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Alberta

Province “rewiring” Alberta’s electricity grid for growth

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Rewiring Alberta’s electricity market

Alberta’s government is making changes to the province’s electricity market rules to restore the balance between affordability, reliability and sustainability.

Alberta’s government is modernizing the province’s electricity system to put Albertans first, restoring the balance between affordability, reliability and sustainability. To achieve this, Alberta’s government continues to work with its partners on power market reforms.  Alberta’s transmission policies are also being updated to improve reliability, increase efficiency, protect ratepayers, and align Alberta with other jurisdictions. Alberta’s government is committed to the province’s unique competitive electricity market, which provides consumers with choice and makes the province a premier destination for investors.

Alberta’s electricity system was designed for a small number of baseload power plants generating reliable electricity. In 2016, Alberta’s accelerated coal phase out was rushed through without proper due diligence. With a growing supply of intermittent renewables instead of natural gas, the province’s power grid and prices can become as volatile as the weather.

The thousands of kilometres of new transmission lines that were required to connect renewables added costs for Albertans, and back-up sources are required to keep the lights on. As demand for electricity only continues to increase, it’s expected that Alberta’s need for electricity could more than quadruple in the coming decades. It is critical that Alberta’s government make changes now to ensure the affordability, reliability, and sustainability of the provincial grid in the decades to come as demand surges.

“Albertans deserve a modern electricity system that prioritizes affordability and reliability. As our electricity supply mix evolves so should our policies, and these updates to transmission policies are essential to ensuring Albertans are well-served by our electricity system for years to come.”

Nathan Neudorf, Minister of Affordability and Utilities

Following three years of engagement with industry, Alberta’s government is making changes to ensure the province’s ratepayers are no longer burdened with the full costs of building new transmission lines. Instead, costs for new transmission infrastructure will be assigned on a cost-causation basis going forward. This will incentivise new power plants to be built in optimal locations that take advantage of existing infrastructure, saving costs for both Alberta ratepayers and job creators. As a result of engagement with industry, Alberta’s government is aligning the province with other jurisdictions by giving the Alberta Electric System Operator (AESO) more market-based tools to increase the efficiency of the province’s grid, prioritizing the use of pre-existing infrastructure.

Updating Alberta’s Transmission Regulation is a significant and necessary step in modernizing the province’s electricity system. To enhance grid reliability, Alberta’s government is also making changes to streamline the process to build and maintain connections between our electricity grid and other jurisdictions. This will reduce red tape and enable critical improvements to happen more quickly. This will also help improve reliability by restoring the electricity grid connections between Alberta and British Columbia, as well as expanding the connections between Alberta and Saskatchewan.

“This is a positive milestone borne out of significant engagement and consultation with industry stakeholders, our partner agencies and the Government of Alberta. We appreciate the tremendous investment of time and effort that everyone has put into this process to reach this point, and we look forward to additional engagement in 2025 to further the detailed market design.”

Aaron Engen, President and CEO, Alberta Electric System Operator

Over the past year, the AESO has engaged extensively with industry on the technical design of a Restructured Energy Market with direction from Alberta’s government. A key aspect of these market reforms includes moving to a day-ahead market, where power generators will be required to commit their power on the previous day, rather than a couple of hours beforehand, making the system better positioned to respond to power fluctuations. This will increase reliability and stability, helping reduce the risk of potential grid alerts. With these changes, Alberta’s government is ensuring that reliability is prioritized, strengthening the grid so that Albertans can get the power they need regardless of the weather.

“Market design features like a day ahead market can help significantly reduce the likelihood of future grid alerts and will ensure that all necessary generators needed to meet electricity demand are online to provide power.”

Derek Olmstead, Administrator & CEO, Market Surveillance Administrator

Minister of Affordability and Utilities Nathan Neudorf has sent a letter to inform the AESO of the government’s latest decisions on changes to the Transmission Regulation and further guide the ongoing technical design of a Restructured Energy Market. Alberta’s government intends to bring forward legislation to support these changes in the new year. In the meantime, the temporary measures enacted by Alberta’s government on July 1, 2024 will continue to protect Albertans, ensuring reliable power and predictable utility bills.

Quick facts

  • The Alberta Electric System Operator (AESO) manages and operates the provincial power grid on behalf of Albertans.
  • The Market Surveillance Administrator (MSA) is a public agency that protects and promotes the fair, efficient and openly competitive operation of Alberta’s electricity and retail natural gas markets.

Alberta

The beauty of economic corridors: Inside Alberta’s work to link products with new markets

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From the Canadian Energy Centre

Q&A with Devin Dreeshen, Minister of Transport and Economic Corridors

Devin Dreeshen, Alberta’s Minister of Transportation
and Economic Corridors.

CEC: How have recent developments impacted Alberta’s ability to expand trade routes and access new markets for energy and natural resources?

Dreeshen: With the U.S. trade dispute going on right now, it’s great to see that other provinces and the federal government are taking an interest in our east, west and northern trade routes, something that we in Alberta have been advocating for a long time.

We signed agreements with Saskatchewan and Manitoba to have an economic corridor to stretch across the prairies, as well as a recent agreement with the Northwest Territories to go north. With the leadership of Premier Danielle Smith, she’s been working on a BC, prairie and three northern territories economic corridor agreement with pretty much the entire western and northern block of Canada.

There has been a tremendous amount of work trying to get Alberta products to market and to make sure we can build big projects in Canada again.

CEC: Which infrastructure projects, whether pipeline, rail or port expansions, do you see as the most viable for improving Alberta’s global market access?

Dreeshen: We look at everything. Obviously, pipelines are the safest way to transport oil and gas, but also rail is part of the mix of getting over four million barrels per day to markets around the world.

The beauty of economic corridors is that it’s a swath of land that can have any type of utility in it, whether it be a roadway, railway, pipeline or a utility line. When you have all the environmental permits that are approved in a timely manner, and you have that designated swath of land, it politically de-risks any type of project.

CEC: A key focus of your ministry has been expanding trade corridors, including an agreement with Saskatchewan and Manitoba to explore access to Hudson’s Bay. Is there any interest from industry in developing this corridor further?

Dreeshen: There’s been lots of talk [about] Hudson Bay, a trade corridor with rail and port access. We’ve seen some improvements to go to Churchill, but also an interest in the Nelson River.

We’re starting to see more confidence in the private sector and industry wanting to build these projects. It’s great that governments can get together and work on a common goal to build things here in Canada.

CEC: What is your vision for Alberta’s future as a leader in global trade, and how do economic corridors fit into that strategy?

Dreeshen: Premier Smith has talked about C-69 being repealed by the federal government [and] the reversal of the West Coast tanker ban, which targets Alberta energy going west out of the Pacific.

There’s a lot of work that needs to be done on the federal side. Alberta has been doing a lot of the heavy lifting when it comes to economic corridors.

We’ve asked the federal government if they could develop an economic corridor agency. We want to make sure that the federal government can come to the table, work with provinces [and] work with First Nations across this country to make sure that we can see these projects being built again here in Canada.

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2025 Federal Election

Next federal government should recognize Alberta’s important role in the federation

Published on

From the Fraser Institute

By Tegan Hill

With the tariff war continuing and the federal election underway, Canadians should understand what the last federal government seemingly did not—a strong Alberta makes for a stronger Canada.

And yet, current federal policies disproportionately and negatively impact the province. The list includes Bill C-69 (which imposes complex, uncertain and onerous review requirements on major energy projects), Bill C-48 (which bans large oil tankers off British Columbia’s northern coast and limits access to Asian markets), an arbitrary cap on oil and gas emissions, numerous other “net-zero” targets, and so on.

Meanwhile, Albertans contribute significantly more to federal revenues and national programs than they receive back in spending on transfers and programs including the Canada Pension Plan (CPP) because Alberta has relatively high rates of employment, higher average incomes and a younger population.

For instance, since 1976 Alberta’s employment rate (the number of employed people as a share of the population 15 years of age and over) has averaged 67.4 per cent compared to 59.7 per cent in the rest of Canada, and annual market income (including employment and investment income) has exceeded that in the other provinces by $10,918 (on average).

As a result, Alberta’s total net contribution to federal finances (total federal taxes and payments paid by Albertans minus federal money spent or transferred to Albertans) was $244.6 billion from 2007 to 2022—more than five times as much as the net contribution from British Columbians or Ontarians. That’s a massive outsized contribution given Alberta’s population, which is smaller than B.C. and much smaller than Ontario.

Albertans’ net contribution to the CPP is particularly significant. From 1981 to 2022, Alberta workers contributed 14.4 per cent (on average) of total CPP payments paid to retirees in Canada while retirees in the province received only 10.0 per cent of the payments. Albertans made a cumulative net contribution to the CPP (the difference between total CPP contributions made by Albertans and CPP benefits paid to retirees in Alberta) of $53.6 billion over the period—approximately six times greater than the net contribution of B.C., the only other net contributing province to the CPP. Indeed, only two of the nine provinces that participate in the CPP contribute more in payroll taxes to the program than their residents receive back in benefits.

So what would happen if Alberta withdrew from the CPP?

For starters, the basic CPP contribution rate of 9.9 per cent (typically deducted from our paycheques) for Canadians outside Alberta (excluding Quebec) would have to increase for the program to remain sustainable. For a new standalone plan in Alberta, the rate would likely be lower, with estimates ranging from 5.85 per cent to 8.2 per cent. In other words, based on these estimates, if Alberta withdrew from the CPP, Alberta workers could receive the same retirement benefits but at a lower cost (i.e. lower payroll tax) than other Canadians while the payroll tax would have to increase for the rest of the country while the benefits remained the same.

Finally, despite any claims to the contrary, according to Statistics Canada, Alberta’s demographic advantage, which fuels its outsized contribution to the CPP, will only widen in the years ahead. Alberta will likely maintain relatively high employment rates and continue to welcome workers from across Canada and around the world. And considering Alberta recorded the highest average inflation-adjusted economic growth in Canada since 1981, with Albertans’ inflation-adjusted market income exceeding the average of the other provinces every year since 1971, Albertans will likely continue to pay an outsized portion for the CPP. Of course, the idea for Alberta to withdraw from the CPP and create its own provincial plan isn’t new. In 2001, several notable public figures, including Stephen Harper, wrote the famous Alberta “firewall” letter suggesting the province should take control of its future after being marginalized by the federal government.

The next federal government—whoever that may be—should understand Alberta’s crucial role in the federation. For a stronger Canada, especially during uncertain times, Ottawa should support a strong Alberta including its energy industry.

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