Alberta’s government is apprising its electricity market guidelines with new provisional procedures it declares will help lower users’ utility bills. The new procedure is a practice known as “economic withholding,” a policy frequently used by power producers in Alberta’s unique-to-Canada free-market electricity scheme.
With Alberta’s competitive market policy, electricity benefactors submit bids into the energy market recognized as the power pool every hour. The Alberta Electric System Operative then dispatches the suppliers’ electricity, preliminary with the lowest-priced bids and moving higher until the province’s power requirements for that hour are met.
Economic withholding is when power producers intentionally hold back some of their sources, submitting them at a higher price. It’s a chance that can pay off if the operator requires that power since the producer makes extra money, but fails if the province’s power requirements are met before it gets to the higher-priced bid.
The exercise is not prohibited but has been extremely criticized lately as one of the influences contributing to rising consumer power bills in the province, as well as a rising number of occurrences where electricity bills in the province have remained higher throughout off-peak periods than in periods of peak demand.
The innovative guidelines will limit the offer price of natural gas-generating elements maintained by large providers if net incomes cross a predefined threshold. They will similarly necessitate natural gas-generating assets to be available, as requested by the AESO, in certain conditions such as extreme weather and other periods of peak demand.
The government said the alterations will still allow generators to create income while guaranteeing Albertans have access to reasonable and reliable power.
But Joel MacDonald, creator of electricity price assessment site energyrates.ca, said Alberta is one of two authorities in North America to have an energy-only electricity market whereby generators are not paid to have reserve generating volume. Instead, they are only paid for the electricity they dispatch to the grid.
It will in the short-term decrease those high prices throughout peak periods, but we’re going to have long-term, less generation. Fewer power plants will be built, he said.
If a lot of Albertans were worried about rolling dim-outs mid-winter, this would make that possible crisis more likely to happen.
Neudorf publicized the changes in a speech at the annual meeting of the Autonomous Power Producers Society of Alberta in Banff on Monday.
The changes broadcast are just the start of what might be a sequence of substantial changes to Alberta’s electricity market. The guidelines that oversee the province’s present system were intended at a period when the majority of Alberta’s power requirements came from coal, and don’t essentially work for a scheme that is now driven by natural gas and renewables.
Jason Wang, senior electricity specialist with clean energy think-tank the Pembina Foundation, said he had expected Neudorf would use Monday’s IPPSA meeting to deliver more clarity about the province’s impending direction than he did.
What we identify is there will be more variations in the market. But it needs to be appropriate and identify the urgency of the energy evolution and environmental issues, Wang said.
If we get years of market ambiguity for developers deprived of any sign of what the consequences are going to look like, that could slow down the net-zero transition.
