Albertans are not strangers to the power of nature. The same natural elements that grow and nourish our fields are known to produce thunderstorms, lightning, flooding, hail, drought, and forest and wildfires – all at unpredictable rates, durations, and severities. Tornadoes also make the list in Alberta – uncommon but not rare at a rate of about ten events per year. But when these disasters, like our current fire season, wipe out the energy infrastructure in a region, who bears the burden of urgent cost and repair?
Since Canada occupies almost 10% of total global forests, fires are a significant threat to all above-ground infrastructure including power supply to homes and businesses. Although wildfires often occur naturally, steps are taken to control the roughly 7300 wildfires that develop in Canada each year, since it only takes 3% of out-of-control wildfires to account for 97% of the total area burned. One study shows that costs for infrastructure repair due to natural disasters in Canada could reach $139 billion in 30 years, while fire control efforts have historically cost Canadians between 800 million and 1.5 billion dollars annually. Despite significant costs to expedite the repair of power infrastructure after a natural event, like wildfire, the alternative poses severe consequences that could put citizens at risk.
Energy Infrastructure Vulnerability
The ease and reliability of our utility infrastructure in Alberta can cause us to take it for granted but the truth is: without energy to power hospitals, evacuation camps and communication systems, recovery efforts amid a disaster are made even more difficult. As recently as 2022, a derecho storm left some areas of Ottawa without power for over two weeks.
Energy infrastructure can be severely damaged by the fire itself or by falling debris and trees. The above-ground wiring required for power access is at particular risk since the telephone poles they are mounted on burn easily. Distribution lines and substations can be compromised, taking out power, and causing natural gas lines to interrupt their flow.
This infrastructure outage also has a rapid and far-reaching impact on the systems which rely on energy inputs to operate. At the time of the declaration of a state of emergency on May 6, Alberta had halted 3.7% of Canada’s total energy outputs, and natural gas exports dropped to levels not seen since April 2021. One example of this saw Baytex Energy Corp. curtailing 10,000boepd (barrels of oil equivalent per day) due to the shutdown of supplier infrastructure in other parts of the province. Other sites, like Saturn I & II near Hinton, went into full shutdown resulting in significant financial losses.
Who pays for energy infrastructure repair?
Losses and expenses associated with infrastructure repair are usually covered by a combination of sources. First, utility companies will file for payment from their insurance provider before looking to the local government.
Once insurance claims have been accepted, or if the disaster continues, these organizations can begin requesting funds from municipal governments. If local funds are not enough, further access to payments may be accessed through provincial and then federal government agencies.
At the federal level, the Government Operations Center coordinates a response through the Canadian Armed Forces’ relevant units. In response to the declaration of a state of emergency on May 6, 2023, the Minister of National Defence authorized the following measures to be implemented in Alberta:
- Additional firefighters and more firefighting resources.
- Airlift capability for remote community evacuation and logistics.
- Equipment and engineering support on the ground.
Further federal support included:
- Contracting support through Public Services and Procurement Canada.
- Continued RCMP support.
- Employment and Social Development Canada extended Service Canada hours and moved mobile service units into areas impacted by evacuation (this expedited access to employment insurance applications).
- Indigenous reserve communities received support through EMAP (Emergency Management Assistance Program).
- Canada’s National Emergency Strategic Stockpile responded to requests for necessary supplies.
- Innovation Science and Economic Development Canada worked with the telecommunications industry to re-establish and/or maintain communications in affected areas.
- Parks Canada sent their Incident Command Team of specialists to assist in managing complex fire challenges.
Finally, if expenses remain, the utility company itself may access its own funds to help pay for the required repairs, which are usually covered by the company’s operating budget, or an emergency savings fund that they have maintained. While provincial and federal assistance is covered by taxes, utility companies often look directly to their customers to help recover some of their costs.
Energy Infrastructure Repair and Your Bill
Following a major event, like the Fort McMurray fire in 2016, utility bills may increase in several ways. When there is a marked reduction in resource supply due to shutdowns and other outages, the price of power and natural gas may increase across the board which will be reflected in the market price per unit of energy – this increase is the same across the province regardless of your utility provider.
Your wires distribution company owns the infrastructure for utility distribution and their fees are regulated by the Alberta Utilities Commission. Wire distribution companies in Alberta include ATCO, ENMAX, FortisAb, EPCOR, and others.
As an energy retailer, Burst Energy does not influence the transmission and distribution charges on your utility bill – these charges are passed through to you, the customer. The distribution fees you pay are indicated as a line item on your utility bill. The only fee charged by Burst Energy is a retail markup on the average wholesale cost of the utility. These are always posted with a breakdown of the fees at www.burstenergy.ca and the fees that we charge our customers for administration remain consistent month-to-month.
Expected Cost of Alberta Wildfires
It could be months before we understand the full financial scope of the impact of 2023’s wildfires on the province. The 2016 Fort McMurray fires are said to have carried a total cost of 9.9 billion dollars.
If you have questions about your bill, contact us today, our Alberta-based customer service team is ready to assist you.
* Image credit: The Globe and Mail
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