Electricity market review underway in Alberta

By Charles Lefebvre
June 18, 2019 - 9:50am Updated: June 18, 2019 - 7:19pm

 

EDMONTON, AB — The United Conservative Party is kicking off a review of the electricity market for business in Alberta.

Energy Minister Sonya Savage announced on Friday that the province has launched a review of the market, whether to retain an energy-only electricity market or create a capacity market.

“This was something that was started under the previous government, and government is now taking that conversation out into the electricity sector to get an opinion and make sure we’re moving in the right direction in the long-run for the province,” said Stacey Smythe, executive director of Market Policy with the Government of Alberta.

Since the 1990s, Alberta has operated under an energy-only market after the system was deregulated. The energy-only market sees electricity produced as needed, and generators are paid for the electricity produced in the moment it’s sold.

A capacity market, explains Smythe, sees generators paid to produce additional electricity.

“The idea is to make sure you have enough generators available when you have your highest demand levels, so nobody is ever left without the electricity they need to run their businesses or power the lights on in their home,” she says.

The NDP government began the process of implementing a capacity market in 2016, with the goal of having it in place by 2021. At the time, Rachel Notley said the capacity market would ensure there was a stable supply of electricity and reduce price volatility. Premier Jason Kenney promised during the election to review the province’s electricity system.

Smythe says the decision on which market to use is important to promote economic growth in Alberta.

“We're wanting to make sure we have a system in place that offers us a reliable system that provides affordable electricity to Albertans, and continues to maintain an investment climate where people want to come to the province, both to build their  business and build new generation,” she said. “Having the right high-level sale electricity market is important to make sure that happens.”

Smythe says the review is not focused on price caps for electricity users in the province.

The province will be meeting with stakeholders over the next 90 days for feedback, and plan to release their findings in September.

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