Electricity 101

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Generation

Following the deregulation of the Alberta electricity market, electricity generators began selling their power to the Alberta Electric Systems Operator (AESO). This concept is commonly referred to as an “Energy Only Market,” and is the current practice in Alberta. For more information, download a report on the “State of the Market.”

A number of new facilities have been built since 2000, and interconnections between Alberta and British Columbia, Saskatchewan, and Montana are essential in meeting the electricity demands in Alberta. Approximately 2% of the province’s electrical requirements are currently supplied under import agreements.

Generation Capacity(2014)

September 2014 Reference

Interconnections between British Columbia, Saskatchewan, and Montana are also an essential component to the supply of electricity to meet the demand in Alberta with about 2% of the provincial requirements being supplied under import agreements.

Transmission

Electricity is sent from the generating plants over high-voltage transmission lines to substations that use transformers to reduce voltage levels. 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 to ensure equal access for all market participants. Distribution companies then pass on (flow through) transmission charges to retailers in their service area. 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 consumption charge.

The need for new transmission lines has normally been analyzed by Alberta’s Electric System Operator (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 controversial.

Alberta has built very little transmission in the past 20 years. The need for substantial system reinforcement is widely recognized, however, the size, timing and technology of these transmission additions is unprecedented and has caused some degree of division among the province’s users.

Since all costs associated with the bulk transmission system are paid by customers and no bulk transmissions system costs are paid by generators, the removal of the public needs assessment process, and its replacement by a closed-door cabinet decision making process, has resulted in opposition by those who feel the decision making process should invoke end users.

Conversely, proponents of the new system maintain 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.

Distribution

Following voltage reduction, electricity travels via low-voltage distribution wire lines to customers.

The Wires Operators (distributors) and franchise territories include:

Municipal:
- Calgary
- Edmonton
- Red Deer
- Lethbridge
- Cardston
- Fort Macleod
- Ponoka
- Crowsnest Pass
Regional:
- ATCO
- Fortis Alberta
Co-ops:
- Rural Electrification Association (REAs)

These distributors are responsible for both the delivery of electricity and meter reading.

Excluding the wire rates posted by operating REAs, the AUC is responsible for the review and approval of the Wire Operators’ tariff rates, to ensure reasonable and principled pricing. The tariff rate recovers costs associated with the design, maintenance, construction and financing of the electrical distribution system, as well as meter monitoring, and finally, profit to the supplier.

Retailer / Marketer

In Alberta, consumers choose to purchase electricity either from a regulated retailer whose rates are set using a government formula, or from a competitive retailer, licensed by Alberta Government Services (AGS).

Consumers who do not choose to sign a contract with a competitive retailer, will utilize the Regulated Rate Option (RRO) as a default supplier. As of July 1, 2010 the calculation used to determine RRO pricing has been based on 100% month-ahead projected pricing instead of a blend of short and long term hedges.

Competitive electricity retailers will often purchase electricity for their customers through a combination of long-term or short-term contracts with generators, or they can also buy electricity directly from the wholesale spot market based on the published hourly price.

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.

Consumer

As an energy consumer, signing with Burst Energy allows you to access your energy resources at near wholesale pricing, often well below other competitive retail or RRO rates.

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

Government of Alberta entities include:

AESO — Alberta Electric Systems Operator
AUC — Alberta Utilities Commission
MSA — Market Surveillance Administrator
UCA — Utilities Consumers Advocate
AGS — Alberta Government Services
ADOE — Alberta Department of Energy

For more information on Competitive Retailers in Alberta visit the Utilities Consumer Advocate’s website.

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Generation Capacity(2014)