The Unavoidable Demise of the Traditional Utility: A Call to Action for Albertans

Past & Future

For over a century, a tyrannical "hub and spoke" model has dictated our energy future.

Massive, centralized power plants, controlled by faceless corporations, have spewed electricity across vast, decaying networks of wires and poles, holding consumers hostage to a system built for a bygone era. This 20th-century relic, a marvel of engineering to some, has now become a financial and environmental liability, a dinosaur lumbering toward inevitable extinction.

The once-unquestioned might of the utility industry is now under siege, facing a "de-evolution" that promises to dismantle the status quo in a cascade of economic upheaval and consumer empowerment.

The signs of collapse are everywhere, from the creaking infrastructure to the skyrocketing bills that are bleeding consumers dry. The traditional utility industry, in its desperate bid to maintain relevance, is asking for staggering sums of money—US$1.4 trillion in the U.S. from 2025 to 2030, and billions more in Canada.

This isn't an investment in progress; it's a taxpayer-funded life support system for a dying model.

With 70% of U.S. distribution lines and transformers over 25 years old, and a staggering 60% of circuit breakers over 30 years old, the grid is a ticking time bomb of unreliability.

The consumer is footing the bill for this decay, with U.S. electricity bills jumping 23% between 2019 and 2024. This financial burden is not a side effect; it's the core strategy of a system designed to extract maximum profit, with former utility executives arguing that excessive guaranteed profits for shareholders are costing U.S. consumers approximately $50 billion annually, or about $300 per household.

The Dawn of a New Energy Paradigm: Distributed Generation

Against this backdrop of decay and financial duress, a new and powerful force is emerging: Distributed Energy Generation (DEG).

This is not a silver bullet, but rather a paradigm shift that will democratize power, putting it back in the hands of the people. DEG involves smaller, localized energy sources like rooftop solar, small wind turbines, and battery storage that generate electricity close to the point of use. This approach not only minimizes the power loss that occurs during long-distance transmission, which accounts for 6-8% of global electricity loss, but also enhances system flexibility and improves resilience against extreme weather events.

The global distributed energy generation market is expanding rapidly, with projections to reach $573.7 billion by 2025, growing at a Compound Annual Growth Rate (CAGR) of 16% from 2020 to 2026. This explosive growth is driven by a number of key factors:

• Cost Competitiveness: The capital costs of renewable technologies have plummeted, making them increasingly competitive with traditional generation. In Alberta, wind is already cheaper than natural-gas-fired power, and solar power is even more economical.

• Technological Advancements: Innovations in solar PV, battery storage, and smart inverters are optimizing energy use and providing valuable data for predictive maintenance and demand forecasting.

• Enhanced Resilience and Energy Security: DEG systems, particularly microgrids, can operate independently of the larger grid during outages, providing a crucial security of supply. This localized production reduces dependence on volatile fossil fuel markets and protects against the kind of systemic failures that could arise from an attack on a few key substations.

• Rapid Deployment: Unlike major generation projects that can take 4-10 years to permit and commission, distributed systems can often be operational in less than a year. This rapid deployment offsets issues like

NIMBYism and engineering time lags that plague large-scale projects.

• ESG Drivers: Corporate Environmental, Social, and Governance (ESG) commitments are driving demand for green energy through power purchase agreements (PPAs), further fueling the transition.

This shift is a philosophical change. It empowers businesses, municipalities, and households to achieve greater energy autonomy, reducing their exposure to market volatility and enhancing carbon reduction goals.

Alberta's Unique Crossroads: The LNG Effect

Alberta, a province historically reliant on abundant, low-cost natural gas, now stands at a particularly fascinating juncture. The commissioning of the LNG Canada facility in Kitimat, B.C., marks a pivotal moment, as it directly connects Western Canadian gas to higher-priced global markets.

This new export demand is already putting significant upward pressure on the Alberta benchmark AECO price, which directly influences consumer natural gas bills.

Deloitte forecasts the AECO price to rise to an average of $3.50/mmBTU in 2026 and reach $4.00/mmBTU by 2032, a significant jump from the 2024 average of $1.36/mmBTU.

This pricing reality will have a magnified effect on electricity costs because natural gas is the dominant fuel source in Alberta's electricity generation mix, accounting for 62% in 2022.

The Alberta Electric System Operator (AESO) has consistently demonstrated a strong correlation between natural gas prices and electricity pool prices. The Utilities Consumer Advocate (UCA) highlights that electricity is more than 21 times more expensive than natural gas on a per-kilowatt-hour basis in Alberta, meaning any increase in the gas commodity price will have a disproportionately large impact on overall energy costs.

The Renewable Renaissance: Alberta's Opportunity

The silver lining in this scenario is the powerful economic incentive it creates for renewable energy. Unlike gas-fired plants, wind and solar have no fuel costs once built, making their operating costs minimal and their prices more competitive as fossil fuel costs rise.

Alberta has quietly become a renewable energy powerhouse, contributing a remarkable 92% of Canada's total growth in renewable electricity generation in 2023. This growth is driven by:

• Abundant Resources: Southern Alberta has some of the highest solar potential in North America, comparable to Florida, and its wind resources are among the strongest globally.

• Deregulated Market: Alberta's energy-only market has fostered private sector innovation, allowing renewable projects to compete directly.

• Carbon Pricing: Alberta's carbon price, set to increase to $170/t by 2030, adds a cost to emissions from natural gas generation, further enhancing renewables' appeal.

Renewables contributed approximately 19% of total electricity generation in Alberta in 2024, a notable increase from 17% in 2023. This growth is essential for reducing our reliance on increasingly expensive natural gas for electricity generation.

A Transitional Solution for a New Reality

The utility industry needs time, time to "devolve" and adapt to these new market realities. This is where a transitional solution is needed, one that bridges the gap between the present centralized grid and the envisioned distributed energy economy. This is the role of smaller, merchant-based distributed generation units, typically from 2.5 to 10 MW in capacity, that can be sited near distribution lines and natural gas infrastructure.

These units can be remotely managed and spooled up to full capacity within 3-5 minutes, lending a level of sophistication not available to larger facilities.

The benefits of this approach are numerous:

• More Rapid Permitting and Installation: These systems can be operational in less than a year, compared to the 4-10 years required for major projects.

• Contained Capital Costs: With costs around $1 million/MW, these units offer a simple payback period of less than 7 years.

• Siting Issues Virtually Disappear: These units are less invasive and can be located on lands already zoned for light industry.

• Enhanced Security of Supply: A network of multiple small units provides greater security than a few large plants. Losing one <10 MW plant is far less concerning than losing one of only two regional plants.

The biggest risk in this transition is not technological; it's managerial. The traditional utility management philosophy, with its formalized processes and large onsite teams, is ill-suited to the agile, small-business nature of distributed generation. The new model requires a shift to a "clone and scale" approach where systems are replicated, and maintenance is outsourced to specialized professionals.

Big Rock Power: Empowering Your Energy Future

The "de-evolution" of electricity is not just an industry trend; it's a direct, profound shift that will shape the financial landscape for every Albertan. The shift from a centralized, predictable system to a more distributed, dynamic, and volatile one requires proactive adaptation.

At Big Rock Power, we've been serving Albertans since 2011, navigating the complexities of our deregulated market to offer real people, real service, and real savings. We are not just an electricity retailer; we are a partner in your energy future.

As natural gas prices are set to "ladder up" due to LNG exports, and electricity prices are intrinsically linked to them, the time to act is now. Big Rock Power offers solutions designed to provide stability and control:

• Lock in Your Rates: Our fixed-rate electricity plans, like the Special Promotional Rate (7.28 ¢/kWh), allow you to stabilize your electricity costs and protect yourself from future price spikes and market volatility.

• Embrace Solar: For those considering renewable energy, our Pre-Solar Rate™ and Solar Club program are designed to save you money while you wait for solar to be installed and then maximize your savings once your system is operational. For more information on our solar offerings, visit our blog on Alberta's Best Solar Club Program at https://www.bigrockpower.ca/alberta-solar-club-program. You can also learn more about the overall Alberta electricity market at https://www.bigrockpower.ca/albertaelectricitynetwork.

• Local and Trusted Service: We are locally owned and operated, with an Alberta-based customer service team ready to help you explore your options.

The interplay of powerful market forces, strategic regulatory interventions, and evolving climate policies will continue to shape the affordability, reliability, and sustainability of Alberta's energy supply. Consumers and businesses alike will need to adapt proactively.

Frequently Asked Questions

1. What is the "de-evolution" of electricity utilities? The "de-evolution" refers to a shift away from the traditional model of large, centralized power plants and a return to more localized, distributed energy generation. This change is driven by aging infrastructure, rising costs, and the increasing viability of renewable technologies like solar and wind.

2. How does LNG Canada impact electricity prices in Alberta? The LNG Canada facility creates new export demand for Western Canadian natural gas, leading to higher prices for the commodity. Since natural gas is the primary fuel for Alberta's electricity generation, these higher gas prices will directly translate into upward pressure on electricity costs for consumers.

3. What are the advantages of distributed generation? Distributed generation (DG) offers numerous benefits, including increased grid resilience during outages, reduced transmission losses, and faster deployment compared to large-scale projects. It also empowers consumers with greater energy autonomy and helps reduce reliance on volatile fossil fuel markets.

4. How can I protect my household or business from rising electricity prices? One of the most effective ways to manage rising costs is by securing a fixed-rate electricity plan. This provides predictability for your budget by locking in a rate and protecting you from future market volatility and price spikes. For those interested in solar, a plan like the

Solar Club can also help you maximize savings.

5. What is the role of natural gas in the future energy system? While renewables are growing rapidly, natural gas will continue to play a crucial role as a flexible partner to intermittent wind and solar. It will provide baseload power and grid stability, especially as more renewable sources come online. Projects with carbon capture, like the Moraine Power Generating Project, will also be part of this future.