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Providing electric power to Albertans involves four major steps:

  • Generation
  • Transmission
  • Distribution
  • Retail

Generation
Generation is the process of converting non-electrical energy to electricity, and is the first process in the delivery of electricity to consumers. Electricity in Alberta is primarily produced through coal-fired plants and natural gas, but recently there has been more wind power and renewable energy sources being used.

Under the restructuring of the electric industry in Alberta, the price of generation is no longer regulated. Generators sell their power through the Independent System Operator (ISO), which operates as an open-access competitive market for electric power. In Alberta, the ISO operates as the Alberta Electric System Operator (AESO). The AESO must operate the power pool in a manner that is fair, efficient and open to all market participants. The AESO has established rules which outline the practices, policies and procedures that are expected from the market participants. The AUC however, oversees the AESO’s rule making process and adjudicates the enforcement of the rules.

The Hydro and Electric Energy Act gives the AUC authority to approve construction of any electric power generating facility in Alberta.

Many companies choose to produce electric power for their own use. Electric power produced and consumed by industrial systems is exempt from some provisions of the Electric Utilities Act (EUA). Power produced by industrial systems is not required to be sold through the power pool, provided that it is used only as the internal power supply for industrial processes. Companies wanting an industrial system designation must obtain approval from the AUC.

Some Albertans choose to generate their own electricity using solar panels or wind turbines, this is called micro-generation. On February 1, 2008 the Alberta government issued the Micro-Generation Regulation which allows Albertans to generate their own power and receive credit for any power they provide into the power pool. The AUC oversees the implementation of this regulation and will develop processes to simplify approvals and interconnection agreements with customers and service providers. Please visit this page for more information about micro-generation.

Transmission
Electricity is sent from the generating plants over high-voltage transmission lines to substations that use transformers to reduce the voltage level.

The AESO oversees the design and use of the transmission system to ensure fair market rates, non-discriminatory access for all market participants and the safe reliable operation of the system. The AUC approves the costs for transmission facility owners to provide their services. The regulated costs of the transmission companies are passed along to the AESO, which recovers the cost of operating the system and the transmission companies’ costs through the AESO’s transmission tariff, which is also approved by the AUC.

The AUC also is required to approve construction, connection and operation of new transmission facilities in Alberta. The Hydro and Electric Energy Act gives the AUC authority to approve the construction of transmission facilities and system interconnection and construction of electric substations.

Distribution
Once the transformers have reduced the high-voltage electricity from the transmission lines, the electricity then travels over low-voltage distribution lines, owned by distributors or distribution wire owners, to customers. The distributors may be municipally owned, rural electrification associations or investor owned companies. The electricity is sold to the end customer by a retailer.

The AUC approves the distribution rates for investor-owned and certain municipally owned wire owners to ensure that they are just and reasonable. Delivery charges for other distributors continue to be set by the applicable regulator—by municipal councils with respect to some municipally owned utilities and by the board of directors for rural electrification associations (REAs). The distribution tariff recovers the cost to the wire owner for things such as the design, maintenance, construction and financing of the electric system that delivers energy to a customer’s home. Meter reading is the responsibility of wire owners.

Retail
Energy retailers purchase electricity through a combination of long-term contracts with the generation companies and short-term purchases through the power pool. Retailers then sell the electricity they have purchased to consumers, either at the regulated rate option (RRO) rate or under unregulated contracted terms with competitive retailers. For more information on competitive retailers in Alberta visit the Utilities Consumer Advocate's website. Consumers that have not signed a competitive contract will automatically receive service from the RRO provider that is available in their area. The RRO is regulated by the AUC, but the AUC has no jurisdiction over competitive retailers. Click here for more information on AUC regulated retail electric rates and tariffs.