Enron Corp., the international energy trading giant,
said Tuesday it has joined Alberta's competitive power race --
offering electricity and natural gas contracts to companies in the
province.
The announcement was hailed by the provincial
government as evidence that Alberta's competitive power market is
developing as planned.
But heading into the homestretch of electricity
deregulation's first year in Alberta, critics say the race still
lacks enough horses to be competitive.
"We view this announcement with a degree of
skepticism," said Chris Spearman, chairman of the Industrial
Association of Southern Alberta, which represents large-scale power
users.
"Consumers are not receiving competitive bids (on
power) ... and believe the deregulated market structure is a
failure."
Following the announcement, Enron cited a lack of
competition among power retailers in Alberta as the reason the
Houston-based company, one of North America's major energy
providers, set up shop here.
"In my opinion, there isn't a lot of competition in
Alberta," said Darren Cross, chief operating officer of Enron Direct
Canada Corp., the company's Calgary-based subsidiary.
"Regardless of what they call themselves, Enmax and
Epcor are municipally owned utilities. ... That's not a lot of
choice for consumers."
In typical markets, Enron competes with between 10
and 30 other companies to sign energy consumers to long-range
contracts.
Alberta Energy Minister Murray Smith said the
province's deregulated market is still developing.
Though there are just three companies making open
offers for power contracts, Smith said another 22 firms are
providing power to the industrial sector.
"At this point, we may only have three companies
actively soliciting contracts, but the government feels better about
three than two.
"Enron's announcement is a signal that this (open)
power market is here to stay," he said.
The debate over electricity contracts has been a
sore spot in Alberta's deregulation. Large industrial power users,
which cite energy costs as their second-largest expense after
payroll, have struggled to get offers on long-term rates.
Spearman said many businesses locked into power
contracts to secure a stable price. The market price of electricity
has since dropped below those levels, leaving many consumers bitter.
Smith is optimistic the presence of Enron in the
market will draw other competitors to Alberta.
Enron is the largest international power trader,
operating in 40 countries with revenues of $101 billion last year.
It purchased the production of an electricity
generation plant in central Alberta during last year's power
auctions for $294 million.
The Sundance B plant is owned by TransAlta Corp. and
produces 706 megawatts of electricity.
The company will offer bundled natural gas and
electricity contracts in the province, a growing trend in the
Alberta energy sector.
Tony McCallum, spokesman for Enmax said the
electricity retailer is still assessing its options of getting into
the natural gas business as well.
Such a move could involve the purchase of ATCO's
natural gas retailing arm, which is on the block.
Enron said it is considering moving into the
residential retailing business but has no firm schedule in place.
"The infrastructure to service residential customers
takes time. So we decided to start off with commercial customers,"
said Cross.
"But we will be addressing that in coming
months."
