Alberta Premier Rachel Notley says party members back her about-face on royalties

Premier Rachel Notley says her decision to back down on a campaign promise to overhaul Alberta's royalty regime will not create divisions within the NDP caucus or the party.

After years on the opposition bench advocating for higher  royalty rates, Rachel Notley decided last week against asking the energy sector to pay more.

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Though some NDP supporters have said they felt betrayed by Friday's announcement, Notley said party members recognize that much has changed in the 12 months since the NDP campaigned for an overhaul of the royalty regime.

"I think it is the right thing, for right now," Notley said during a Monday morning interview on CBC's Edmonton AM. "It is just not the time to add additional challenges or changes to an industry that drives our economy.

"My MLAs were telling me, 'Listen, people are worried about their jobs, they're worried about their stability, their security and being able to put food on the table.' And this was a response to that."

A four-member panel spent the last five months studying Alberta's royalty system, and made the recommendation to keep the current scheme relatively unchanged, amid a worsening outlook for oil prices.

Not only has the low price of oil crippled Alberta's energy markets, Notley said it's becoming increasingly difficult for the province's energy producers to contend with increased production from companies south of the border.

"They are no longer our customer, but our competitor. Not only do we only have one market, but our one market is now our competitor," said Notley. "The dynamic has changed quite dramatically."

Changes to Alberta's royalty structure for oil, liquids and natural gas will apply initially only to new wells. The existing royalty rate will continue for 10 years for wells already producing. The new system will take effect in 2017.

Although Notley has often suggested that Albertans were not receiving full and fair value because of provincial royalty structure, she said changing the regime now would be too risky.

"Should we have been getting a better take three or four years ago? Yes, I still believe that's true. But is now the time to be seeking that? No, it's not, because the situation has changed.

"I hope that Albertans will see that this was a pragmatic choice that we made, given the current circumstances."