Understanding Deregulation Part 2: 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.