Neudorf talks electricity at SACPA

Posted on May 23, 2024 by Vauxhall Advance

By Al Beeber
Southern Alberta Newspapers

A discussion on the Alberta electricity system sparked a full house to turn out recently to the Lethbridge Senior Citizens Organization for a session of the Southern Alberta Council on Public Affairs.

Lethbridge East MLA and Minister of Affordability and Utilities Nathan Neudorf discussed the utility market, factors that impact the affordability of electricity and other matters.

When he was appointed to his new position by premier Danielle Smith, Neudorf was tasked with several initiatives including to make life more affordable for all Albertans, as well as the necessary work to ensure the provincial electricity grid is affordable, reliable and sustainable for generations to come.

His talk included an overview of the market and what the government has done and will do moving forward to provide corrections and fixes to the electricity grid and lower utility costs.

He talked about the various agencies involved in the electricity sector and their roles including the Alberta Electric Systems Operator which is an independent, not-for-profit organization that manages and operates the Alberta grid, doing the day-to-operations making sure supply and demand are balanced all day.

It works with industry and government to make sure there is reliable power.

He also talked about the role of Alberta Utilities Commission, an independent quasi-judicial agency which has the task of reviewing and approving – or not – all generation and powerline projects to make sure utilities are delivered fairly, equitable and in the public’s best interest.

He mentioned The Utilities Consumer Advocate which works on behalf of the consumer helps people navigate any potential disputes with energy providers and the Market Surveillance Administrator which enforces a fair, open and competitive market, Neudorf said, making sure natural gas and electricity providers comply all applicable legislation, standards and regulations.

The Balancing Pool, established in 1999, helps manage the transition to competition in Alberta’s energy industry. There is rate rider charge on bills every month, he pointed out. It is currently being wound down and Neudorf expects its job to be completed within the next year or two.

The government is the other partner whose job is to work with those agencies and government ministries to oversee a reliable and affordable electricity grid.

He talked about the Agriculture First initiative on renewable development, the aim being to have a system that’s affordable, reliable and lasts into the future.

Alberta is unique in Canada that it is the only province with an energy-only market. This means a producer of electricity is only paid when it produces and sells power to consumers, Neudorf said.

Alberta consumers pay for the electricity they use and the system provides them with a reliable supply of electricity, he said.

Neudorf also pointed out that there has been a transition from coal-powered generation and the addition of a significant amount of renewable energy.

Alberta has almost completely transitioned off coal and this year coal will be fully phased out, a full six years ahead of schedule, he said.

About half of energy produced here comes from co-generation where large industrial facilities that require a lot of heat and steam also produce electricity.

The Alberta system was designed to rely on coal generation which provided a very stable transmission system. But with province moving off coal to renewables, there were many consequences, some of them unforeseen, Neudorf noted.

“It has led to a system that has in those renewable projects, which are very abundant and have hundreds of different sites, you’ve seen a tremendous increase in our transmission system to be able to accommodate them and bring them onto our system.”

Transmission costs on bills can sometimes rival or exceed generation costs, Neudorf said, due to transmission sites going from about 15 in number to close to 200 now.

An energy mix is important to support the province’s goal of carbon neutrality by 2050 but the popularity of renewables has impacted the sustainability and reliability of the electricity market, he said.

The increase of renewables has added pressure to the transmission system and caused system reliability changes resulting in increased costs borne by customers, he added.

The world is evolving and the electricity system has to evolve, as well, Neudorf told the audience.

In March, the province proclaimed Bill 22, the Electricity Statutes (Modernizing Alberta’s Electricity Grid) Amendment Act to make life more affordable, he said. The act will allow for additional self-supplying storage within the grid, encouraging further technologies and further investment in technology to make sure all consumers who want to generate at their location of residence or business can either store, or supply the excess power, to the grid.

He said using energy storage instead of building more powerlines will help modernize the system and steer the province in the direction of more affordable power.

In his talk, he also talked transmission costs, and maximizing use of existing infrastructure and Neudorf addressed distribution costs, noting Lethbridge is one of the few jurisdictions in Alberta that has its own distribution rates which are approved by city council.

He also said the province wants to make sure customers who rely on Regulated Rate Option have access to different rate plans. RRO is the default option for customers who don’t want to sign a contract or who can’t sign one.

The RRO is a floating rate that changes monthly and customers on it are subject to price spikes and volatility.

He also discussed the topic of economic withholding by power generators, noting the province has also two three-year temporary measures intended to limit the excessive price impacts of economic withholding while allowing generators can still make a reasonable rate of return.

Changes that will be made at the beginning of July will support a more effective competition, improve reliability and protect consumers from some price volatility, he said.

Economic withholding is the practice of generators will offer electricity at a high price to raise the overall price of electricity and recover costs.