Consumers may be left out in the cold in realizing any benefits from the development of new lower-cost electricity generation, says a new energy consulting report.

The study, released last week by Calgary-based Optimum Energy Management Inc. (OEMI), says any benefits from significant transmission infrastructure development may not materialize, or instead be directed to generation companies or exporters rather than Alberta power consumers.

Those customers may also be zapped by the costs associated with developing the additional $1- to $3-billion transmission capacity required to pave the way for lower-cost generation and increased exports.

The report says about 3,750 to 5,200 megawatts of new generating capacity will be required to meet rising demand and to replace aging units that are expected to be retired over the next fifteen years.

About 5,100 MW of projects are under construction or have been announced for startup over the next six years, largely in response to higher power prices.

“Notwithstanding the supply-demand balance, generation developments are further complicated by significant transmission capacity constraints that have pitted northern generation projects against southern developers,” said Duane Reid-Carlson, OEMI’s vice-president of energy pricing.

Many lower-cost base-load generation development prospects are located in northern Alberta – far from the robust southern Alberta load growth and export path to the U.S. northwest markets, the report says.

Spot wholesale power prices averaged 7.1 cents/kWh in 2001.

Based on the current forecast level of demand, natural gas prices and the timing of new supply additions, average 2002 Alberta spot electricity prices are expected to be in the range of 3.1 to 4.6 cents/kWh, with some upside risk and continued volatility.

Longer-term, spot wholesale power prices are expected to trade in the range of 3.7 to 7.1 cents/kWh over the next 15 years, depending on future supply additions and natural gas price, the report says.

Alberta electricity demand is expected to increase by an average of 1.6 to 2.6 per cent per year over the next 15 years.

The report is the fifth in a series of annual studies monitoring the deregulation of Alberta’s electric energy industry.