Rage against the utility bills
Have you noticed your utility bills lately? Not many do, I don’t think, outside of the small cohort that scrutinizes them diligently and makes spreadsheets out of the carcass because they are excellent stewards of the household budget (I wish), or are claiming a tax deduction, or maybe just because they have a very low concept of fun.
Regardless, there is a current oddity in the bills that is definitely attention-getting. What’s happening these days is a wild discrepancy between the value of a commodity consumed and the bill’s gut-punch total. It’s always been that way, to a certain extent, particularly on the power side, where you could see a charge for electricity itself as one or two lines, then a blizzard of other odd charges that doubled the bill. Rate rider this and surcharge that.
But current bills are taking it a step further, making a mockery of our consumption costs. Natural gas bills are the worst, approaching a point of absurdity. A recent natural gas bill, unduly small consumption wise because of summer/holidays for some of, as a case in point: In the month, household gas consumption was 0.98 GJ. The gas cost portion of the bill was $0.91, but the total bill was $50.89. The actual value of gas consumed was just under 2 percent of the total.
The natural inclination is to scream into the void or the family’s ears, or in some parts of the country as I’m learning, to phone a local politician and yell at them (never done that in my life but apparently it’s like morning coffee for some). What incentive is there to limit consumption when there are so many grubby hands destroying my budget?
In tough times, the anger is understandable. I have no idea how many lower income families make it work with today’s prices. It must be gutting to open a bill and see an incomprehensible “Rate Rider” charge that is 1.25 times the value of the gas consumed, added to a “Municipal Franchise Fee paid to CITY OF CALGARY”) that is almost four times the value of the gas. And those aren’t even gas delivery charges, which presumably pay for all the pipes and what not.
Oh yeah, then there’s that – the carbon tax, coming in at 4.4 times the value of the gas itself. Hey, I had a pretty good month, burning less than 1 GJ – no matter, the same hammer applies. Let’s see how the “but you get it all back” argument flies at the voting booth next time around. (That economist’s chestnut seems to ignore what everyone knows, that these carbon taxes are layered into everything we buy, and that the rebate to consumers is seen as a vote winner because businesses don’t vote and so who cares. We shall find out who cares.)
To be fair to poor old utilities, neither I nor anyone should complain about distribution services being a significant portion of a bill, particularly when said distribution systems work so very well here in this neck of the world. We get our power and natural gas delivered to our appliances in exactly the quantities we want/need, reliably, 24/7/365 (and water, mostly, right Calgary). Our filth gets carted and flushed away with icky precision, as regular as you are.
We should never take for granted what a wonder that all is, and should never expect that it would be free. It is worth a lot. What would you pay for a food system that brought exactly what you want to you whenever you wanted, in exactly the right quantities, at the flick of a switch or tap of an icon? Think Skip the Dishes but they’re waiting outside your house with whatever you want.
Having said that, there is some dubious puffery going on in those extra charges; just because they are invaluable doesn’t mean we shouldn’t pay attention to what is creeping in to the totals.
If you want to see a utility’s ears perk up like a dog hearing action in its food dish, mention the phrase “rate base”. Regulated utilities are allowed to earn a rate of return on capital investments, and so the more capital they spend the happier they are, because as a rule of thumb their borrowing/financing costs are far lower than the rate of return they can earn. As Fortis put it in a recent quarterly report, “Fortis expects its long-term growth in rate base will drive earnings that support dividend growth…”
I completely understand that regulating a critical utility so that it operates functionally and reliably in these crazy energy times is no easy task. There is an enormous push to integrate all sorts of energy sources, immediately, because if we will all die from the weather, the story goes. So there’s that. At the same time other regulatory and demand burdens present considerable challenges, like you’re a tightrope walker and multiple parties are using huge batons to try to knock you off.
But at the end of the day, end-user power (and natural gas) prices all boil down to a single monthly total, and voters across the land will remain steadfastly uninterested in energy until that fateful day when their utility bill goes up. Then all hell breaks loose, and someone has to explain it. Or try.
Such is the backbone of voter fury, which we are beginning to see reach epic proportions right across the country.
Canada’s opportunity to be data center powerhouse…what could go wrong?
I watched the US presidential debates the other week, and i weep for you, my American friends. One does not need to even pick sides to ask, in all earnestness, “What the hell was that?”
It was but a few short years ago that rang in your ears such oratory greatness as “Ask not what your country can do for you, but what you can do for your country.”
What we all heard instead of vision and thoughtfulness and eloquence was the verbal equivalent of two cartoon characters whanging each other over the head with tire irons. I heard “They’re eating dogs in Ohio”, counterpointed by some sort of pacifying AI-gen word salad that conveyed nothing but the crooning of vapid platitudes.
Imagine if a job applicant showed up for an interview and answered any question the way these two applicants for the big chair answered the questions put to them. You would be escorting them out the door like a running back escorting a football.
And these two are applying for the top job in the world.
America, I know you will right yourselves, but apparently not any time soon. So anyway we might as well analyze what the energy landscape might look like under what polls say is the most likely outcome (who knows, but all I have). It seems quite probable that the appeal to the “You ain’t eatin’ my pets!” Crowd is less vote-gathering than those who run from it, no matter what ideologically cacophonous beast’s jaws they are running straight into.
So for sake of argument let’s assume Kamala Harris is the next president, and walk through what that might mean for some aspects of energy, and where Canada might have a big opportunity. (I would do the same for Trump but I can’t even envision where he would take things; on the energy front he promises to both make the US an energy exporting superpower and to “cut energy prices in half” and I can’t even begin to analyze that.)
The other week, the Biden administration (I think that’s what it’s still called) announced a new Task Force on AI Datacenter Infrastructure that will meet with “clean energy solution providers” to reaffirm hyperscalers “commitments to achieving net zero carbon emissions and to procuring clean energy to power their operations.”
In other words, the Biden administration is looking to intervene to ensure that AI datacenters develop in alignment with the administration’s climate goals and emissions reduction policies, which include the forced shut-down of many coal and natural gas fired power plants within the next 10 years if these plants cannot sequester more than 90 percent of CO2 emissions. Not a single one does that today, and even with carbon sequestration it will be difficult for any of them to exceed 90 percent. Grid operators are already sounding the alarm, warning of looming power shortfalls at certain times.
(There is a segment of the energy policy spectrum that chooses to brush off these reliability warnings because they will be rare, or the system will handle the load 99 percent of the time, or some such. Run like hell from anyone that downplays this problem. The one percent of the time that the system will be unable to meet power consumption needs will be by definition the very worst weather times, such as an extreme cold snap or heat wave, and that one percent power shortfall time might be more catastrophic than can be imagined. Think of a massive power outage at -30 degrees, where buildings cannot even keep pipes from freezing; where electrical anything won’t want to work at all. Where batteries say “To hell with this, I’ll be back when it’s warmer.”)
Yet the forces of AI development are so massive that it is inconceivable that there will be any ‘clean power’ solution to these demands. Also last week, Blackrock, Global Infrastructure Partners, Microsoft, and MGX announced an AI partnership to invest in data centers and supporting power infrastructure. These big rich galoots are throwing $100 billion into the kitty, because they have some pretty lofty visions: “Artificial intelligence is not just an industry of the future, it underpins the future. Through this unique partnership, we will enable faster innovation, technological breakthroughs and transformational productivity gains across the global economy…”
The quite-extensive news release is quite barren of any of the federal Task Force’s ‘clean power’ enthusiasm, and the site even points to a nuance that shows their game plan – and where Canada might found a massive new industry on their doorstep. From the $100 billion fund news release: the fund will “…make investments in new and expanded data centers to meet growing demand for computing power, as well as energy infrastructure to create new sources of power for these facilities.These infrastructure investments will be chiefly in the United States fueling AI innovation and economic growth, and the remainder will be invested in U.S. partner countries.”
The only way this tidal wave of AI power demand will be clean is if a startling number of new nuclear power plants appear like mushrooms within the next few years, because AI will not wait for the sun to shine or the wind to blow. Such a nuclear renaissance anytime in the next decade is beyond unlikely because of the regulatory and construction challenges of actually building a new reactor. Microsoft has even gone so far as to announce plans to reactivate the Three Mile Island nuclear facility, a task that was until recently thought to be just crazy and so expensive as to be inconceivable, and the site itself was a Mecca for anti-nuclear activists.
Where might Canada benefit from this? Well, it is evident that the AI race will trample anything in its path in search of 24/7/365 power, and AI will not wait ten years for nuclear plants or renewable energy/battery/whatever green new tech might be percolating in research labs here and there. So where better place for the Americans to turn to than their northern neighbour, just sitting there shivering across the world’s longest undefended border, with so much energy we can’t find outlets for it all? Not just hydrocarbons but plenty of hydroelectric power, and, if grid operators and regulators can figure it out, plenty of wind and solar capacity that might be useful if married properly with baseload power. No simple task that, but there is a lot of money being funnelled to people to figure that out, so here’s hopin’.
In the current Canadian political environment, the AI industry might well be met with the same shrugs of indifference from our federal leaders, or even outright hostility, if said power consumers don’t adhere to our environment minister/Greenpeace activist’s view of what is good for Canada. Recall that Canada has turned away multiple requests from desperate countries for east-coast LNG because Ottawa can’t envision a business case for it. That unfortunate statement is more than a year old and the world is still laughing at it.
But there is a palpable feeling across the land that this ruling cohort is about to be shown the door in a most spectacular fashion, see: utility bill discussion above for one of many reasons, and a new government might well be more open for business.
It would be amazing to see Canada carpe diem for once. We seem to have adopted as a national anthem the old Garbage song, “I’m only happy when it rains”.
What the world desperately needs – energy clarity. And a few laughs. Pick up The End of Fossil Fuel Insanity, available at Amazon.ca, Indigo.ca, or Amazon.com.
Read more insightful analysis from Terry Etam here, or email Terry here.