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Powering Alberta's Future: A Comprehensive Guide to the Province's Electricity Landscape

By: Larry Peters

Table Of Contents:

Introduction: Powering Alberta's Future

A History of Power

Alberta's Deregulated Electricity Market

Navigating the Currents: Challenges and Opportunities

Alberta's Evolving Power Mix: From Coal to Clean

Modernizing the Grid: Infrastructure and Innovation

Understanding Your Electricity Bill in Alberta

Big Rock Power: Empowering Albertans with Choice

Conclusion: A Resilient and Sustainable Energy Future

References

Introduction: Powering Alberta's Future

Electricity, a fundamental force of nature, has been progressively understood and harnessed over millennia, rather than being a singular invention. Its earliest known records date back to 2750 BC, with ancient Egyptians documenting electric fish as "thunderers of the Nile".1

Around 500 BC, Thales of Miletus observed static electricity by rubbing amber with fur.1 This phenomenon remained largely unexplored for nearly two millennia until William Gilbert's systematic studies around 1600 AD, where he coined the term "electricity" from the Greek word "elektron" (amber).1

The journey from these early observations to modern power systems underscores a continuous accumulation of scientific knowledge and technological breakthroughs.

The 18th century marked a pivotal shift with Benjamin Franklin's kite experiment in 1752, conclusively proving that lightning was a form of static electricity, a discovery that profoundly shaped early electrical theory.1 The turn of the 19th century brought significant advancements, including Alessandro Volta's invention of the first true electric battery, the voltaic pile, in 1800, demonstrating how a continuous electric current could be generated.1

Michael Faraday's development of the electric dynamo in 1821 was a monumental breakthrough, converting mechanical power into electromagnetic power and setting the precedent for modern electricity generation methods using turbines.1

Thomas Edison further revolutionized electricity's practical application with his patent of the first practical and accessible incandescent light bulb in 1879, making large-scale electricity generation and distribution economically viable.1 His public demonstration on December 31, 1879, famously predicted electricity would be "so cheap that only the rich would burn candles".1 This historical progression from basic understanding to widespread application highlights how scientific inquiry, when combined with engineering ingenuity, can transform societal capabilities and drive economic accessibility.

Alberta stands as a cornerstone of Canada's energy sector, renowned globally for its vast oil and gas reserves.5 This historical reliance has profoundly shaped its energy infrastructure and economic identity. However, the province is currently undergoing a pivotal energy transition, moving towards a more diversified and cleaner energy mix.8 Electricity is not merely a utility but a critical enabler of Alberta's economy, powering everything from large-scale industrial operations, particularly the oil sands, to the daily lives of its over four million residents.8 Understanding this dynamic landscape is crucial for comprehending the complexities and opportunities within the province's energy future.

Big Rock Power is a competitive energy retailer deeply rooted in Alberta, providing essential electricity and natural gas services to residential, small business, and farm consumers across the province.9 As a tradename of Utility Network & Partners Inc., Big Rock Power emphasizes its commitment to transparent pricing and reliable service, aiming to offer "rock solid savings" without "hidden fees".9

By providing this expert content, Big Rock Power seeks to inform and empower Albertans, reinforcing its position as a knowledgeable and trustworthy partner in navigating the province's evolving energy landscape. This approach helps to establish the company's expertise and relevance, ensuring that it is recognized as an authoritative resource for those seeking to understand Alberta's electricity market and their options within it.

II. The Electrifying Journey: A History of Power

Early Discoveries and Milestones

The earliest known records of electricity date back to 2750 BC, with ancient Egyptians documenting electric fish as "thunderers of the Nile" and even conducting crude experiments by touching these fish with iron rods to induce shocks.1

Around 500 BC, the Greek philosopher Thales of Miletus observed static electricity, noting that rubbing lightweight objects like fur or feathers on amber caused them to attract other light objects.1 This fundamental observation remained largely unexplored for nearly two millennia until William Gilbert's systematic studies around 1600 AD. Gilbert, an English physician, coined the term "electricity" from the Greek word "elektron" (amber), and is often referred to as the "father of modern electricity" for his comprehensive work on magnetic and electric forces.1

The 18th century brought significant theoretical and experimental breakthroughs. In 1751, Benjamin Franklin published "Experiments and Observations on Electricity," which became foundational for future electrical experimentation.1 His famous kite experiment in 1752 conclusively proved that lightning was a form of static electricity, a discovery that profoundly shaped early electrical theory.1

The turn of the 19th century saw rapid advancements in harnessing electricity. Alessandro Volta, an Italian scientist, invented the first true electric battery, the voltaic pile, in 1800. This invention, based on the principle of immersing zinc and silver in an electrolyte to create a current, established the foundation for chemical batteries still used today.1

Further advancements in the 19th century laid the groundwork for modern power systems. Michael Faraday's invention of the electric dynamo power generator in 1821 was a monumental breakthrough. His device converted motive (mechanical) power, such as from steam, gas, water, and wind turbines, into electromagnetic power at a low voltage, setting the precedent for continuous electricity generation for centuries to come.1

Thomas Edison further revolutionized electricity's practical application with his patent of the first practical and accessible incandescent light bulb in 1879. Using a carbonized bamboo filament, his bulb could burn for over 1,200 hours, making large-scale electricity generation and distribution economically viable. Edison's public demonstration on December 31, 1879, famously predicted electricity would be "so cheap that only the rich would burn candles".1 These cumulative discoveries and inventions illustrate how scientific understanding, when combined with engineering ingenuity, progressively transformed electricity from a curiosity into an indispensable force driving economic accessibility and societal transformation.

The War of Currents: AC vs. DC and its Lasting Impact

The late 19th century was marked by a fierce rivalry, known as the "War of the Currents," between two titans of electricity: Thomas Edison, who championed direct current (DC), and Nikola Tesla, who advocated for alternating current (AC).1 Edison's DC systems, while initially standard and suitable for short distances (e.g., his Pearl Street power station in New York City could power lights within half a mile), proved inefficient for long-distance transmission due to significant voltage loss.3 In contrast, Tesla's AC system offered superior efficiency and the ability to easily step up or step down voltage using transformers, making it ideal for transmitting electricity over great distances with minimal loss.12

Edison, financially invested in DC, launched a vigorous public relations campaign to discredit AC. This included public demonstrations of AC's perceived dangers and even supporting the use of AC in the electric chair as a method of execution to emphasize its fatal risks.12 However, George Westinghouse, an astute entrepreneur and engineer, recognized AC's inherent advantages. He strategically purchased Tesla's patents for the AC induction motor and polyphase system, becoming a staunch promoter of AC for large-scale power distribution.12

A decisive victory for AC came when Westinghouse and Tesla won the contract to light the 1893 Chicago World's Fair. This monumental display showcased AC's practicality and safety to over 27 million people, far surpassing anything achievable by DC.3

This event, coupled with Westinghouse's subsequent construction of AC generators for the Niagara Falls hydropower plant—which successfully delivered electricity 26 miles to Buffalo, NY—effectively ended the "War of the Currents," establishing AC as the preeminent global standard for power transmission.13 This historical conflict demonstrates how technological superiority, combined with strategic commercial backing and impactful public demonstration, can overcome entrenched interests and determine industry standards.

Edison Proving the Dangers of AC Power

Despite AC's historical dominance, DC electricity is experiencing a modern resurgence for specific applications. High-voltage DC (HVDC) transmission lines are increasingly being built for very long distances (typically over 600km) or for underground and underwater cables. This is due to inherently lower capacitance losses in DC transmission, making it more efficient for these particular scenarios.13

Furthermore, the growing electricity consumption of data centers, which natively operate on DC, is a significant driver for further HVDC development. By proliferating DC transmission systems, electricity losses experienced by data centers can be significantly reduced, contributing to lower carbon emissions.13 This evolution highlights that technological "victories" are rarely absolute or permanent, and older concepts can find new relevance with advancements and changing demands.

Alberta's Early Adoption of Electricity

Alberta was a relative latecomer to widespread electricity adoption compared to more densely populated regions of North America. The need for electricity in the province only became cost-effective when its urban centers grew sufficiently to create demand.16 This point arrived in the late 1880s and early 1890s.

Calgary was the first city in Alberta to establish an electrical system in 1887, when the Calgary Electric Lighting Company won a contract to install and power ten streetlights.16 Edmonton followed shortly after, with the Edmonton Electric Lighting Company being established in 1891 to provide city streetlights.16 Lethbridge's early electricity history was intimately linked to its burgeoning coal industry, with the first coal-fired electricity generator in Alberta beginning operations outside the city in 1874 to power coal mines. A plant dedicated to providing power to the city of Lethbridge itself was built in 1893.17

The early 1900s saw significant debates regarding the optimal model for utility ownership. Population booms placed tremendous strain on existing systems, prompting discussions about the relative merits of public versus private ownership.17

Calgary, 1887

Edmonton became a pioneer in this regard, purchasing the Edmonton Electric Lighting Company in 1902 to become the first municipally-owned electric utility of its size in Canada.17

Calgary, however, pursued a different model, building a municipal coal-fueled power plant in 1905 but also seeking private sector partners.17 Lethbridge also took municipal control of its electricity generation and distribution in 1907, and by 1913, could offer exceptionally cheap electricity due to its access to cheap fuel from a municipally-owned coal mine.17 These early, diverse approaches to utility ownership laid some of the foundational differences that would later distinguish Alberta's electricity market from most other Canadian provinces.

Alberta's first hydroelectric project, Horseshoe Falls, opened in 1911, marking an important step in diversifying the province's energy sources.17 However, widespread rural electrification remained a significant challenge. The high costs associated with extending electricity lines over long distances to sparsely populated areas, coupled with a lack of financial incentive for existing private power monopolies, meant that rural Albertans lagged behind their urban counterparts and other parts of Canada in accessing electricity.16

This issue became a highly charged political debate, leading to the eventual government sponsorship and creation of numerous Rural Electrification Associations, some of which continue to exist today.16 The historical context of fragmented early development and the absence of a large, vertically integrated provincial power company, unlike most other Canadian provinces 16, helps explain the unique path Alberta later took towards a deregulated electricity market.

Alberta Government Deregulated Electricity

III. Alberta's Deregulated Electricity Market: A Unique Model

The Genesis of Deregulation: Why and When (1996-2001)

Alberta embarked on a significant transformation of its electricity market in 1996 with the implementation of the Electric Utilities Act (EUA).16 With this act, Alberta became one of only two fully deregulated electrical supply systems in North America.

This pivotal legislation marked a departure from the traditional cost-of-service regulation, moving the province towards a market-based system. A primary catalyst for this deregulation was the Alberta government's response to power brownouts experienced in the 1990s.16 The prevailing belief, particularly under the premiership of Ralph Klein, was that fostering competition among power producers would lead to an increase in supply and a reduction in prices, thereby enhancing Alberta's attractiveness for business investment.16

A notable distinction of Alberta's approach, setting it apart from most other Canadian provinces, is that it never owned or operated its own provincial power company.16 This meant that the province did not have a large, vertically integrated public utility to dismantle during the restructuring process, providing a different starting point for market liberalization. The restructuring process, initiated in 1996, continued through amendments to the EUA in 1997 and the establishment of new agencies in 2003, such as the Alberta Electric System Operator (AESO) and the Alberta Utilities Commission (AUC).16 By 2001, Alberta's energy market had evolved to full deregulation for both electricity and natural gas.20

The initial aim of this deregulation was to create a more competitive environment that would ultimately benefit consumers through lower prices and increased reliability. However, subsequent developments have shown a complex reality, where the market has, in many ways, struggled to consistently deliver on these promises, leading to challenges such as price volatility and reduced grid reliability.20 This divergence between policy intent and actual outcomes is a central theme in understanding Alberta's unique electricity market. Its distinct position as the only Canadian province with an effective open market at both the wholesale and retail levels 16 makes its experiences a compelling case study in the complexities of market liberalization for essential services.

Key Players and Their Roles: AESO, AUC, AER, Balancing Pool, UCA

Alberta's deregulated electricity market is governed by a network of interconnected entities, each with distinct responsibilities that collectively aim to ensure the system's operation, regulation, and consumer protection.

Alberta Electric System Operator (AESO):

Established on June 1, 2003, under the Electric Utilities Act, the AESO functions as the Independent System Operator (ISO) for Alberta's electricity market.16 Its core mandate is to ensure the safe, reliable, and economic planning and operation of the Alberta Interconnected Electric System (AIES), while also promoting a fair, efficient, and openly competitive (FEOC) market for electricity.23

The AESO is responsible for managing real-time balance between electricity supply and demand, overseeing the wholesale electricity market, and conducting long-term planning for the transmission grid, including approving prudent spending on transmission infrastructure.22 It provides open access to the grid for generators, transmission companies, and large industrial consumers.22

Alberta Utilities Commission (AUC):

Also established in 2003, the AUC is a quasi-judicial body that regulates investor-owned electric, gas, and water utilities, as well as some municipally-owned electric utilities and regulated retailers.16

The AUC's role is to act in the "public interest," balancing the needs of customers and utilities while considering economic, social, and environmental impacts of applications.25

It must approve the construction of new generation projects, although it does not regulate the wholesale prices charged for electrical output, which are determined by the market.30
Crucially, the AUC regulates and sets the prices charged for electricity transmission and distribution services.30
It also approves the Regulated Rate Option (RRO), now known as the Rate of Last Resort (RoLR), every two years.33
The AUC is responsible for adjudicating AESO rule-enforcement matters and reviewing AESO rules to ensure they support a fair, efficient, and openly competitive market.26

Alberta Energy Regulator (AER):

The AER is responsible for regulating the entire lifecycle of oil, oil sands, natural gas, and coal projects in Alberta, with a core mandate to protect public safety and the environment.34

Its authority has recently expanded to include deep geothermal, critical rare earth, and other minerals.34 The AER makes decisions on natural gas development, including wells and intra-provincial pipelines, and monitors compliance with environmental and safety standards.25

Balancing Pool:

This entity manages specific assets, revenues, and expenses that arose during Alberta's transition to a competitive electricity market.36 This includes managing Power Purchase Agreements (PPAs) that grant rights to exchange electric energy and ancillary services, thereby handling the financial implications of the market's restructuring.36

Utilities Consumer Advocate (UCA):

Created in October 2003 as part of the Ministry of Affordability and Utilities, the UCA serves as a vital resource for consumers.38 It educates and mediates for residential, farm, and small business electricity, natural gas, and water consumers, and actively advocates for their interests in regulatory proceedings.38 The UCA's existence underscores that while the market offers choice, consumers often require support to navigate its complexities and ensure fair treatment.

The presence of multiple, distinct regulatory and operational bodies, each with specialized functions, highlights the inherent complexity of Alberta's deregulated system. While this distributed authority is intended to foster competition and efficiency, it can also lead to coordination challenges and potential regulatory gaps, especially as new technologies and market behaviors emerge.

The explicit role of the UCA as a consumer advocate further indicates that the competitive market alone was not deemed sufficient to fully protect consumer interests, necessitating external intervention to ensure transparency and fairness. The AUC's unique position of approving project construction but not wholesale prices also reinforces the "energy-only" market philosophy, where price signals are intended to drive investment, but where market power can also develop, requiring subsequent regulatory responses.

Market Structure: Energy-Only vs. Capacity Markets

Alberta's electricity market operates under a distinctive "energy-only" market design, a structure it shares almost exclusively with Texas in North America.3 In this model, electricity generators are compensated solely for the energy they produce and sell into the market. The design is predicated on the idea that high market prices during periods of high demand or tight supply will naturally incentivize investment in new generation capacity, thereby ensuring supply adequacy.21

This "energy-only" approach stands in contrast to a "capacity market" model. In a capacity market, electricity producers receive payments not only for the energy they generate but also for maintaining a specified level of generation capacity that is available when needed. This capacity payment aims to ensure sufficient supply is available to meet peak demand and enhance grid reliability, typically leading to less price volatility for consumers.16 The previous Alberta government, under Rachel Notley, had plans to transition towards a capacity market to address some of the market's reliability concerns, but these plans were subsequently terminated by the United Conservative Party (UCP) government.16

The choice of an "energy-only" market is a fundamental design decision with profound implications for Alberta's electricity system. While theoretically promoting efficiency through price signals, in practice, it has led to a "just-in-time" approach to grid expansion.21 This means that new capacity might not be built until prices are already very high or the system is under severe stress, contributing to the grid reliability issues and frequent emergency alerts observed in the province.20 The absence of explicit capacity payments also means that consumers are directly exposed to the full brunt of wholesale price volatility, as generators rely solely on these fluctuating prices for revenue recovery. Furthermore, the reversal of the capacity market plans introduces regulatory uncertainty, which can deter long-term, capital-intensive investments necessary for grid stability and evolution.

The Role of Retailers in a Competitive Market

Alberta's deregulated market provides consumers with the flexibility to choose their electricity and natural gas providers from a variety of competitive retailers.20 These retailers offer diverse rate plans, including fixed rates that provide price certainty, variable rates that fluctuate with the market, time-of-use plans, and bundled services, allowing consumers to select options that best align with their energy consumption patterns and risk tolerance.20

Big Rock Power operates within this competitive landscape, providing tailored electricity and natural gas plans specifically designed for residential, small business, and farm consumers across Alberta.9 This includes offering various fixed-rate options that can shield customers from market volatility, a key value proposition in a deregulated environment.

For consumers who do not actively choose a competitive contract, they are automatically placed on the Regulated Rate Option (RRO).

This default option was rebranded as the Rate of Last Resort (RoLR) effective January 1, 2025.20

The RoLR is a variable rate that changes monthly, directly reflecting the fluctuating wholesale market prices.20 The existence of the RRO/RoLR, and the fact that many consumers only realize they are on this variable rate when faced with significantly higher bills 33, highlights a gap between the theoretical benefits of consumer choice and the practical realities of consumer engagement in a complex market.

Competitive retailers offering fixed rates effectively absorb or hedge against the wholesale price volatility that consumers on the variable RoLR face. This demonstrates a crucial function of competitive retailers in managing market risk for their customers. To ensure financial stability within this system, retailers, along with other market participants, are subject to compliance monitoring by the AESO and AUC.

This oversight, particularly regarding load settlement requirements, aims to ensure accurate billing and maintain market integrity.42 The need for such oversight and the presence of a consumer advocate (UCA) underscore that while the market offers choice, it also requires mechanisms to protect consumers and ensure fair play.

IV. Navigating the Currents: Challenges and Opportunities

Price Volatility and Consumer Impact (Regulated Rate Option/Rate of Last Resort)

Alberta's deregulated electricity market has demonstrably resulted in higher prices and significant price volatility for consumers, a stark contrast to the initial promises of deregulation.20 Since 2001, residential consumers in Alberta have collectively paid an estimated $7 billion more in system costs compared to other Canadians, averaging roughly $205 per household per year over 24 years of deregulation.20 This substantial financial burden directly challenges the premise that competition would inherently lead to lower costs for end-users.

The Regulated Rate Option (RRO), which was rebranded as the Rate of Last Resort (RoLR) effective January 1, 2025, serves as the default for consumers who do not choose a competitive contract.20 This variable rate has experienced extreme spikes, reaching as high as 32 cents per kilowatt-hour (kWh) in 2024, leading to "massive utility bills" for many Albertans.33 In contrast, customers on fixed-rate contracts with competitive retailers often secured significantly lower rates, sometimes below 10 cents per kWh.33 The government's rebranding of RRO to RoLR aims to clarify its inherently volatile nature and encourage consumers to actively explore competitive options, as many only realized they were on the RRO when faced with these unexpected bill increases.33

Variable Electricity Pricing on Alberta Market

Grid Reliability and Emergency Alerts

Despite the higher prices experienced by consumers, Alberta's electricity grid has demonstrated increasing unreliability, a critical concern for both households and industries.

This unreliability is evidenced by a disproportionately high number of Energy Emergency Alerts (EEAs) issued by the province compared to the rest of North America.20

From January 2022 to April 2024, Alberta accounted for a striking 33% of all Level 3 EEAs in North America. Level 3 alerts are the most severe, indicating that rolling blackouts or brownouts are likely or already in progress. In 2024 alone, this figure escalated dramatically, with Alberta accounting for 86% of all EEA3 alerts across North America.20

Notable grid events in January and April 2024 illustrate the severity of these reliability challenges. Triggered by extreme cold weather, the provincial electricity grid was unable to meet demand, with reserve power at one point dwindling to as little as 10 MW. This led to multiple grid alerts and even rotating power outages in Edmonton.20 Such incidents highlight the precarious balance between supply and demand, particularly during periods of peak stress.

A significant concern within this volatile market is the disproportionate impact on vulnerable populations. Low-income Albertans and newcomers, for instance, may face barriers such as credit requirements or deposits that limit their access to more stable fixed-rate contracts, effectively leaving the RoLR as their only viable option.33 This situation transforms market volatility into a social equity issue, where the benefits of "choice" are not equally accessible, and those least able to afford price spikes are most exposed to them. The persistent gap between the promise of deregulation and the reality of consumer costs highlights a fundamental flaw in the market's operation for a significant segment of the population.

According to AESO’s , Alberta requires $10–14 billion in distribution and transmission upgrades over the next decade just to maintain reliability and handle forecasted growth. and an additional $30 billion in capital and operational costs by 2049 just to comply with new reliability and emissions standards.

The "energy-only" market design, which is unique to Alberta and Texas in North America, is cited as a significant contributing factor to this unreliability.21 This market structure incentivizes investment only when prices are high, leading to a "just-in-time" approach to grid expansion rather than proactive planning for sufficient generation capacity.21

This design choice means that the system often lacks the necessary buffer or reserve margins to adequately respond to sudden demand spikes or unexpected generator outages, making it inherently vulnerable. The frequent alerts and actual outages not only inconvenience consumers and disrupt daily life but also carry significant economic and reputational costs for the province, potentially deterring investment and economic growth that relies on a stable power supply. This situation underscores a critical trade-off between the theoretical market efficiency and the practical need for robust grid reliability.

Market Concentration and Economic Withholding

The deregulation process in Alberta has inadvertently led to a highly concentrated electricity market, which has significant implications for competitive pricing and consumer costs. As of the first quarter of 2024, the five largest generation entities in Alberta controlled 54% of the market share.21 This level of market concentration grants these dominant companies substantial market power, enabling them to set prices above their marginal cost, which directly translates to higher electricity prices for consumers.21

A concerning practice identified within this concentrated market is "economic withholding." This occurs when large electric generators intentionally reduce or withhold some of their power supply from the market.

The objective is to create an artificial scarcity, which in turn drives up wholesale prices. This allows the generators to make more money on the power they do sell, even if they sell less overall. While this practice is, to some extent, "designed into the Alberta system" to compensate generators during periods of low wholesale prices, its prolonged application can lead to "outrageous bills" for Albertans.43 This directly undermines the "fair, efficient, and openly competitive" (FEOC) market ideal that deregulation was intended to establish.23

Major Alberta Generators have their hands on the scales

In Alberta's deregulated electricity market, generators are able to manipulate the market through Economic Witholding. They will refuse to generate electricity until such time as market prices reward them with greater profits.

Lessons from Texas: Similarities and Preparedness

Alberta's electricity market shares a striking and cautionary resemblance with that of Texas, as they are the only two jurisdictions in North America that utilize an "energy-only" market design.3 This shared structural characteristic makes the lessons from the Texas energy crisis of February 2021 particularly relevant and urgent for Alberta. During that crisis, extreme sub-zero temperatures led to widespread failures of thermal generating plants, primarily due to a lack of winterization and limited fuel supply, coupled with an unprecedented surge in electricity demand.3 This confluence of factors resulted in controlled outages across approximately 20% of the system and narrowly averted a catastrophic state-wide blackout.3

The key takeaways for Alberta from the Texas crisis underscore the critical need for proactive, forward-looking planning and robust emergency preparedness, especially in the face of extreme weather events. The crisis vividly demonstrated the deep integration and interdependence of gas and electric systems; disruptions in natural gas supply, for instance, directly impacted electricity generation, creating a cascading failure.3 This highlights that grid reliability is not solely an electricity generation issue but a broader energy system challenge that requires holistic planning across fuel supply chains.

While Alberta's natural gas system is generally designed for cold temperatures, with facilities like gas wells having alcohol injected to prevent freeze-offs and compressors located indoors, it is less clear whether current system planning adequately accounts for other extreme climate risks, such as prolonged extreme heat or wildfire threats.40

The increasing frequency and intensity of extreme weather events due to climate change mean that the "lessons learned" from Texas are not merely theoretical considerations but immediate operational imperatives for Alberta.

Addressing these shared vulnerabilities requires rigorous system planning, improved coordination between gas and electric systems, and enhanced public communication during emergencies to mitigate demand surges and ensure safety.40 The identical market design means Alberta faces the same inherent risks of supply-demand imbalance during extreme conditions, making proactive resilience measures essential to avoid similar catastrophic failures.

Investment Climate and Regulatory Hurdles (Renewables Moratorium)

Alberta's renewable energy sector, once a leader in Canada, has recently faced significant headwinds, leading to a contraction in its project pipeline in 2024, the first time on record.

This downturn is primarily attributed to policy shifts and a marked loss of investor confidence.46 A major contributing factor was the seven-month industry-wide moratorium on new approvals for wind, solar, geothermal, and other renewable energy projects, imposed in August 2023 and lifted in February 2024. This moratorium alone resulted in over $30 billion in delayed, deferred, or lost investments and taxes for clean energy investors, companies, and governments.47

Following the lifting of the moratorium, sweeping new restrictions were announced that further compounded investor uncertainty. These include a significant 35 km no-build zone for wind turbines around designated protected areas and additional stringent approvals for solar projects.47 New policies also ban renewable energy projects from "sensitive agricultural lands," a restriction that appears disproportionate given that there are no Class 1 agricultural lands in Alberta, and even a full build-out of solar capacity would use a tiny fraction of the agricultural land base.47 These measures are widely perceived as discriminatory, as similar limitations are notably not applied to the oil and gas industry, which has thousands of wells drilled within Alberta's protected areas.47

These disproportionate measures are in stark contrast to the province's primary oil and gas industry subsidies which are estimated to be between $1.5 to $2 billion annually.

Further regulatory hurdles include the vague definition of "pristine viewscapes," which new renewable projects cannot impact, leaving significant discretion to provincial decision-makers.47 Additionally, new upfront recycling surcharges for renewable energy equipment have been introduced, costs that are not levied on fossil fuel projects, creating an uneven playing field.46 Alberta is also challenging the constitutionality of federal Clean Electricity Regulations and has proposed ending the zero-congestion requirement on transmission lines, which could restrict renewable generators from sending electricity to the grid even when producing at full capacity.46

This series of policy inconsistencies and perceived biases creates a hostile business environment for clean energy investment.47 While Alberta aims to diversify its economy 6, these actions actively hinder growth in the clean energy sector, potentially locking the province into a less diversified energy future. Jurisdictions like Texas and South Australia, which offer stable and supportive regulatory frameworks, continue to attract significant capital in renewables, highlighting Alberta's self-imposed competitive disadvantage in attracting clean energy investment.46 This situation not only impacts the province's ability to meet its renewable energy targets but also represents a missed economic opportunity in a rapidly growing global industry.

V. Alberta's Evolving Power Mix: From Coal to Clean

The Coal Phase-Out: A Major Transition

Alberta has undergone a significant and rapid transformation in its electricity generation mix, moving decisively away from coal-fired power. The province has successfully phased out all coal generation by early 2024, years ahead of the initial 2030 target set by the government in 2015.8 This accelerated transition represents a major achievement in reducing electricity emissions and marks a significant milestone in Alberta's journey towards a cleaner energy evolution.

This ambitious phase-out was primarily accomplished through a combination of coal-to-gas conversions and the retirement of older coal units.
For instance, approximately 929 MW of coal generation converted to gas (Keephills 3) or dual-fuel (Genesee 3) during 2022, and,
Another 801 MW of coal was retired (Keephills 1, Sundance 4).50 By July 2024,
All remaining coal and dual-fuel generation (1,286 MW) in Alberta was converted to natural gas.8

This shift has dramatically altered the province's energy landscape, reducing its carbon footprint from electricity generation. While this transition represents substantial environmental progress, it has primarily involved a shift to a "cleaner fossil fuel" rather than a full decarbonization in the short term, setting the stage for the continued dominance of natural gas in the province's energy mix.

Coal fired power plants no longer operate in Alberta.

Their emissions are significantly worse than all other forms of power generation.

Natural Gas: The Dominant Dispatchable Power Source

Natural gas has rapidly emerged as Alberta's primary power source, playing a crucial role in providing reliable and consistent electricity generation as the province transitions away from coal.24 In 2024, gas-fired generation accounted for a substantial 74.7% of Alberta's total electricity generation, marking a significant increase from 68.9% in 2023, as it fully replaced coal generation.8 This reliance on natural gas is expected to increase further in the coming years, particularly as a stable backup for intermittent renewable sources.40

The advantages of natural gas as an energy source are numerous in the Albertan context. Canada boasts abundant natural gas resources, with over 200 years of supply at current production levels, ensuring a stable and secure domestic supply.52

When burned for power generation, natural gas produces significantly fewer greenhouse gas emissions compared to other fossil fuels, emitting about 49% less carbon dioxide (CO2) than coal and approximately 30% less CO2 than oil, along with fewer air pollutants like sulfur dioxide and nitrogen oxides.53

Natural gas is the cleanest fossil fuel which can be used in the production of electricity.

In Alberta, approximately 75% of all electricity is generated using this method.

The Rise of Renewables: Wind, Solar, and Hydro

Renewable energy sources are playing an increasingly important role in Alberta's electricity generation mix.

In 2024, wind, solar, and hydro collectively contributed approximately 19% of the province's total electricity generation. This is an increase from 17% in 2023.8 This marks a significant growth from 15% in 2018.50

Alberta aims to generate 30% of its electric energy from renewable sources by 2030.51 Between 2020 and 2024, Alberta accounted for a substantial 86% of all new wind, solar, and battery storage installations across Canada, demonstrating its leading position in renewable development prior to recent policy shifts.46

One of the benefits accruing to renewables are the credit offsets generated. These carbon offsets were enacted to incentivize generators to choose renewable sources of energy rather than the use of fossil fuels.

Pros and Cons of Wind Power in Alberta

Pros: Wind power is a clean, free, and renewable energy source that produces no harmful emissions and does not consume water, a finite resource.57 It has the potential to significantly reduce greenhouse gas emissions.57 Alberta possesses vast untapped wind potential, particularly in its southern regions.58 The cost of wind energy is expected to continue dropping with ongoing technological advancements, making it increasingly economically attractive.57 Wind turbines require minimal land space and can be integrated into existing farmland without interfering with agricultural operations.57

Cons: Despite its benefits, wind power faces challenges. Most suitable wind sites are located in rural areas, far from urban centers, posing transmission challenges.57 There are also aesthetic concerns regarding the visual impact of towering turbines on "viewscapes," though some find them appealing.57 While generally quiet (around 40 decibels, quieter than a typical conversation), noise can be a concern for some residents.57 Wind turbines also pose a risk to birds, which can be killed by flying into the blades.57 The economic viability of wind power is highly dependent on consistent windiness, making it less practical in less windy regions.57 Recent policy shifts in Alberta, including land-use restrictions and transmission challenges, have led to a stalling of wind projects, hindering further growth.46

Pros and Cons of Solar Power in Alberta

Pros: Solar power offers significant financial benefits, including reducing energy bills and increasing home value.59 Alberta law allows microgenerators to sell excess energy produced by their panels back to the grid for compensation, creating an additional revenue stream.59

Solar energy is completely renewable and contributes drastically to reducing carbon footprints.59 Despite common misconceptions, Alberta, particularly Calgary, receives ample sunlight to make solar power highly viable.59 The solar sector has shown resilience even amidst recent policy turbulence, with numerous large-scale projects under construction or approved, indicating continued growth potential.46

Cons: The primary barrier to solar adoption is the high initial cost of installation, which can be substantial despite potential rebates and tax breaks. It is estimated that solar panels can take between seven and eight years to pay for themselves.59

Solar power is intermittent; panels only generate electricity when it's sunny, meaning no production at night and reduced output on cloudy or snowy days.59 Older homes or roofs with skylights or decks may not be well-suited for solar panel installation without costly modifications.59 Aesthetic concerns, though subjective, are also noted, though panel designs are improving to blend more seamlessly with roofs.60

Pros and Cons of Hydro Power in Alberta

Pros: Hydroelectric power is a reliable and consistent source of renewable energy, unlike wind and solar, as it is less dependent on immediate weather conditions.61 It produces low greenhouse gas emissions.61

Many hydroelectric dams offer energy storage capabilities through pumped-storage systems, allowing excess energy to be stored during low-demand periods and released during high demand.61

Hydroelectric facilities typically have long lifespans and offer cost-effective operation once built.61 They can also serve multiple purposes, including drought and flood mitigation.61 Hydroelectric stations currently provide some of the lowest-cost electricity in Canada.62

Cons: Building hydroelectric dams requires significant initial financial investment, which can be a barrier despite low operating costs.61

Hydropower is highly dependent on the availability and flow of water, making it vulnerable to droughts or seasonal variability that can affect generation capacity.61 Suitable locations for large-scale hydroelectric projects are limited.61

There is a risk of catastrophic failure due to natural disasters, and dams can significantly impact local environments by altering water flow, water temperatures (which affect aquatic life), and groundwater levels.61 Large dams can also drastically change the visual landscape, leading to aesthetic concerns.61

Pros and Cons of Biomass Power in Alberta

Pros: Biomass energy is a renewable energy source, as organic materials can be continually grown and harvested.63

It has the potential for carbon neutrality if new biomass is grown to replace harvested materials, absorbing comparable amounts of CO2.63 Biomass effectively reduces and utilizes waste, including food waste, agricultural residues, and forestry by-products.63 It offers significant job creation opportunities across its supply chain, reportedly creating 10 times more operating jobs than wind and solar on an energy output basis.63

Biomass is unique among renewables in that it can be economically utilized in existing carbon-based infrastructure, such as coal-fired power plants.64 It also provides substantial economic development opportunities for Indigenous communities and fosters cleantech innovation.64

Cons: The large-scale cultivation required for biomass can raise concerns about land use and potential deforestation.63 There is also a risk of competition with food production, as increased demand for bioenergy crops could encroach on arable land traditionally used for food, affecting food security.63

The burning of biomass releases air pollutants such as carbon monoxide and nitrogen oxides, contributing to air pollution and potentially adverse health effects; in Europe, biomass smoke is estimated to contribute to at least 40,000 premature deaths annually.63 Furthermore, biomass production, transportation, and utilization are resource-intensive, requiring substantial amounts of water, fertilizers, and energy, which can sometimes counterbalance perceived environmental benefits.63

The Future of Nuclear Power in Alberta

Nuclear power is globally recognized as a critical tool for reducing greenhouse gases and fighting climate change, offering a zero-emission path to energy independence.65 Canada is a world leader in nuclear energy infrastructure, with nuclear generation safely powering communities in Ontario for over 50 years and providing approximately 14% of Canada's electricity.66 The federal government has pledged to triple Canada's nuclear capacity to help meet its target of net-zero emissions by 2050.65

Energy Alberta is proposing to build a world-class nuclear power generating station in the Peace River area of Northern Alberta, which would include two to four 1,000 MW-class CANDU® MONARK™ reactors. This facility could produce up to 4800 MW of electricity to the grid, representing up to 25% of the province's existing electricity generation.65 CANDU® reactors, developed by Canadian scientists and engineers, use natural (not enriched) uranium mined and processed in Canada, offering lower costs and a stable, secure energy supply.65

The advantages of nuclear power are compelling: it is a readily scalable, zero-emission energy source capable of delivering reliable and affordable electricity around the clock.65 The Canadian nuclear industry is a significant economic engine, employing 89,000 people and contributing $22 billion annually to GDP.65 Nuclear energy runs 24/7, 365 days a year, providing energy security and stability.65 From an environmental perspective, it avoids 80 million tonnes of CO2 emissions per year.65

The project is currently in the federal Impact Assessment (IA) process, initiated in April 2025, which will evaluate its potential effects on the environment, health, society, economy, and Indigenous Peoples.65 While nuclear technology would require long-term contracts to build under any market structure 56, its potential to provide baseload, zero-emission electricity could be a critical component of Alberta's future energy mix, helping the province progress towards a net-zero electricity system.66

Microgeneration and Distributed Energy Resources

Alberta's Micro-Generation Regulation empowers residents to actively participate in the energy market by generating their own electricity from renewable or alternative energy sources and selling any surplus back to the Alberta grid in exchange for energy credits.5 This regulation allows for installed capacities up to 5 MW.5

This has been further encouraged by privately owned utilities like Big Rock Power introducing innovative programs like the Solar Club to generate faster returns on investment (ROI)

As of May 2024, microgeneration capacity in Alberta totaled 258 MW across more than 20,000 sites, with solar power accounting for approximately 95% of this total.5 This indicates a strong and growing interest among Albertans in producing their own clean energy. These distribution-connected generation resources, typically smaller than 5,000 kW, contribute to the provincial grid and represent a shift towards more decentralized energy production.67

The growth of microgeneration signifies a broader trend where consumers are transforming from passive recipients of electricity to active participants in the energy system. This not only allows individuals to reduce their own energy bills but also contributes to the overall supply of renewable energy on the grid. Programs and competitive retailers that support microgeneration are crucial for maximizing the financial and environmental benefits for these energy-producing consumers.

VI. Modernizing the Grid: Infrastructure and Innovation

Transmission and Distribution Networks: The Backbone of Power Delivery

Alberta's electricity grid functions as a highly integrated network comprising power generation, high-voltage transmission, and lower-voltage distribution systems.24 This intricate infrastructure is essential for delivering electricity from where it is generated to where it is consumed.

Transmission lines are the arteries of the grid, designed to carry bulk electricity from large power stations to substations over long distances at very high voltages.5

Alberta's transmission system spans approximately 26,000 km of lines.5

These lines are owned and operated by shareholder-owned companies such as AltaLink and ATCO.5 The high voltage minimizes energy loss over long distances.69

The Alberta Utilities Commission (AUC) regulates the construction and costs of new transmission projects, and sets the prices charged to deliver electricity over this system, ensuring that transmission facility owners can recover reasonable and necessary costs, including a fair return on their capital investment.25

Transmission charges typically constitute approximately 15% of an average customer's total electricity bill.32 These charges have seen increases since 2004 due to the expansion of infrastructure, reflecting the significant capital investment required to maintain and expand this vital network.32

Distribution lines serve as the final stage of electricity delivery, carrying power from substations to individual consumers, homes, businesses, and farms, over shorter distances at lower, usable voltages.5

Alberta has over 200,000 km of distribution lines.5

These systems are owned by municipally-owned companies like ENMAX and EPCOR (in Calgary and Edmonton, respectively), or by the cities of Red Deer, Lethbridge, and Medicine Hat.

Shareholder-owned companies such as ATCO and Fortis also operate distribution systems.5 The AUC regulates distribution rates for major urban centers and shareholder-owned companies, while some local municipal governments or Rural Electrification Associations (REAs) approve rates for their areas.32

Distribution charges typically constitute approximately 24% of an average customer's total bill.32 A notable disparity exists in distribution costs, with rural customers often paying higher charges than urban dwellers due to lower population density and longer distances between customer sites.32 This highlights a geographic inequity in the cost of service, where the infrastructure required per customer is higher in less dense areas.

Both transmission and distribution charges include "rate riders," which are used to reconcile expected costs with actual operational costs, leading to variations in average monthly charges.32 Understanding these "delivery charges" is crucial for consumers, as they represent a significant portion of the electricity bill that is separate from the energy commodity price itself. This distinction is important for comprehending how competitive retailers primarily affect the energy charge, while transmission and distribution costs are largely regulated and passed through.

The Role of Substations: Electrical substations are indispensable components within the electricity grid, acting as critical junctions that enable the transformation, control, and distribution of electrical energy.70

Their primary function is to receive high-voltage electrical energy generated at power stations and then either raise its voltage for efficient long-distance transmission or reduce it for local distribution to communities and individual homes.70

At the heart of every substation are transformers, which are the core components responsible for modifying voltage levels.70 These devices transfer electrical energy by means of changing magnetic fields, stepping voltage up or down as needed to ensure safe and reliable power flow.70

Substations are categorized into transmission substations (operating at 275kV and above) and distribution substations (operating at 132kV and below), each serving different stages of the electricity journey.70 Transmission substations are often located near major power sources or where electricity enters/leaves the high-voltage network, connecting circuits and forming the backbone of the grid.70 Distribution substations then further reduce the voltage for safe delivery to end-users.70

Beyond voltage transformation, substations are crucial for the proper control of electricity and are increasingly vital for integrating renewable energies into the grid.71 As more distributed power sources like solar and wind farms connect to the network, substations facilitate their safe and efficient integration, ensuring grid stability and balancing energy flows.70

The evolution of substations has been driven by the need for greater capacity and efficiency in electricity production and distribution, leading to larger facilities and the adoption of more advanced technologies that enhance safety and reliability.71 These critical nodes are fundamental to the grid's functionality and its ongoing modernization.

Addressing Aging Infrastructure and Grid Modernization Efforts

Much of North America's power grid infrastructure, including significant portions in Alberta, is aging, with more than 70% of it being over 25 years old.72

This aging infrastructure presents substantial challenges, increasing the likelihood of electrocution and other safety issues for workers and the public. It also struggles to withstand the increasing number and severity of extreme weather events, such as major storms, heat waves, and wildfires, leading to reduced reliability and increased outages.72 The deteriorating equipment places a greater burden on lineworkers, leading to longer hours in dangerous settings, which can result in fatigue, chronic pain, and a higher propensity for mistakes.72

Modernization efforts are therefore critical to enhance grid resilience, safety, and efficiency. These initiatives involve several key areas of development:

Upgrading Meter Technology: The deployment of Advanced Metering Infrastructure (AMI) is a significant step. AMI meters track electricity consumption and power quality in real-time, using two-way communication to report usage data.73 This eliminates the need for physical meter reads, reduces operating costs, enables faster detection of outages, and provides more consistent billing by avoiding estimated readings.73 AMI also supports the integration of green technologies like solar panels and electric vehicles by providing granular usage data.73
Advanced Distribution Management Systems (ADMS): These systems provide a platform for various smart grid functions, improving grid efficiency and resiliency. ADMS allows for remote response to outages and other grid conditions, enabling quicker and safer restoration of power. They can also be expanded to support greater customer demands for green technology integration.73
Investing in Real-Time Sensors: Installing modern, real-time sensors can alert operators to downed power lines, damaged components, or overloaded equipment, enabling proactive maintenance and remote power cutoff.72

Alberta's distribution system, in particular, needs modernization to become more affordable, reliable, and responsive to evolving customer needs.74 Public engagement on a new electricity distribution policy is anticipated in late 2025, signaling a provincial commitment to these upgrades.74

The cost of grid modernization is a significant challenge, often estimated at $3 million to $5 million per mile for moving transmission lines underground.72 This cost is compounded by the pressure to keep energy affordable for the public, especially for private utilities balancing shareholder expectations.72

Federal funding, such as that available through the Inflation Reduction Act in the US, can help in upgrading the grid by replacing older power lines with stronger ones that can carry more electricity and connect to more renewable generators.72 The imperative for investment and the interplay of supportive policy with technological advancements are crucial for a resilient energy future.

Smart Grid Initiatives and Data Management (AMI, Green Button)

The evolution of Alberta's electricity grid towards a "smart grid" is crucial for enhancing its efficiency, reliability, and ability to integrate diverse energy sources. Key initiatives in this modernization effort include developing cost-effective non-wires solutions, implementing demand-side management (DSM), and establishing foundational data-gathering capabilities.74

Non-wires solutions, such as demand response, distributed storage, and localized renewables, can defer or avoid costly conventional infrastructure buildout, improving service and accommodating capacity more economically.74 Demand-side management, though inconsistently applied in Alberta, is a proven mechanism for reducing peak demand, managing emissions, and improving affordability by encouraging consumers to adjust their energy use.74

Central to these smart grid initiatives is robust data management. Alberta's distribution system has historically lacked cohesive and prevalent capabilities for real-time visibility and control.74 Without the ability to collect real-time, site-specific data and eventually enable sophisticated automation services, utilities, retailers, and third-party aggregators are constrained in deploying effective programs to manage peak demand and integrate distributed generation.74 Investing in modern metering infrastructure, creating shared data standards, and developing open access frameworks are foundational steps for a more dynamic and interoperable system.74

It allows third-party applications to analyze this data, providing valuable insights to help customers understand their energy use, make informed decisions to reduce costs, and monitor usage trends.75 For businesses, Green Button offers a standardized format for data across multiple utilities, facilitating energy management advice and simplifying mandatory government reporting requirements.75

By enabling consumers to access their historical usage data (up to two years) and ongoing meter readings, Green Button fosters greater transparency and consumer agency.75 This shift towards data-driven energy management not only empowers individual consumers but also provides critical information for optimizing grid operations, managing peak demand, and integrating distributed resources like solar more effectively. This transformation positions data as a key enabler for consumer empowerment and overall grid optimization, moving the system from reactive to proactive management.

Smart Grid Initiatives and Data Management (AMI, Green Button)

The evolution of Alberta's electricity grid towards a "smart grid" is crucial for enhancing its efficiency, reliability, and ability to integrate diverse energy sources.

Key initiatives in this modernization effort include developing cost-effective non-wires solutions, implementing demand-side management (DSM), and establishing foundational data-gathering capabilities.74

Demand-side management, though inconsistently applied in Alberta, is a proven mechanism for reducing peak demand, managing emissions, and improving affordability by encouraging consumers to adjust their energy use.74

The "Green Button" initiative represents a significant step towards empowering energy customers with data access. Green Button is a data standard that provides energy customers with more choice in how they access their electricity and natural gas data.75 It allows third-party applications to analyze this data, providing valuable insights to help customers understand their energy use, make informed decisions to reduce costs, and monitor usage trends.75 For businesses, Green Button offers a standardized format for data across multiple utilities, facilitating energy management advice and simplifying mandatory government reporting requirements.75

VII. Understanding Your Electricity Bill in Alberta

Understanding an electricity bill in Alberta can be complex due to its multiple components, which often go beyond simple energy consumption. A typical bill includes charges for the energy commodity itself, as well as distinct charges for the transmission and distribution of that energy, alongside other fees.

Breaking Down the Charges: Energy, Transmission, Distribution

Energy Charge (Commodity):

This is the cost of the electricity you consume, measured in kilowatt-hours (kWh).30

In Alberta's deregulated market, this charge is determined by the wholesale market, specifically through the Energy Trading System (ETS) operated by the AESO. Here, power producers and importers submit supply offers, and prices are set based on market demand.30

Retailers, like Big Rock Power, purchase energy from this wholesale market and then sell it to their customers.30

The price of electricity is directly influenced by market conditions, including supply availability and demand fluctuations.30

Transmission Charges:

These charges cover the cost of moving electric energy from large generating facilities through high-voltage transmission lines to the distribution utility substation transformers.32

Transmission rates are approved and regulated by the Alberta Utilities Commission (AUC).30 The charge on a customer's bill is based on their electricity consumption.32 Alberta has seen an increase in transmission charges since 2004 due to significant infrastructure expansion projects required to maintain and upgrade the grid.32

On average, transmission charges constitute approximately 15% of a customer's total bill.32 These charges are essential for funding the backbone of the power delivery system, ensuring that electricity can travel efficiently across the province.

Distribution Charges:

These charges cover the cost of moving electric energy from the substation transformers through local, lower-voltage lines that carry electricity directly to the customer's meters.32

Distribution rates are regulated by the AUC for major urban centers like Calgary (ENMAX) and Edmonton (EPCOR), as well as for shareholder-owned companies like FortisAlberta and ATCO Electric.32 For some smaller municipalities (e.g., Cardston, Ponoka, Red Deer, Lethbridge) and Rural Electrification Associations, distribution rates are approved by local governments or boards of directors.32

Distribution costs vary significantly by location and consumption. For instance, rural customers often face higher distribution charges than urban customers due to lower population density and longer distances between customer sites, which increases the infrastructure cost per household.32 On average, distribution charges constitute approximately 24% of a customer's total bill.32

Rate Riders:

Added to both transmission and distribution charges, rate riders are used to reconcile expected costs with actual operational costs for utilities.

These adjustments can lead to variations in average monthly charges year over year.32

This breakdown helps demystify the electricity bill for consumers, making it clear that a significant portion of the cost is related to the infrastructure required to deliver power, rather than just the energy commodity itself. By explaining each component, consumers can better understand their charges, differentiate between competitive and regulated elements, and make more informed decisions about their energy plans.

Municipal Franchise Fees: A "Stealth Tax" Explained

Municipal franchise fees, also known as local access fees, represent an additional charge on monthly power bills in Alberta that often goes unnoticed by consumers.77

These fees are not based on actual electricity consumption but rather on the customer's location and specific agreements negotiated between their municipality and utility providers.77 Essentially, they grant utility companies the right to use public land for essential infrastructure, such as power lines and gas pipes.77

These fees contribute significantly to municipal revenue streams, often funding general city services like road maintenance or other public projects, leading some to characterize them as "stealth taxes" buried within utility bills.77

The discrepancies in these fees across different municipalities have been a point of contention. Historically, cities like Calgary tied their franchise fees to the volatile Regulated Rate Option (RRO now known as the RoLR), which meant that when wholesale energy prices spiked, so did these fees, leading to unexpected increases for residents.77 In contrast, Edmonton and most other municipalities used a fixed rate per kWh, resulting in more predictable fees.77 To address this inconsistency and improve predictability, the Alberta government is now mandating a standardization across all municipalities to a "quantity-only" model.77

A particularly regressive aspect of these fees is that Goods and Services Tax (GST) is applied to them, effectively creating a "tax on a tax".77

This silently increases monthly costs for consumers and is considered one of Alberta's most regressive energy charges.77 The impact also varies between urban and rural areas. While Edmonton residents generally pay the lowest franchise fees, and Calgary's fees are projected to decrease, many rural and small-town Albertans often pay the maximum allowed (20% of distribution charges).77

This can result in rural residents paying more for the same amount of electricity, exacerbating the already higher utility distribution costs they face due to lower population density.77 Despite public dissatisfaction, legal challenges against these fees have been unsuccessful, as the law supports municipalities and the AUC approves rates that do not exceed the cap.77 This component of the bill highlights a significant hidden cost that impacts affordability and equity across the province.

The Role of Prudentials in the Market

In Alberta's deregulated electricity market, "prudential requirements" play a crucial role in maintaining financial stability and integrity, particularly given the inherent price volatility.

These prudentials are essentially financial guarantees that retailers and other market participants may be required to post.76 The Alberta Electric System Operator (AESO) assesses the creditworthiness of pool participants to determine if any unsecured credit limit should be granted.76

The calculation for these prudential requirements is typically based on the past two months of settlement periods multiplied by the estimated pool price.76 This mechanism acts as a safeguard, ensuring that market participants, especially retailers who offer fixed-rate contracts to consumers, have the financial capacity to meet their obligations even if wholesale market prices fluctuate dramatically.

By requiring these financial assurances, the system aims to prevent defaults by market participants, which could otherwise destabilize the entire competitive market.

For consumers, the concept of prudentials, while technical, is indirectly relevant. Retailers offering fixed rates are essentially taking on the price risk that consumers on the variable Rate of Last Resort (RoLR) bear.

The prudential requirements are part of the financial framework that enables retailers to offer such stable pricing plans.

Big Rock Power, for instance, lists "Prudential" as a factor in some of its fixed-rate plans 9, indicating transparency about how these risk management costs are factored into their offerings.

While prudentials are a necessary component for market integrity, the costs associated with these financial safeguards can, in turn, indirectly influence the rates that retailers offer to consumers.

VIII. Big Rock Power: Empowering Albertans with Choice

Our Commitment to Transparent Pricing and Reliable Service

Big Rock Power is deeply committed to empowering Albertans within the province's unique and often complex deregulated energy market. The company's core philosophy centers on providing "rock solid savings" and a straightforward approach to energy services, emphasizing "no BS, no hidden fees, just good old-fashioned value".10 This commitment directly addresses common consumer frustrations stemming from the market's price volatility and the presence of often opaque charges.21

As a competitive retailer, Big Rock Power offers a diverse array of fixed and variable electricity and natural gas rates, catering to the distinct needs of residential, small business, and farm consumers across Alberta.9

By offering fixed-rate plans, the company provides price certainty, shielding customers from the unpredictable fluctuations of the wholesale market that impact those on variable rates like the Rate of Last Resort (RoLR).20

This focus on transparent pricing and reliable service serves as a key differentiator in a market where trust and clarity are highly valued. The company's emphasis on being "born and bred Albertans" 10 further reinforces its local credibility and understanding of provincial needs, fostering a stronger connection with its customer base.

Electricity Hedging

In Alberta's unique deregulated electricity market, power prices are subject to hourly volatility based on the real-time balance of supply and demand. For Big Rock Power to provide stable, predictable rates to our customers, like our fixed-price plans or our new Solar Club rate, we must employ strategic hedging to manage this risk.

Here’s how we manage electricity price volatility:

Fixed-Price Contracts: We enter into long-term financial contracts to "hedge" against market swings. This means we buy a predetermined volume of electricity at a set price for a future period, regardless of what the real-time market price is. By locking in prices for a significant portion of our forecasted customer demand, we protect both our business and our customers from sudden price spikes.
Solar Club Pricing: For our Solar Club members, the process is dictated by AESO. AESO regulations state that a consumer must be compensated for any power exported to the grid at the same price which the consumer pays while importing power. If as an example, the consumer pays 10 cents/kWh when they import electricity from the grid, any electricity exported to the grid from their solary panels, also receives 10 cents/kWh. Big Rock's philosophy is to create a premium entry point for all exported electricity generated during peak summer months which offers solar panel owners, the greatest return on investment. During off-season periods (late fall, winter and early spring), Solar Club members are able to take advantage of more conventional fixed term rates. Solar Club members can move from one plan to another with no fees or penalties.
Active Market Management: Our energy trading team continuously monitors the Alberta Electric System Operator (AESO) market. This allows us to make informed decisions on when to purchase additional electricity to meet demand, leveraging times when the spot market price is low. This dynamic management ensures we can balance our fixed-price obligations with opportunities for cost savings.

In essence, our hedging strategy is about risk management.4 It enables Big Rock Power to offer our customers the certainty of stable rates, while still navigating the complexities and volatility of Alberta's electricity market. This approach allows us to provide reliable service and consistent value, regardless of market conditions.

Maximizing Solar Investments with the Solar Club Program

Big Rock Power is at the forefront of enabling distributed energy generation in Alberta through its participation in the innovative Solar Club program.

The Solar Club is an electricity rate structure specifically designed to help homeowners with grid-connected solar systems maximize the financial returns on their solar investments.9 This program represents a market innovation that directly supports the growth of microgeneration in the province.

The core of the Solar Club strategy is a "buy low, sell high" approach, allowing members to strategically manage their energy credits.78 Members can switch between two distinct rates:

High Export Rate: Currently around 30.00¢/kWh, this rate is most advantageous during periods of high solar production, typically the spring and summer months (e.g., March through October). During these months, solar-equipped homes often generate more electricity than they consume, allowing them to sell excess power back to the grid at a premium rate and accumulate significant credits.78
Low Import Rate: Currently around 8.49¢/kWh, this rate is beneficial during months of lower solar production, typically the fall and winter (e.g., November through February), when a home's grid electricity use exceeds its solar output. Switching to this rate during these periods minimizes the cost of imported electricity.78

The benefits of the Solar Club extend beyond just rate optimization.

Accumulated credits can be used to offset various electricity bill charges, including energy consumption costs, variable transmission charges, distribution fees, and even local access fees.78
Crucially, unused credits roll over to future months, providing a financial buffer that helps cover winter electricity bills when solar systems produce less.78
Members also receive additional perks, such as a 3% annual cash-back reward on all imported electricity.78
Members that own a full battery electric vehicle (BEV) are eligible to receive an enhanced 5% annual cash back on their electricity imports.
Natural gas customers who bundle with a Solar Club Rate will also receive 5% cash back on their gas usage.
The program offers significant flexibility, allowing members to change rates once per billing cycle with just 10 days' notice, penalty-free, and even schedule future rate switches based on predicted production patterns.78
For customers awaiting solar installation, a "Pre-Solar Rate" (e.g., 7.28¢/kWh) is also available, providing savings while they wait for their system to go live.9
The program is most beneficial for homes that produce 70% or more of their annual electricity needs from solar, ensuring they are net exporters during peak production months.79

The Solar Club program by Big Rock Power exemplifies how competitive retailers can innovate within a deregulated market to empower consumers and drive the adoption of renewable energy.

By maximizing financial returns for solar owners, it provides a strong economic incentive for clean energy adoption, complementing broader provincial goals for renewable energy growth even amidst regulatory hurdles. This initiative encourages active energy management and participation, aligning with the principles of smart grid development and consumer-driven decarbonization.

Big Rock Power Sustainability

At Big Rock Power, we believe that powering your life should not come at the cost of the planet. Our commitment to a sustainable future is at the core of everything we do.

Through our Big Rock Solar Club, we're actively encouraging and accelerating the adoption of residential solar power by offering a premium export prices for all solar panel generated electricity exported to the grid. This not only helps our customers achieve a faster return on investment for their solar panels but also directly contributes to a more decentralized and resilient grid powered by renewable energy.

For customers who want to support clean energy without installing solar panels, our Green Energy Program allows you to ensure a percentage of the power you use is matched with renewable energy credits. This simple choice helps fund the growth of wind, solar, and hydro projects, reducing our collective carbon footprint.

We are dedicated to building a greener, more sustainable energy future for our community, one kilowatt-hour at a time.

Our Place in Alberta's Energy Ecosystem

Big Rock Power operates as a vital component within Alberta's intricate energy ecosystem, specifically within the competitive retail segment. The company's operations are inherently intertwined with the broader regulated infrastructure and key entities that govern the province's electricity market.

This includes the Alberta Electric System Operator (AESO), which manages the grid and wholesale market, and the Alberta Utilities Commission (AUC), which regulates the transmission and distribution networks and sets certain rates.24 Big Rock Power works in conjunction with "wire owners" such as EPCOR and ATCO, who are responsible for the physical delivery of electricity to homes and businesses.24

As an Albertan business, Big Rock Power emphasizes its local presence and deep understanding of the province's unique energy needs and challenges.10 This local identity is a crucial aspect of its positioning, allowing the company to build trust and tailor its offerings to the specific concerns of Albertans, particularly regarding price volatility and hidden fees that have characterized the deregulated market.21

By actively participating in the competitive retail market, Big Rock Power provides a crucial service: offering consumers choice and alternative pricing structures that can help them navigate the complexities of their electricity bills and manage their energy costs more effectively.

This strategic positioning allows Big Rock Power to leverage the competitive aspects of the market while operating within the established regulatory framework, contributing to a more dynamic and consumer-focused energy landscape in Alberta.

IX. Conclusion: A Resilient and Sustainable Energy Future

Alberta's electricity landscape is a dynamic and complex system, uniquely characterized by its deregulated, "energy-only" market design, shared almost exclusively with Texas in North America.3

This model, while intended to foster competition and reduce prices, has presented significant challenges, including persistent price volatility and a concerning decline in grid reliability, evidenced by a disproportionately high number of Energy Emergency Alerts.20 The market's concentration and instances of "economic withholding" further highlight the complexities of ensuring a truly fair and openly competitive environment.21

The lessons from the Texas energy crisis serve as a stark reminder of the systemic vulnerabilities inherent in this market design, particularly when confronted with extreme weather events and the deep interdependencies of energy systems.3 Furthermore, recent regulatory hurdles, such as the renewables moratorium and subsequent restrictions, have created an uncertain investment climate for clean energy, potentially hindering the province's economic diversification and climate goals.47

Despite these challenges, Alberta has made significant strides in its energy transition.

The rapid phase-out of coal-fired generation by early 2024, years ahead of schedule, marks a substantial achievement in reducing electricity emissions.8 Natural gas has emerged as the dominant dispatchable power source, offering reliability and lower emissions compared to coal, though its non-renewable nature and price volatility present ongoing considerations.8

Concurrently, there has been a notable rise in renewable energy adoption, particularly wind and solar, with microgeneration playing an increasingly active role in the energy supply.8 The imperative for grid modernization, including upgrading aging transmission and distribution infrastructure and implementing smart grid technologies like AMI and Green Button, is paramount for future stability and consumer empowerment.74 These innovations promise greater efficiency, resilience, and data-driven insights for both grid operators and consumers.

In this evolving landscape, Big Rock Power stands as a key partner for Albertans, committed to providing transparent, reliable, and affordable energy solutions.10 By offering diverse rate plans and innovative programs like the Solar Club, Big Rock Power empowers consumers to navigate the complexities of the deregulated market, manage their costs effectively, and actively participate in the clean energy transition.9

The Solar Club, in particular, exemplifies how market-driven solutions can maximize the financial benefits for solar-owning homeowners, fostering the growth of distributed energy resources. Big Rock Power's vision for Alberta is rooted in contributing to a more resilient, sustainable, and consumer-centric energy future, ensuring that Albertans have choice and control over their energy consumption in an increasingly dynamic environment.

References

[1] Drax.com. "14 moments that electrified history." [https://www.drax.com/electrification/14-moments-that-electrified-history/](https://www.drax.com/electrification/14-moments-that-electrified-history/)
[2] EIA.gov. "History of electricity." [https://www.eia.gov/kids/history-of-energy/timelines/electricity.php](https://www.eia.gov/kids/history-of-energy/timelines/electricity.php)
[4] Wikipedia. "Electricity policy of Alberta." [https://en.wikipedia.org/wiki/Electricity\_policy\_of\_Alberta](https://en.wikipedia.org/wiki/Electricity_policy_of_Alberta)
[5] Peacepower.ca. "When did Alberta deregulate electricity?" [https://peacepower.ca/faqs/when-did-alberta-deregulate-electricity](https://peacepower.ca/faqs/when-did-alberta-deregulate-electricity)
[6] EnergyRates.ca. "Why the Canadian Energy Market Deregulated and How It's Working." [https://energyrates.ca/why-energy-market-deregulated-canada/](https://energyrates.ca/why-energy-market-deregulated-canada/)
[7] Reddit. "Performance of Alberta's Electricity Market Since Deregulation." [https://www.reddit.com/r/alberta/comments/1gg7frs/performance\_of\_albertas\_electricity\_market\_since/](https://www.reddit.com/r/alberta/comments/1gg7frs/performance_of_albertas_electricity_market_since/)
[8] CBC News. "Alberta to rebrand default electricity option as 'rate of last resort'." [https://www.cbc.ca/news/canada/edmonton/alberta-to-rebrand-default-electricity-option-as-rate-of-last-resort-1.7177707](https://www.cbc.ca/news/canada/edmonton/alberta-to-rebrand-default-electricity-option-as-rate-of-last-resort-1.7177707)
[9] Diversify Alberta. "Alberta's Deregulated Electricity Market to Blame for High Power Prices." [https://diversifyalberta.ca/albertas-deregulated-electricity-market-to-blame-for-high-power-prices/](https://diversifyalberta.ca/albertas-deregulated-electricity-market-to-blame-for-high-power-prices/)
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A History of Alberta Power

Introduction

Alberta's Deregulated Electricity Market

Challenges & Opportunities

From Coal to Clean

Modernizing the Grid

Understanding Your Electricity Bill

Big Rock Power - Empowering Albertans

Conclusion:

Bibliography

AESO

AUC

UCA

Alberta's Electricity Network Here's How It Works!

Powering Alberta's Future: A Comprehensive Guide to the Province's Electricity Landscape

Introduction: Powering Alberta's Future

II. The Electrifying Journey: A History of Power

Early Discoveries and Milestones

The War of Currents: AC vs. DC and its Lasting Impact

​

Alberta's Early Adoption of Electricity

​

III. Alberta's Deregulated Electricity Market: A Unique Model

​

The Genesis of Deregulation: Why and When (1996-2001)

​

Key Players and Their Roles: AESO, AUC, AER, Balancing Pool, UCA

​

Alberta Electric System Operator (AESO):

Alberta Utilities Commission (AUC):

Alberta Energy Regulator (AER):

Balancing Pool:

Utilities Consumer Advocate (UCA):

Market Structure: Energy-Only vs. Capacity Markets

The Role of Retailers in a Competitive Market

​

IV. Navigating the Currents: Challenges and Opportunities

Price Volatility and Consumer Impact (Regulated Rate Option/Rate of Last Resort)

Grid Reliability and Emergency Alerts

​

Market Concentration and Economic Withholding

Lessons from Texas: Similarities and Preparedness

Investment Climate and Regulatory Hurdles (Renewables Moratorium)

​

V. Alberta's Evolving Power Mix: From Coal to Clean

​

The Coal Phase-Out: A Major Transition

​

Natural Gas: The Dominant Dispatchable Power Source

​

The Rise of Renewables: Wind, Solar, and Hydro

Pros and Cons of Wind Power in Alberta

​

Pros and Cons of Solar Power in Alberta

Pros and Cons of Hydro Power in Alberta

Pros and Cons of Biomass Power in Alberta

The Future of Nuclear Power in Alberta

Microgeneration and Distributed Energy Resources

​

VI. Modernizing the Grid: Infrastructure and Innovation

​

Transmission and Distribution Networks: The Backbone of Power Delivery

​

Addressing Aging Infrastructure and Grid Modernization Efforts

​

Smart Grid Initiatives and Data Management (AMI, Green Button)

​

Smart Grid Initiatives and Data Management (AMI, Green Button)

​

VII. Understanding Your Electricity Bill in Alberta

​

Breaking Down the Charges: Energy, Transmission, Distribution

VIII. Big Rock Power: Empowering Albertans with Choice

​

Our Commitment to Transparent Pricing and Reliable Service

​

Electricity Hedging

​

Maximizing Solar Investments with the Solar Club Program

​

​Big Rock Power Sustainability

​

Our Place in Alberta's Energy Ecosystem

​

IX. Conclusion: A Resilient and Sustainable Energy Future

Proudly Canadian

Alberta's Electricity Network
Here's How It Works!

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