Deregulation in the Alberta’s power sector started in 1996 (same as in California) with some changes made in 2001 and 2007. The main idea behind this was to allow for competitive forces to pervade the electricity market in a better way to result in better prices for consumers. It should be noted that electricity is an idiosyncratic commodity in many ways - demand must equal supply at all times, transmission over long distances is difficult and electricity storage is effectively impossible. The problems that were identified after the decision to shift towards a deregulated market, that still remain unresolved, are as follows:
- No single participant should be able to control more than 20% of the offer capacity of the electricity market supply. However, the Alberta Government has allowed this capacity to go up to 30%
- Inter-tie capacity with other markets such as the United States, BC, Saskatchewan etc. should be at least 20%. This has not been implemented yet.
- Demand response should be allowed up to 20% of the total market, but this has not been adopted as suppliers argued that this leads to collusion. In reality, this has not been favoured simply to allow for market and price domination.
If the above three problems are not resolved prices will keep rising spasmodically, resulting in market inefficiency and disruption. Alberta’s coal-fired generation units are approaching the end of their design lives and divestiture periods in 2020. However, the most important aspects to look forward to when it comes to analyzing our energy market is the upcoming provincial elections. This is the time that social policy makers need to step up and be courageous enough to accept that markets alone cannot do social policy. It is essential for residential, commercial and industrial businesses to realize the demand-supply dynamics of electricity that cause market volatility and price hikes. Information is power. That is the phenomenon Gray Energy Economics bases its strategic intent on. The Alberta Power Price App is targeted towards providing accurate information on a real-time basis so that energy consumers are aware of price changes and can take steps to manage their consumption. What needs to be done is simple, easily identifiable and has the potential to change Alberta electricity market dynamics hugely.