Provincial government rewiring electrical market
By Lethbridge Herald on December 11, 2024.
The Alberta government is making changes to electricity market rules, with updates to transmission policies.
Herald photo by Alexandra NoadAlexandra Noad – LETHBRIDGE HERALD – Local Journalism Initiative Reporter
The Alberta government will be making changes to the electricity market rules in the province to help restore balance between affordability, reliability and sustainability.
In a press release on Tuesday, Lethbridge East MLA Nathan Neudorf, who also serves as Minister of Affordability and Utilities, says Albertans deserve a modern electricity system that is both affordable and reliable.
“As our electricity supply mix evolves, so should our policies. These updates to transmission policies are essential to ensuring Albertans are well-served by our electricity system for years to come,” said Neudorf.
Alberta’s current electricity system was designed for a small number of baseload power plants generating reliable electricity.
In 2016, Alberta’s accelerated coal phase out was rushed was rushed through, without proper due diligence and with a growing supply of intermittent renewables being used instead of natural gas, the province’s power grid along with the prices, can become as volatile as the weather.
Thousands of kilometres of new transmission lines were required to connect renewables along with backup sources required to keep the lights on have added costs for Albertans.
The demand for electricity only continues to increase and it’s expected that Alberta’s need for electricity could quadruple or more in the coming decades.
In the release the government stated the need to make changes now to ensure the affordability, reliability and the sustainability, of the provincial gride in the decades to come as demand surges.
After three years of engagement with the industry, the Alberta government says they are making changes to ensure the province’s ratepayers are no longer burdened with the full costs of building new transmission lines.
To achieve this, costs for new transmission infrastructure will be assigned on a cost-causation basis going forward.
The Alberta government believes this will incentivise new power plants to be built in optimal locations which take advantage of existing infrastructure which will save costs for both Alberta ratepayers and job creators.
Because of the government engagement with the industry, they are aligning the province with other jurisdictions by giving the Alberta Electric System Operator (AESO) more market-based tools to increase the efficiency of the province’s grid by prioritizing the use of pre-existing infrastructure.
Aaron Engen, president and chief executive officer of AESO says they appreciate all the work the Alberta government as well as other stakeholders have done thus far and they look forward to continued engagement in 2025.
“This is a positive milestone borne out of significant engagement and consultation with industry stakeholders, our partner agencies and the Government of Alberta,” said Engen.
According to the release the provincial government believes updating Alberta’s Transmission Regulation is a significant and necessary step in modernizing the province’s electricity system.
To enhance grid reliability the Alberta’s government is making changes to streamline the process of building and maintain connections between their electricity grid and other jurisdictions.
The government is hoping this reduces red tape and enable critical improvements to happen quicker as well as help improve reliability by restoring electricity grid connections between Alberta and British Colombia along with expanding connections between Alberta and Saskatchewan.
Over the past year, the AESO has engaged extensively with industry on the technical design of a Reconstructed Energy Market along with direction from the provincial government.
One key aspect of these market reforms includes moving to a day-ahead market, where power generators will be required to commit their power on the previous day rather than a couple of hours beforehand.
Derek Olmstead, administrator and chief executive officer of the Market Surveillance Administrator, says these features will help reduce grid alerts.
“Market design features like day-ahead market can help significantly reduce the likelihood of future grid alerts and will ensure all necessary generators needed to meet electricity demand are online to provide power,” said Olmstead.
Neudorf has sent a letter to inform the AESO of the government’s latest decisions on changes to the Transmission Regulation and to further guide the ongoing technical design of a Reconstructed Energy Market.
The government says they intend to bring forward legislation to support these changes in the new year.
In the meantime, the temporary measures enacted by Alberta’s government on earlier this year will continue to protect Albertans, ensuring reliable power and predictable utilities.
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