"Will make a difference": Alberta reveals changes to try and lower electricity prices

The Alberta government is making some changes to the rules when it comes to economic withholding and electricity prices, in a move that will hopefully save Albertans some big bucks.

The Province announced on Monday morning that, based on recommendations from the Alberta Electric System Operator and the Alberta Market Surveillance Administrator, the UCP is set to make regulatory changes to improve the rules around economic withholding.

According to the Province, every hour of every day, power generators offer to sell their electricity to Alberta’s grid. An energy-only market, which is how Alberta operates, only compensates generators for the volume of power they generate.

To drive competition, the lowest-priced electricity is bought and dispatched first. Generators will sometimes offer their electricity at very high prices to recoup their production costs, causing economic withholding. When done by large generators, it can result in higher prices for Albertans.

The negative impacts of economic withholding are usually offset by competition. However, the Alberta government claims that longer periods of higher prices, as Albertans have seen over this past year, signal the need to increase competition in the province’s electricity market to help lower prices again.

“To protect consumers from prolonged spikes in electricity prices, the government has implemented two temporary measures that ensure Alberta has enough power generation available to meet Albertans’ needs, as well as limit the impacts of economic withholding on utility bills,” the Province added.

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The two temporary policy changes are being implemented through new regulations and an amendment to the AESO’s rules.

The first policy change addresses economic withholding by limiting the offer price of natural gas generating units owned by large generators if net revenues cross a predefined threshold.

The second will address physical withholding by requiring natural gas-generating assets to be made available, as directed by the AESO, in certain circumstances like during extreme weather and other times of peak demand.

The provincial government touts that the two changes still allow generators to earn revenue while ensuring Albertans have access to affordable and reliable power.

“Our government is committed to Alberta’s unique and investor-driven energy-only market. However, the market’s rules were designed 25 years ago, and some are no longer optimal for the system today. This will truly make a difference by helping lower Albertans’ utility bills,” said Minister of Affordability and Utilities Nathan Neudorf in a news release.

The Province added that these two tweaks are “part of a larger, long-term effort to modernize Alberta’s electricity grid, ensuring it’s affordable, reliable and sustainable for generations to come.”