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Alberta's Low Electricity Demand

6/2/2016

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As we mentioned in an earlier blog post, the recent fires in the Fort McMurray area caused a significant reduction in provincial natural gas demand.  Since the oil sands operations are also extremely electricity intensive, there has been a similar observable reduction in provincial electricity demand.  Electricity usage in Alberta has been lower than anticipated for most of 2016 due to a combination of higher than average temperatures and low economic activity.  However, the effect of the wildfires can clearly be seen in the attached provincial usage graph.  Not surprisingly, this has resulted in extremely low spot electricity rates.  Despite the low spot prices, fixed term electricity prices have actually increased marginally over the past month along with increasing oil and natural gas prices.  It is important for our Index based clients to keep a close eye on term pricing as the current low price environment won’t last forever.

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