I am talking about energy economics later today and not just your basic wellhead to city gate pricing or OPEC price fixing. These days energy economics is more complicated than ever. Think deferred revenue (the pseudo-asset), take-or-pay wind energy, the cost of wind and solar energy load balancing, winter peak heating, co-gen, off-grid, carbon pricing, not to mention local content rules relating to renewable energy systems.
Here are a couple of tricky examples. Some folks in Nova Scotia were indignant that NewPage was being ‘subsidized’ by other – mostly residential and small business – rate payers. Within a week of NewPage taking its 200 MW? (I am not sure of this) offline, Emera was saying it would have to raise rates everywhere else to make up the lost revenue. I won’t answer this because I have before on these pages.
Then there is wind energy. Under take-or-pay NB Power has to take the power when the wind is blowing –whether it needs it or not. So, in the middle of the summer when it has more than enough baseload generation to more than cover its power needs, it is forced to pay 11 cents? 14 cents? /kwh for wind energy it doesn’t need.
Wish me luck.