Alberta is making key changes to electricity market, but critics raise concerns over lack of details

Alberta has set the stage for key electricity market reforms, and while critics have said the changes are welcome, they say the lack of details provides uncertainty for the market. Affordability and Utilities Minister Nathan Neudorf tabled legislation on Thursday that would allow hydrogen to be used for home and commercial heating, move to a day-ahead market and a cost-causation model for transmission infrastructure. Jason Wang, senior analyst at the Pembina Institute, said while the legislation allows for flexibility and is a welcome step towards restoring the electricity market, it lacks clear details on how the cost-causation will be determined and if it will ultimately be a fair cost.

He added that the timeline for the electricity market redesign was pushed back to 2027, which will cause uncertainty within the market, especially for investors. “Alberta’s approach is still uncertain. The details are still not clear,” Wang said.



“If you shift the costs of transmission to the generator, that just makes the cost of electricity that they provide more expensive.” Wang said the province is not utilizing current transmission infrastructure to its fullest, pointing to existing technology like renewables such as wind and solar and provincial interties. He said going forward, there is an opportunity for more transparency for Albertans and for the Alberta Utilities Commissioner to potentially have input or oversight of the changes before they are implemented.

“Earlier drafts looked like they were going to be biased against renewable energy, and it’s hard to say what the system operator and government today are going forward with, how those will impact wind and solar ...

but because of the complexity of all of these rules, a lot of modelling has to be done to look at what the impacts might be,” Wang said. The province intends to move forward with its plan to modernize the electricity market via the restructured energy market (REM). Back in December, Neudorf directed the Alberta Electric System Operator (AESO) to finalize details for REM by 2025, which includes a mandatory day-ahead model where power generators will commit their power 24 hours in advance rather than a couple of hours beforehand.

The amendments would also include changes to the existing transmission policy so costs for new transmission infrastructure will be assigned on a “cost-causation basis,” meaning Alberta ratepayers would no longer be saddled with the full cost of a new transmission line or infrastructure and seek to maximize existing lines. “We’ve heard Albertans and their frustration with rising transmission costs on their bills,” Neudorf said. “I’m confident that the renewables can continue to develop in the right place that benefits Albertans and our industry to the greatest degree.

” On Thursday, the province provided a list of quotes from stakeholders in support of the legislation. Postmedia has reached out to AESO for comment. Further regulations will be developed to clarify the implementation details, according to the province.

[email protected] @kccindytran RelatedAlberta looks to allow hydrogen blending to heat homes and businessesAlberta announces electricity market reforms, moves to day-ahead model and cost-causation basis Bookmark our website and support our journalism: Don’t miss the news you need to know — add EdmontonJournal.com and EdmontonSun.

com to your bookmarks and sign up for our newsletters . You can also support our journalism by becoming a digital subscriber. Subscribers gain unlimited access to The Edmonton Journal, Edmonton Sun, National Post and 13 other Canadian news sites.

The Edmonton Journal | The Edmonton Sun.