Thank you and good morning. My name's Rob Schaefer and I'm the executive vice-president of trading and marketing at TransAlta.
Thanks for having me here today. I really appreciate the opportunity to speak here about the impact on the electricity sector of declining oil prices.
Before I get started just let me introduce TransAlta for those of you who aren't familiar with us. We are Canada's largest, publicly traded power generator and marketer. We've been in business, headquartered in Calgary, for over 100 years. We are a well-diversified company. We have operations across Canada, in the United States, and in Western Australia. We have 64 generation facilities and we span pretty much all fuel types, from hydro to wind to coal to gas, with a total fleet capacity of over 8,500 megawatts across all those jurisdictions. We're Canada's largest wind generator and we're among the largest publicly traded renewables companies in Canada.
We're in your communities. We have small hydro facilities in British Columbia. We have efficient coal plants in Alberta. We have wind farms in Quebec. In fact, we have a gas cogeneration plant right here in Ottawa serving the children's health centre just north of here. We've been serving that facility for a number of years and we're very proud to have just worked out a new deal with the Ontario Power Authority to continue the operation of that plant.
We're very involved in the oil and gas sector. Of course, we supply power to the grid in Alberta. We supply all oil and gas producers that way. We also have cogeneration facilities right on site with Suncor, for example. We just heard from Suncor earlier. In fact, we've been in business, in partnership, with Suncor at Fort McMurray for 14 years, with a cogeneration plant there. We serve their refinery in Sarnia, Ontario, as well. Clearly the oil and gas sector is important to our business.
What I would like to do here today is to speak to the impact of oil prices on the power sector, and I'm going to cover both the short-term impacts as well as the long-term impacts.
Thinking about the short term, what we're seeing today are the lowest power prices we've seen in years in Alberta, and actually across North America. There are a couple of things going on here.
Number one, we've had a significant amount of new power supply come in during the last couple of years, brought on by having relatively higher prices that brought on new supply. Now we're seeing the impact of that with quite low prices.
The second thing, though, is that we have very low natural gas prices. I think you heard about that and you've certainly been aware of that. So what's happening is that we're seeing a trend of increased competition between gas and coal in Alberta and in other markets as well. In fact, in 2014 coal ran about 12% less than what it was capable of, and our analysts are linking that to low gas prices. Basically in any jurisdiction where you have a reasonable amount of gas-fired generation you're seeing the impact of that on the markets. Those are the short-term impacts.
The longer term impact is this. As difficult as low oil prices are on the oil sector, it's also difficult on the power sector. If we see a protracted period of low prices, it's going to be difficult to make the investments we require to renew the generation fleet across Canada. Clearly in the short term consumers are better off with low power prices. The challenge is that, longer term, we could see a knock-on impact in the form of higher prices later, and even potentially supply shortfalls. You know that in western Canada, in particular, an oil and gas industry that's not investing in growing means a flat load growth for the power sector.
As we look to the 2020 timeframe to renew our fleet, if we have a protracted period of low prices it's going to be challenging to do that, no matter what fuel technology you want to talk about because all new generation comes with large price tags. There is a long lead time to make those investments, much longer than the oil and gas sectors themselves, so you get into a timing crunch.
That's the bottom line. Just to wrap up, at TransAlta we're certainly up for the challenge. We've adapted to the effectively low mining revenues in Western Australia, the manufacturing sector in Ontario. We've been dealing with the growth we've had in western Canada. We can certainly deal with a softer market. It's not the first time we've seen it; it won't be the last. We're certainly up for the challenge.
Thank you very much, and I welcome your questions.