Alberta electricity policy
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 farm
s 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.
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.
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 water. As a result, B.C. based its system on hydroelectric power while Alberta constructed one that primarily burns hydrocarbon
s. 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 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.
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 even during periods of rapid economic growth.
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
began to restructure its electricity market
Electricity market
In economic terms, electricity is a commodity capable of being bought, sold and traded. An electricity market is a system for effecting purchases, through bids to buy; sales, through offers to sell; and short-term trades, generally in the form of financial or obligation swaps. Bids and offers use...
away from traditional regulation
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
to a market-based
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
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
Pipeline transport
Pipeline transport is the transportation of goods through a pipe. Most commonly, liquids and gases are sent, but pneumatic tubes that transport solid capsules using compressed air are also used....
and milling forest products. On the supply side, generators range from wind farm
Wind farm
A wind farm is a group of wind turbines in the same location used to produce electric power. A large wind farm may consist of several hundred individual wind turbines, and cover an extended area of hundreds of square miles, but the land between the turbines may be used for agricultural or other...
s east of Crowsnest Pass
Crowsnest Pass
Crowsnest Pass is a high mountain pass across the Continental Divide of the Canadian Rockies on the Alberta/British Columbia border.-Geography:...
to huge coal-fired plants near Edmonton
Edmonton
Edmonton is the capital of the Canadian province of Alberta and is the province's second-largest city. Edmonton is located on the North Saskatchewan River and is the centre of the Edmonton Capital Region, which is surrounded by the central region of the province.The city and its census...
. 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
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...
are now met by a complex system based on diverse power
Electric power
Electric power is the rate at which electric energy is transferred by an electric circuit. The SI unit of power is the watt.-Circuits:Electric power, like mechanical power, is represented by the letter P in electrical equations...
sources.
Market components
Alberta's electricity market consists of five fundamental components and features.- Seventeen firms supply electricityElectricityElectricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...
into the gridGrid connectionIn electrical grids, a power system network integrates transmission grids, distribution grids, distributed generators and loads that have connection points called busses. A bus in home circuit breaker panels is much smaller than those used on the grid, where busbars can be 50 mm in diameter...
. Five of those providers - ATCOATCOATCO Ltd. is an Alberta based corporation with more than 7,000 employees operating across three main business divisions: Power Generation; Utilities and Global Enterprises, with companies active in industrial manufacturing, technology, logistics and energy services.ATCO Ltd...
, EnmaxENMAXENMAX Corporation is a vertically integrated utility that provides electricity, natural gas, renewable energy and value-added services to its customers.-Overview:...
, Capital Power CorporationCapital Power CorporationCapital Power Corporation is an independent power-generation company based in Edmonton, Alberta, Canada. Capital Power develops, acquires, and operates power generation from a variety of energy sources...
, TransAltaTransAltaTransAlta Corporation is a power generation and wholesale marketing company headquartered in Calgary, Alberta.TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia...
and TransCanada Corp.TransCanada Corp.TransCanada Corporation is a major North American energy company based in Calgary, Alberta, developing and operating energy infrastructure in North America. Its pipeline network includes approximately of pipeline and connects with virtually all major gas supply basins in North America...
- supply about 80% of the province's generation capacity. - The Alberta Electric System Operator (AESO)Alberta Electric System OperatorThe Alberta Electric System Operator, abbreviated AESO, is a not-for-profit entity responsible for the planning and operation of the Alberta Interconnected Electric System in a safe, reliable, and economical manner....
leads the planning and operation of the power systemElectric power transmissionElectric-power transmission is the bulk transfer of electrical energy, from generating power plants to Electrical substations located near demand centers...
, 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 ensures that Alberta’s electricity markets are fair, efficient and competitive.
Supply interdependence with British Columbia
Alberta and neighbouring British ColumbiaBritish Columbia
British Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...
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.
The power-exchanging relationship between the two provinces is based on geography
Geography
Geography is the science that studies the lands, features, inhabitants, and phenomena of Earth. A literal translation would be "to describe or write about the Earth". The first person to use the word "geography" was Eratosthenes...
. Alberta has coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
and natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
, while B.C. has big mountains, long valleys and lots of water. As a result, B.C. based its system on hydroelectric power while Alberta constructed one that primarily burns hydrocarbon
Hydrocarbon
In organic chemistry, a hydrocarbon is an organic compound consisting entirely of hydrogen and carbon. Hydrocarbons from which one hydrogen atom has been removed are functional groups, called hydrocarbyls....
s. 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 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.
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 and has recently 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 even during periods of rapid economic growth.
See also
- Hydro-Québec's electricity transmission systemHydro-Québec's electricity transmission systemHydro-Québec's electricity transmission system is an expansive, international power transmission system located in Quebec, Canada with extensions into the Northeastern United States...
- Manitoba HydroManitoba HydroManitoba Hydro is the electric power and natural gas utility in the province of Manitoba, Canada. Founded in 1961, it is a provincial Crown Corporation, governed by the Manitoba Hydro-Electric Board and the Manitoba Hydro Act. Today the company operates 15 interconnected generating stations. It has...
- Ontario electricity policyOntario electricity policyOntario electricity policy refers to plans, legislation, incentives, guidelines, and policy processes put in place by the Government of the Province of Ontario, Canada, to address issues of electricity production, distribution, and consumption. Policymaking in the electricity sector involves...
- SaskPowerSaskPowerSince 1929, SaskPower has been the principal supplier of electricity in Saskatchewan, Canada. Today, it serves more than 473,000 customers and manages $5.3 billion in assets...