Energy, announced May 1 his intentions to purchase the company from current owners SNC-Lavalin of Montreal. The sale is subject to regulatory approval by the Alberta Utilities Commission and Industry Canada.
Joe Anglin, Wildrose MLA of Rimbey-Rocky Mountain House-Sundre says Buffett’s acquisition of AltaLink poses multiple pitfalls.
AltaLink stands as a fully regulated company servicing approximately 85 per cent of the province. “The public pays for 100 per cent of all the upgrades,” said Anglin.
Anglin says when AltaLink was first created it was worth $848 million, and its value has increased over the years. With Buffett’s $3.2 billion dollar bid, the assets of the company are likely to jump to settle at between $9 billion and $12 billion.
“The beauty with the assets is there’s a guaranteed income with that,” said Anglin.
With a 9 per cent annual return, he added that is three to four times the prime business rate and numbers like that won’t be found anywhere else.
“Within a year, the public will have paid to double that entity,” said Anglin. “What does the public get for it? They get higher electric costs . . . where’s their return?”
With the purchase of AltaLink, Buffett is also sitting in a position to manipulate the market and further increase the costs; a move electric companies have been proven to make.
Companies are able to shut off power lines and transmissions to manipulate prices. As availability goes down, the need will go up, prices will invariably jump.
Anglin mentioned a project set to extend lines to Fort McMurray as well as power lines being legislated despite not being requested by engineers.
With Alberta remaining the exception, most other jurisdictions have regulations in place to protect the public from these types of situations.
“Alberta is a deregulated market,” explained Anglin. This doesn’t mean the market has no regulations, but that they have been restructured.
“What the regulations have done is rolled over.” Anglin added the current regulations in place are better serving electric companies than the ratepayers of Alberta.
He says it is because Alberta is viewed as a high-potential economic province that these abuses against the public are allowed. “High electric costs always infringe upon your economic growth.”
While the future cannot be predicted, there’s a chance the ratepayers of Alberta will sit at a lower priority than the stakeholders of Berkshire Hathaway Energy, which will dominate as the primary interest. “And by the way, Berkshire Hathaway Energy has done very well for its stakeholders,” said Anglin.
New Democratic Leader Brian Mason also fears for Albertan’s interests and has urged the Alberta Utilities Commission to reject Buffett’s bid.
“This is just another example of the tale of two Albertans. The PCs’ deregulated electricity market allows corporations to make massive profits, while Alberta families are left to pay too much on their power bills every month,” stated Mason in a press release.
“Building transmission lines in a deregulated market means that we don’t have the necessary oversight to build transmission in a sensible, organized way. Albertans pay for the infrastructure, so it should be owned and operated without a profit motive,” he added.