EDMONTON, AB (August 20, 2013): The recent Market Surveillance Administrator’s report shows distortion of the wholesale electricity market and collusion among Alberta-based generators that is resulting in price gouging, Wildrose Utilities Critic Joe Anglin said today.
“This report shows consumers are getting gouged and market manipulators are getting away with it,” Anglin said. “This government needs to show some leadership, grab the bull by the horns, and work to end this apparent collusion in the market to ensure consumers receive a fair market price for electricity.” The wholesale electricity market is premised on suppliers making independent, anonymous offers for selling their electricity. Instead, the MSA found clear evidence of dominant Alberta-based generators signaling each other in an effort to raise the price of wholesale electricity. Through the monitoring of hourly trading, the MSA discovered that sellers of electricity altered prices after decoding the intentions of their counterparts, and then signaled their own intentions if inclined. This has resulted in much higher wholesale electricity prices, and millions of dollars in inflated electricity costs being passed along to industry and consumers. Industrial consumers are impacted immediately while residential consumers have their costs averaged (hedged) over a period of three to six months. Ultimately, consumers pay for all these inflated costs either through direct billing or higher costs passed down from industry and manufacturers. “The MSA was struck by the precision of the competitive interplay between some of these large suppliers that sometimes resulted in much higher market prices than would have been expected had there been uncertainty about a counterpart’s competitive intentions,” the report reads (page iii). Anglin said the MSA’s findings require further investigation and called on government to relieve electricity consumers of unfair price fixing. “The Market Surveillance Administrator calls into question the sustainability of the competitive market in the long run. Surprisingly, the MSA declined to investigate further or propose any enforcement action,” Anglin said. “In any other province, these findings would result in a criminal investigation.”