Understanding Your Energy Service
How Does Electricity Service Work in Alberta?
The electricity system can be understood in four steps:
Generation
Electricity is generated in plants. This market is deregulated, meaning that private investors can build and operate electricity generation facilities. Electricity is produced in real-time, and sold in the power pool. The power pool is the only market on which electricity can be bought and sold. It is managed and operated by the Alberta Electric System Operator (AESO). The AESO is responsible for determining the order in which supply offers are sold, for calculating the hourly pool price, and for ensuring the safe, efficient, and reliable operation of the system even in the face of unexpected shocks (such as large weather storms).
Transmission
Once electricity is generated, it travels along high-voltage lines across the province to local transformers. As it does not make sense (economic or otherwise) to have more than one set of electricity transmission wires in a given area, this part of the system is centrally controlled. There are seven utility companies responsible for electricity transmission throughout Alberta. They are overseen by the AESO, and rates for their services are set through regulation by the Alberta Utilities Commission (AUC) or by their local municipality or Rural Electrification Association (REA).
Distribution
Once electricity reaches the local transformers, its voltage is reduced to be suitable for local distribution. It then travels along local distribution lines to reach your home. These local distribution lines are owned by your local provider. Distribution services in Alberta are provided municipally, by REAs, or by Atco Electric (northern and southeastern Alberta), and FortisAlberta (southern Alberta). As is the case in the transmission stage, the rates for service by your local utility are set by regulation made by the AUC, or your local municipality or REA. Your local distributor is responsible for delivering electricity, maintaining and repairing the local network, and for providing an electricity supply at the Regulated Rate Option, if you have chosen your local distributor as your supplier.
Retail
The final stage of the electricity system is when it reaches your home. The retail section of the Alberta electricity market is responsible for billing for customer use and the sale of electricity. In Alberta, while your local utility will always be responsible for delivering your power, you can choose your electricity supplier from a range of competitive retailers. Our list of Alberta energy suppliers can help you determine your options. Customers who do not wish to purchase a contract for their electricity have the option of paying a regulated rate.
How Does Natural Gas Service Work in Alberta?
The natural gas market works in a similar - though slightly different - way to the electricity market:
Exploitation
The province of Alberta owns most (80%) mineral rights. Gas producers pay the government a royalty share of the gas they exploit. They retain ownership ("title") to the gas from the moment natural gas is produced until it is sold. Regulated rate providers and competitive retailers may purchase gas at several points throughout the production chain, from the producers themselves or from a gas marketer.
Transportation
Once it has been processed, natural gas is sent along high-pressure pipelines to the local distribution system and other major markets. Most natural gas produced in Alberta flows in the NOVA pipeline system, a wholly-owned subsidiary of TransCanada Corporation. This company has a monopoly on gas transportation but is regulated by the Alberta Utilities Commission and the National Energy Board
Distribution
Connected to these high-pressure pipelines are low-pressure local distribution pipeline systems that deliver natural gas directly to retail consumers. Two investor-owned distribution companies service the majority (88%) of Albertans. Distribution companies are responsible for transporting all gas to consumers, regardless of from whom (regulated rate provider or competitive retailer) they have bought it. Their rates for providing this service are regulated by the Alberta Utilities Commission (AUC). Some distribution systems are municipally-owned, and are self-regulated. Natural gas co-operatives also exist in Alberta, and are not covered by the Gas Utilities Act.
Retail
As is the case for the electricity market, the retail section of the natural gas system concerns the sale and billing for consumption of natural gas at the consumer level. Consumer choice for natural gas supply has existed in Alberta since 2004, after the Gas Utilities Act was amended in 2003. As is the case in the electricity markets, a regulated rate for natural gas supply exists alongside competitive contracts. This rate is approved by the AUC, and is known as either the Gas Cost Recovery Rate (GCRR) or the Gas Cost Flow Through Rate (GCFR). There are two regulated rate providers in Alberta: AltaGas Utilities, which owns and operates the gas distribution system as well as provides the regulated rate in its area, and Direct Energy Regulated Services, which provides the regulated rate for the ATCO Gas distribution service area.