Alberta's Electricity Industry:
New Markets, New Opportunities

By Tracey Horne-Pettipas

There's a worldwide trend toward deregulation of industries, and Alberta is a leader, according to an electrical industry executive who spoke at the APEGGA Calgary Branch luncheon on Sept. 17.

"The push for the deregulation of electricity came over several years from many stakeholders," said Lorry Wilson, P.Eng., chief executive officer of Power Pool of Alberta.

We have seen the deregulation of the natural gas industry, the telecommunications industry and now the electricity industry. Since Jan. 1, 1996, the electricity industry in Alberta has been operating under a new structure, a model that recognizes the push for more competition in the market.

This new approach is aimed at developing an industry structure that takes advantage of the benefits of competition, while safeguarding the strengths of Alberta's existing electric systems by preserving the high reliability of the current system, maintaining existing controls for reliability and retaining low electricity rates.

"By deregulating we are accomplishing several objectives - reducing regulatory costs, providing lower costs to consumers and providing something we haven't had, more choice. The ultimate goal, however, is to make the electric power industry competitive while still ensuring security of supply and maintaining Alberta's position of having one of the lowest costs of electricity in Canada," said Mr. Wilson.

Under the new Electric Utilities Act, legislation established a Power Pool - the first exchange in North America - to allow for the development of an efficient market for electricity based on the concept of fair and open competition. All electricity, whether generated in Alberta or imported, is sold into the pool. Distributors, such as Alberta Power, TransAlta, Edmonton Power and the cities of Calgary, Lethbridge and Red Deer purchase all of the energy taken by their customers with lowest-cost supply. Access to the pool is available on a non-discriminatory basis to all generators, distributors, importers and exporters that meet qualifications.

The Power Pool is made up of three major players: a) the Energy Market, or the exchange that works like the stock market (in this case the commodity is megawatt hours of electricity), b) the System Controller or real-time air traffic controller which runs the real-time operations, and c) the Transmission Administrator which provides access to and from the Power Pool.

Those attending the luncheon meeting, the first of the 1998-99 season, were told that with the amended Electric Utilities Act, Alberta can look forward to several improvements, such as the deregulation of generation, increased competition and customer choice. Customer choice will first be felt by large industrial users who will be able to buy directly from the pool. By 2001, when full deregulation takes place, individual consumers will be able to choose the company they want to provide them with electricity, similar to the way we are now able to choose our telephone service.

"Every engineer in attendance at this luncheon will be involved in deregulation in some fashion," says Mr. Wilson. "New opportunities will be created for independent power projects such as ways to use wasted heat, for retailers such as hotels and grocery chains, for niche market developments like Enmax's green power, in financial markets and in energy market consulting."