Alberta commission seeks comment on latest delay for 338-MW Saddlebrook project

The Alberta Utilities Commission said in a May 28 notice that it will take comment until June 18 on a recent application by TransCanada Energy Ltd. for an extension of the construction completion date for the Saddlebrook power station, from the current June 30, 2015, to June 30, 2021.

The Saddlebrook power station will be located within the Saddlebrook Industrial Park, approximately 10 kilometers north of High River, Alberta. The power station would consist of one natural gas combustion turbine generator and one steam turbine generator, with a total generating capability of 338 MW.

TransCanada Energy (TCE) applied April 30 with the commission for this delay. The commission in 2010 approved this project,  with a condition of that 2010 approval being that construction was to be completed by June 30, 2012. As a result of uncertainties regarding federal coal emissions policy, as well as local transmission capacity and regional system constraints, construction did not commence at that point. In 2012, the commission granted a TCE application for the current June 30, 2015, deadline.

TCE said that it worked with the Alberta Electric System Operator (AESO) throughout 2012 and 2013 to investigate transmission connection alternatives. TCE also participated in several of the AESO’s applications concerning the Foothills Area Transmission Development.

TCE said that it previously procured roughly C$80 million worth of equipment for Saddlebrook, including the gas and steam turbines. This equipment is currently being stored in controlled conditions within the existing MagCan building on the site and will remain there pending construction of the power station.

Said the April 30 application about the reasons for this latest delay: “At this time, electricity market signals are not indicating the need for substantial new generation resources in Alberta. Accordingly, TransCanada anticipates delaying construction of Saddlebrook until there is sufficient market need to support new generation build. In TCE’s view, the current market conditions are generally being driven by three factors: (i) present generation oversupply; (ii) reduced demand growth; and (iii) continued uncertainty regarding emissions regulations. Current reserve margins indicate that there is surplus generation capacity in the Alberta market resulting from the recent addition of substantial new generation. This surplus capacity is reflected in the current pool price environment, which adversely impacts the economics of investment in new generation.

“In addition, the recent collapse in oil prices has created a slowdown in demand growth. This reduction in demand growth will result in a longer timeframe before the current generation oversupply is absorbed into the market.

“Lastly, the Alberta government is reviewing its greenhouse gas policy framework, which could have significant implications for the electricity market. Clarity on the greenhouse gas policy is necessary to understand the timing of retirement of existing coal assets and the corresponding need for new generation in Alberta.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.