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.
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…
Distribution: Once the transformers have reduced the high-voltage electricity from the transmission lines, the electricity 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, Ponoka andCrowsnest Pass
Regional: ATCO and FortisAlberta
CO-OPS: Rural Electrical Association’s (REA’s)
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: In Alberta, customers can choose to buy electricity from a Regulated Retailer whose rates are set based on a government formula or a Competitive Retailer. Competitive Retailers are licensed by Alberta Government Services (AGS).
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 last 5 years, the formula used in calculating the RRO has gradually changed. On July 1 2010 the calculation will be based on 100% month-ahead projected pricing instead of a blend of short-term 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 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.
Get Energy is a competitive Energy Marketer that provides power to Fort McMurray, Edmonton, Red Deer, Calgary and almost all of Alberta!
In Alberta, you can choose how you buy electricity. You can sign a contract with an Energy Retailer at an agreed contract price and terms. You also can buy your electricity at a regulated rate, often called the RRO. The regulated rate is the unit price of electricity (cents per kilowatt hour – kWh). The Alberta Utilities Commission (AUC) regulates Alberta’s investor-owned and municipally-owned utilities to ensure that customers receive electricity at a just and reasonable rate. This rate changes each month. If you have not chosen a competitive electricity retailer and you use less than 250,000 kWh per year, you will continue to be eligible for the RRO.
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