A BRIGHTER ALBERTA

Generation

With the deregulation of electricity in Alberta, the price paid for electric generation is no longer regulated. Generators sell their power to the Alberta Electric System Operator (AESO). The AESO, in turn, provides independent, fair, efficient and open-market-access for all Market Participants (Retailers), who buy electricity from the wholesale market at the hourly-posted price.

There are over 200 participants and about $9 billion in annual energy transactions handled by the team at the AESO.

The chart illustrates the sources of Alberta’s power.

Transmission

Electricity is sent from the generating plants over high-voltage transmission lines to substations that use transformers to reduce the voltage level.

Regulated rates for transmission are set by the Alberta Utilities Commission (AUC) and are managed by the Alberta Electric System Operator (AESO).

The AUC approves the construction and operation of all transmission facilities in Alberta. They also establish Regulated Transmission Rates. The AESO administers the rates and oversees the transmission system so there is equal access for all Market Participants. Distribution companies then flow through these transmission charges to Retailers in their service area. Distribution companies’ transmission charges are based on rates approved by the AUC, and on each consumer’s individual energy usage. Retailers in turn pass these transmission charges on to the consumer as part of their monthly retail bill.

The need for new transmission lines is normally analyzed by Alberta’s Electric System Operator (the AESO), and reviewed in public hearings before the AUC. The Government of Alberta has recently changed the electric industry legislation, allowing cabinet to mandate the construction of critical transmission infrastructure. This change has proven to be highly controversial.

Alberta has built very little transmission in the past 20 years, and the need for substantial system reinforcement is widely recognized. However the size, timing and technology of these transmission additions is unprecedented.

The removal of the public need assessment process, and its replacement by a closed-door cabinet decision making process, is of concern to many parties, particularly since all costs of the bulk transmission system are paid by customers and no bulk transmission system costs are paid by generators.

Others observe that expanding transmission capacity will facilitate green power development, increase generator competition, and open up new internal and external supply options for customers within and outside of Alberta.
The controversy continues Power Service…

Distribution

Once the transformers have reduced the high-voltage electricity from the transmission lines, the electricity in Alberta then travels over the utility’s low-voltage distribution wire lines to customers.

The Wires Operators (distributors) and franchise territories include:
Municipal: Calgary, Edmonton, Red Deer, Lethbridge, Cardston, Fort MacLeod, Crowsnest Pass,Power Service
Regional: ATCO and Fortis Power Service
Co-Ops: Rural Electrification Association (REAs)

These utilities are responsible for delivery of electricity and reading the consumer’s meter. Excluding the wires rates posted by operating REAs, the AUC is responsible for the approval of the Wire Operators’ Tariff Rates, reviewing fees to be just and reasonable. The Tariff Rate recovers the utility’s costs to design, maintain, construct and finance the distribution electric system and read consumers’ meters. The Rate also includes a reasonable profit to the utility.

The Retailer must be registered with the Wires Operator and is invoiced for all regulated wires services. This cost is passed to the consumer as part of the Retailer’s monthly customer bill.

Retail

This is where Bow Valley Power comes in.
Electricity in Alberta can be purchased from a Regulated Retailer, whose rates are set based on a government formula, or a Competitive Marketer, which provides great rates to earn customers. Bow Valley Power is a competitive energy marketer operating under the Electricity and Natural Gas retail licences of Utility Network and Partners Inc. issued by Service Alberta.

For consumers who have not chosen to sign a contract with the competitive supplier, the Regulated Rate Option (RRO) is available as a default supply option. Over the years, the formula used in calculating the RRO has gradually changed.
Competitive electricity retailers will often purchase electricity for their customers through a combination of long-term or short-term contracts with the generation companies. They can also buy electricity directly from the wholesale spot market based on the published hourly price.

This allows consumers to get as close as possible to wholesale prices, which are often well below other competitive retail or RRO prices. For more information on Competitive Retailers in Alberta visit the Utilities Consumer Advocate’s website.

Bow Valley Power provides electricity throughout all of Alberta, excluding Medicine Hat.

Oversight

While the market is a blend of both regulated and unregulated entities, the Government of Alberta is responsible for the orderly and fair proper operation of the province’s electric system, including generation, transmission, distribution and retailing.

AESO: Alberta Electric Systems Operator
AUC: Alberta Utilities Commission
MSA: Market Surveillance Administrator
UCA: Utilities Consumers Advocate
SA: Service Alberta
ADOE: Alberta Department of Energy