The Alberta Utilities Commission is mapping out key
issues related to the future of Alberta’s electric and natural gas distribution
system in this public inquiry.
Chair Mark Kolesar identified in his overview
released at the onset of this inquiry that a transition is occurring in the
industry. He specifically identified a shifting market, technology, public
policy, consumer behaviour and environmental factors as reasons for the
transition. This inquiry seeks to understand how this transition plays out, and
ensures effective management of change and its effects are central to the
public interest mandate of the Alberta Utilities Commission to deliver
innovative and efficient utility regulatory solutions for Alberta.
The evolving nature of electric generation,
consumption, storage and the distribution system has significant implications
for the grid, incumbent utilities, consumers, grid managers and the regulatory
framework. These are among the central matters the AUC will examine in its
The inquiry is intended to help answer three
- How will technology affect the grid and incumbent electric distribution facility owners; and how quickly?
- Where alternative approaches to providing electrical service develop, how will the incumbent electric distribution utilities be expected to respond, and what services should be subject to regulation?
- How should the rate structures of the electric distribution facility owners be modified to ensure that price signals encourage electric distribution facility owners, consumers, producers, prosumers and alternative technology providers to use the grid and related resources in an efficient and cost-effective way?
The AUC broadened the scope
of the inquiry to include natural gas distribution on March 29, 2019.
technologies and recent innovations may transform both the electric and natural
gas distribution networks. The AUC understands that electric and gas utilities
may be in a position to displace each other, given merging technologies.
Broadening the inquiry will allow the AUC to consider the economic and
regulatory implications of electricity and natural gas being used as
interchangeable energy sources.
In recent years, Alberta’s
electricity distribution sector has been affected by rapid technological
improvements and changing consumer behaviour. Government efforts to promote
clean, renewable electricity generation linked to Alberta’s Climate Leadership
Plan have contributed to increased renewable generation such as wind and solar,
and the rise of distributed generation at the residential and community levels.
Concurrently, the electricity
distribution network has grown in complexity as consumers increasingly both
consume energy from the grid and produce power to be put into the grid. In
addition, utilities and the communities they serve are increasingly embracing
energy efficiency, demand response, renewable energy and energy storage.
Among consumers, trends
include the growing popularity of electric vehicles with more manufacturers
moving away from internal combustion engines, and the design and construction
of new homes that are often highly energy efficient, with some using zero net energy.
Some consumers, large and small, are considering battery storage, bringing the
prospect of independence from the grid closer to reality.
This inquiry will help the AUC
contribute to Alberta successfully navigating and guiding the transition and
evolution of the province’s electric distribution system in a manner that
supports the public interest, public policy goals, a healthy and robust
utilities sector and just and reasonable rates for consumers.
The scope of the inquiry has be
initiated through questions in modules one, two and three in the notice issued
on March 29, 2019. Please review the notice
issued the same date for full details, questions, scope and options for
Module One of the inquiry is scheduled to complete in early October. Moving
into Module Two, the Distribution System Inquiry will be building upon the
learning on technology and focus on better understanding on how those technologies,
combined with the social, economic and legislative forces, may affect the
current business models and regulatory frameworks governing existing
distribution utilities. Module Two will also consider which distribution
utility services should be regulated, the related implications for the monopoly
franchise and the obligation to serve, and to what extent, if any, new entrants
should also be regulated by the AUC.