The Alberta government is making regulatory changes to how generators provide energy to the province to reduce Albertans’ soaring electricity bills.
Electricity in the province has skyrocketed for consumers since July 2021, driven by a lack of competition.
Affordability and Utilities Minister Nathan Neudorf told attendees at Independent Power Producers Society of Alberta’s annual conference in Banff, Alta. Monday morning that the province remains committed to an energy-only market — where generators are paid just for the electricity that they produce.
“Our unique deregulated electricity market is one of the key reasons that Alberta continues to be a destination of choice for investment,” he said.
“However, the recent series of grid alerts and high electricity prices have highlighted that the market of today needs to evolve to include reliability and increased stability of pricing.”
Neudorf announced that the province will limit the offer price of natural gas-generating units owned by large generators when net revenues cross a predefined threshold. The province hasn’t yet clarified the threshold.
Alberta will also require natural gas-generating assets to be made available in extreme weather and peak demand as directed by the Alberta Electric System Operator, which manages and operates the provincial power grid on behalf of the Alberta government.
The province compensates generators for the volume of power they produce. To drive competition, the lowest priced electricity is bought and used first.
Generators sometimes offer their electricity at very high prices to recoup their production costs causing economic withholding. When done by large generators, it can result in higher prices for Albertans.
Neudorf said that Alberta’s electricity generators have been operating within the rules, but the rules themselves are outdated.
“Those rules were designed 25 years ago and are not the best fit for today’s system,” he added.
“These interim solutions are part of our long term effort to modernize Alberta’s grid as we work to build an affordable, reliable and sustainable electricity system for generations to come.”
The minister also said he heard a lot of complaints from Albertans about their electricity bills during the election last spring, and it’s still the most common issue he hears today.
The province gave out monthly electricity bill rebates of up to $75 from July 2022 to April 2023, but costs for many consumers have spiked since then — especially for those not locked in on fixed-rate power contracts.
The regulated rate option was reliably less than 10 cents per kilowatt hour in the past, but spiked in July 2021 and has stayed high since.
“I want to reiterate that my vision for Alberta’s electricity future is based on one simple goal and ensuring that Alberta’s electricity system is affordable, reliable, and sustainable for generations to come,” he said.
“This means having an energy only market that puts Albertans first and provides certainty and returns for investors and developers.”
