Understanding Deregulation Part 3: Power Distribution

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Understanding Deregulation Part 3: Power 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, Crowsnest Pass
REGIONAL: ATCO and FortisAlberta
CO-OPS: Rural Electrification Association (REAs)

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.

Understanding Deregulation Part 2: Power Transmission

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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.

Understanding Deregulation Part 1: Generation

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Understanding Deregulation Part 1: Generation

With deregulation of the electric industry in Alberta, the price paid for electric generation is no longer regulated. Generators sell their power to the Alberta Electric System Operator (AESO) following the concept which is called an “Energy Only Market”. Click Here for a report on the “State of the Market”. A number of new facilities have been built since 2000. Recently the industry is investing in wind generation and today wind represents 9% of the market installed capacity. To monitor generation supply and current pricing visit AESO’s online and real time trading web page at http://ets.aeso.ca/ deregulation-generation