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By rdnewsNOW staff

Provincial Politics

Power watchdog supports Alberta’s electricity market reforms

Aug 6, 2024 | 2:30 PM

Officials with the Alberta government say the Market Surveillance Administrator’s (MSA) latest report on grid alerts bolsters the province’s plans to improve the power grid’s reliability through market reforms.

Alberta’s government says it is improving the province’s electricity system to ensure Albertans have affordable and reliable power by making changes to electricity market rules. In Alberta’s unique deregulated electricity market, government officials say power generators offer to sell their electricity to the province’s grid every hour of every day.

As Alberta’s electricity landscape has evolved significantly since the market was first designed, Alberta’s government says it is taking the steps needed to modernize the province’s electricity system. The government says a new report by the MSA emphasizes the need to improve Alberta’s power system, and strongly supports the Alberta government’s power market reforms.

“The grid alerts in January and April served as powerful reminders of the importance of having reliable electricity,” says Nathan Neudorf, Minister of Affordability and Utilities. “The recent MSA report provides a thoughtful analysis of these two events and confirms that our government is taking the best course of action to ensure Albertans have affordable and reliable power both now and in the future.”

Government officials say the MSA’s report provides a comprehensive analysis of two recent events that significantly impacted Alberta’s electricity system: the emergency alert issued on January 13 during extreme cold weather and the brief rotating power outages during the grid alert on April 5. Officials say the report examines the numerous contributing factors to both events, how the Alberta government’s market reforms would likely have prevented both events, and makes recommendations to improve the grid’s reliability.

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According to provincial officials, while Alberta’s government undertakes the important work of long-term electricity market reforms, temporary rules were enacted earlier this summer to ensure the grid is reliable and affordable. One of those new rules, says the government, was the Supply Cushion Regulation, which requires natural gas power plants to be online in times of high demand if there is not enough power to meet Alberta’s needs. The MSA’s report suggests that the rotating outages on April 5 would likely have been avoided if the government’s Supply Cushion Regulation had been in place at the time.

Government officials say engagement is underway on the detailed design of Alberta’s restructured energy market, which is expected to include moving to a day-ahead market where generators will commit their dispatchable power on the previous day, rather than an hour beforehand. Provincial officials say the MSA’s report reinforces the Alberta government’s decision to implement a day-ahead market, which is expected to help better prepare for and respond to power shortages during times of high demand in the province.

“In a day-ahead market, once each day the AESO will look forward to all hours of the next day collectively, minimize the cost of meeting demand the next day, and ensure that all generators needed to meet demand are online (committed),” explains Derek Olmstead, Administrator & CEO, Market Surveillance Administrator. “Day-ahead prices are expected to be less volatile than Alberta’s current hourly prices and allow for more efficient natural gas nomination. Market design features like this can reduce the likelihood of load shed events such as the one that occurred on April 5.”

According to provincial officials, the MSA’s analysis provides valuable insight on how the Government of Alberta, the Alberta Electric System Operator (AESO), and power generators play essential roles in ensuring the reliability of the province’s grid. With that in mind, Alberta’s government says it is taking the necessary steps forward to improve the province’s electricity system, ensuring that Albertans have a reliable power grid for generations to come.

“The AESO’s top priority is maintaining reliability for Albertans. We have identified a number of learnings from the events, and have already taken action in line with several of the MSA’s recommendations,” shares Marie-France Samaroden, Vice President, Grid Reliability Operations.

Report findings and recommendations

Government officials say the report examines the events of January 13, in which an Alberta Emergency Alert was issued when severe -40°C temperatures drove demand to record levels. The MSA found that in addition to high demand, unanticipated generation outages, low wind generation, and reduced electricity imports owing to extreme weather in neighboring provinces all contributed to the power shortage. They also concluded that the emergency alert was effective in reducing energy consumption by 350 megawatts (MW), ensuring rolling outages in the province were avoided.

Government officials say the report also analyzes the April 5 electricity event, in which the AESO directed transmission and distribution companies across the province to reduce power consumption by a total of 244 MW to avoid a potential system failure, resulting in rotating outages over a period of 26 minutes. Unlike the January 13 event, the MSA found that high demand did not cause the supply shortage, and instead pointed to challenges with accurately forecasting wind generation and unplanned generator outages as the main drivers.

Alberta government quick facts

The MSA is an independent public agency that protects and promotes the fair, efficient, and openly competitive operation of Alberta’s electricity and retail natural gas markets.

The AESO independently manages and operates the provincial power grid.

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