Alberta electricity policy
From Wikipedia, the free encyclopedia
In 1996, Alberta began to restructure its electricity market away from traditional regulation to a market-based system. The market now includes a host of buyers and sellers, and an increasingly diverse infrastructure.
Consumers range from residential buyers to huge industrial consumers mining the oil sands, operating pipelines and milling forest products. On the supply side, generators range from wind farms east of Crowsnest Pass to huge coal-fired plants near Edmonton. The diversity of Alberta’s electricity supply has increased substantially. To a large extent because of deregulation, the province has more technology, fuels, locations, ownership, and maintenance diversity than in the past. The system’s reliability, its cost structure and Alberta’s collective exposure to risk are now met by a complex system based on diverse power sources.
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[edit] Market components
Alberta's electricity market consists of five fundamental components and features.
- Seventeen firms supply electricity into the grid. Five of those providers - ATCO, Enmax, Epcor, TransAlta and TransCanada Corp. - supply about 80% of the province's generation capacity.
- The Alberta Electric System Operator (AESO)[1] leads the planning and operation of the power system, facilitates competitive power markets and ensures open access to the grid.
- There are about 160 wholesale electricity purchasers, many of which are also resellers to other end-users.
- Retail consumers have the option to buy electricity at competitive prices from third-party sellers or at regulated prices through the local utility.
- The Market Surveillance Administrator[2] ensures that Alberta’s electricity markets are fair, efficient and competitive.
[edit] Supply interdependence with British Columbia
Alberta and neighbouring British Columbia are buyers and sellers of each other’s power. Albertans buy from B.C. during peak hours. B.C. buys from Alberta during the night. This arrangement confers benefits on both provinces.[3]
The power-exchanging relationship between the two provinces is based on geography. Alberta has coal and natural gas, while B.C. has big mountains, long valleys and lots of rain. As a result, B.C. based its system on hydroelectric power while Alberta constructed one that primarily burns hydrocarbons. Because of these basic realities, over the years the two provinces have evolved an interdependent relationship.
Alberta’s electrical demand varies substantially throughout the day and across the seasons. When individuals are fixing supper and using home appliances, demand for power goes up, as it does during heat waves and cold snaps. It tapers off during spring and fall. Like other mechanical devices, generators fail unexpectedly from time to time. If they are wind-powered, their output is quite variable and difficult to predict.
Whether for reasons of temporary high demand, short supply or both, Alberta buys electricity from its western neighbour. In 2007, B.C. provided as much as 465 megawatts per hour to Alberta for brief periods. In a sense, B.C. serves as a standby generator that can provide significant amounts of reliable power on short notice. By contrast, Alberta sells electricity to British Columbia at night during periods of surplus capacity. During that period, B.C. recharges its hydroelectric reservoirs.
Simply put, Alberta buys electricity from B.C. during periods of peak consumption, on unusually cold or hot days or when a larger-than-normal number of generators are down for maintenance. British Columbia buys electricity from Alberta when that province least needs it, at night. This arrangement enables both provinces to make optimal use of their generating and storage capacity and use assets more efficiently. Also, it keeps power prices lower in both provinces than they would otherwise be.
This arrangement evolved because of the physical differences between the two electrical systems. It depends very little on differences in the two market models.
[edit] Market models
The differences between Alberta’s and British Columbia’s market models represent the two extremes in use within Canada. Alberta has developed a system in which markets determine prices and the pace of investment. B.C. has a regulated, government-owned power system. British Columbians are justifiably proud of their hydroelectric system, although today’s B.C. taxpayers do not appear as keen to invest in publicly funded generation as their parents were. As a result, B.C. has become a net electricity importer. In 2007 Alberta sold much more electricity to B.C. than that province bought from Alberta.
Alberta was also a slight net importer in 2007, with its net imports coming primarily from its eastern neighbour, Saskatchewan. Despite the vast differences in market design and because of large differences in the mix of generation assets, the electricity systems of Alberta and British Columbia enjoy a unique symbiotic relationship. B.C. provides a market for Alberta’s night-time surplus and a peaking supply for Alberta’s crunch periods. The investment climate in Alberta has attracted a steady stream of investor-funded generation projects for the past ten years. This is one of the reasons Alberta’s electricity system has provided reliable, sustainable power in an environment of rapid economic growth.
