Alberta Electricity Transition

Alberta Electricity Transition

Overview:

The Alberta Government introduced three principles in November 2015 to do with phasing out coal-fired generation by 2030: maintaining reliability, encouraging investment, and providing price stability for all Albertans. The Government brought in energy expert Terry Boston as consultant for input. Recently, the Government took necessary steps to reform the electricity system to support those principles.

Coal Phase-Out:

The ambitious goal of the 2030 coal phase-out overshadowed the Federal Government’s long range plan, which prompted the Liberals to accelerate their own plan. The current provincial government is determined to live up to the “Leadership” claim in its Climate Change Leadership plan. Current advertising even supports this with a statement of “leading the way today so we don’t have to follow tomorrow.”

November 24th – The Government announced its revised coal transition action by agreements with TransAlta, Capital Power, and ATCO to end coal-fired emissions on or before December 31st, 2030. Transition payments were provided to these companies; all own coal-fired electricity units originally slated to operate beyond 2030. These transition funds can be reinvested into Alberta’s electricity market and will be paid until 2030 funded in full by the price on industrial carbon emissions. The Government also reached a settlement with Capital Power, AltaGas, and TransCanada Energy with regard to the early return of their Power Purchasing Arrangements.

RRO Cap:

November 22nd – The government announced a price cap to protect consumers from volatile electricity pricing to be in full implementation from June 2017 to June 2021. In effect, consumers on the Regulated Rate Option (RRO) will pay the lower of the market rate or the government’s capped rate of 6.8 cents per kilowatt hour. Although rates are low now the rate ceiling will ensure stable and affordable prices as the economy picks up.

REA IMPACT: REAs involved in retail and/or have contracts signed above 6.8 cents must consider the impact of revising all contracts or eliminating them. Keep in mind, consumers on the RRO pay the lesser of – current rate or 6.8 cap for 4 years.

Capacity Market:

November 23rd – The Government released its plans to create a “capacity market” for electricity to help ensure adequate energy supplies and protection from price volatility. This type of market attracts investors with its stability and predictability. Alberta’s capacity market will be developed with stakeholder consultation to be in place by 2021. This type of market is in more than 30 US jurisdictions and the UK.

November 29th – Bill 34, the Electric Utilities Amendment Act, would allow the Balancing Pool to borrow money from the province to manage its funding obligations – this gives the Balancing Pool the tools it needs to limit cost impacts on consumers, thereby enabling greater predictability and stability.

Door-to-Door Sales:

November 25th - Announcement introduced the ban on door-to-door sale of energy products (including energy contracts) effective January 1st, further protecting consumers from misleading, high-pressure sales practices.

REA IMPACT: Any REAs who retail must comply with the laws forbidding door-to-door sales.

Summary:    

GENERAL REA IMPACT:

  • Transition away from coal-fired generation does not affect the REA in that the generation will come from some other source.
  • Price protection with a predictable and stable electricity market benefits all small consumers, including farms/members.
  • In a move that in essence “re-regulates” the Alberta market to some degree, REAs must make changes that move with the market and, through the AFREA, provide stakeholder input that considers their situation with regard to renewables, distributed generation, and RRO providers.

The AFREA continues to work with government and stakeholders, on behalf of our members and all REAs, to ensure that the interests of REAs are considered in new initiatives and corresponding policy and/or legislation. We are working directly with the AESO to address the uniqueness of REAs and the impact of new initiatives affecting distribution.