By Vipin Prasad
In 1996, Alberta restructured its electric industry to create a marketplace with new opportunities for power producers and more options for consumers. Under the new system, electricity is exchanged through the Power Pool of Alberta, which operates a spot electric energy market and manages the real time operation of the provincial electric grid and interconnections with British Columbia and Saskatchewan. Transmission facilities remain regulated, and buyers and sellers of electrical energy obtain access to the grid through an independent Transmission Administrator.
Power producers build plants in response to market opportunities, rather than regulatory decisions, and power consumers have options to alter their consumption in response to the market price. Today, a host of innovative independent power plants is helping to meet the province's electricity needs and more projects are under construction and in the works.
Demand and supply
Peak demand for electricity in Alberta reached 7,408 megawatts this past winter and, with higher crude oil prices and strong economic growth, is expected to increase by just over three per cent to 7,647 megawatts in the winter of 2000/2001. (see graph) In addition to meeting consumer demand, the Alberta electric system maintains a minimum operating reserve in the range of 460 - 600 megawatts to ensure reliability of supply.
The new market structure encourages innovation and the use of efficient technologies such as cogeneration. Alberta's installed generating capacity of 7514 megawatts includes supply from major generating companies along with small and independent power producers. These independent power projects are being developed to meet the growing electrical demand of industries in Alberta, with the surplus sold into the energy market.
Independent power projects totaling some 454 megawatts have been added to the system since 1996. An additional 930 megawatts, primarily from cogeneration projects with the balance from combined cycle, hydro and wind developments, is slated to come on stream throughout 2000. Surplus capacity from these projects, together with around 100 megawatts of small and independent power available before deregulation, is expected to provide about 1000 megawatts to help meet Alberta's forecast increase in demand this year.
Power consumers in Alberta also participate in the supply/demand balance through voluntary load curtailment programs managed by the Power Pool and through contractual arrangements with the Transmission Administrator. These programs are expected to allow over 250 megawatts of demand to participate in the energy market in 2000. The province also has the ability to import 950 megawatts through interconnections with British Columbia and Sask-atchewan.
Participants in Alberta's electric market today number about 50 including major generating companies, distributors, marketers and brokers and small and independent power producers. The number of players is expected to increase over the next few years with further deregulation in the generation market and the introduction of customer choice.
On the generation side, power from plants built under the former, regulated system is being opened to competition in 2001 through a process that will allow independent marketers to purchase rights to the energy from these power plants and compete.
In the same year, with full retail competition, end-use customers will have the option of either continuing to buy electricity from their traditional supplier or making other arrangements with new retailers.
In the coming year, as the electric energy market further evolves, a strong economy is expected to fuel continued growth in demand for electricity in Alberta. With a new market structure that encourages efficiency and innovation, the province's electric industry is well positioned to respond.
Vipin Prasad is with the Power Pool of Alberta. ET