The short version: the Alberta Electric System Operator runs an electricity auction every hour. Generators submit prices at which they are willing to run. AESO accepts the cheapest offers until it has enough to meet demand, and the price of the last accepted offer becomes the pool price — paid to every generator that ran that hour. This single number, repeated 8,760 times a year, is what flows through to your default rate.

Why the pool price exists at all

Before deregulation, an integrated utility decided which power plant to run based on its own internal cost stack. After deregulation, somebody still has to decide that, but they have to do it transparently and without favouritism — because the generators are now competing companies. AESO is that somebody. The pool price is the mechanism it uses to coordinate them.

Almost every article you will read about Alberta electricity will mention the pool price as though it were the consumer price. It is not. It is the wholesale price. Most households will never pay it directly — but every household pays a rate derived from it.

How the hourly auction actually works

Each hour, every generator that wants to be eligible to run submits a supply offer — up to seven price-and-quantity pairs ("I will sell 100 MW at $30, another 50 MW at $80…"). AESO stacks all the offers from every generator in price order, lowest to highest, and walks up the stack until it has enough megawatts to meet expected demand. The price of the last accepted MW becomes the System Marginal Price (SMP) for that minute. The hourly pool price is the time-weighted average of the SMPs across the hour.

Why every generator gets the same price

A wind farm that offered $0 still gets paid the clearing price set by the last accepted gas plant. That sounds unfair until you realise it is the only way to make low-cost generators bid honestly. If they were only paid their own bid, they would all bid the same high number — and the market would not work.

Tool: see a single day at the pool price level

Hover or tap each hour to see what was happening. The shape — overnight trough, double daytime peaks, evening spike — repeats most weekdays. Sample values for illustration only.

Hover an hour to see the price, demand, and what is driving it.

Illustrative day. For live pool prices and the rolling average, see aeso.ca. The shape of the day shifts with the seasons — winter peaks in the evening, summer peaks shift later.

How the pool price ends up on your bill

Two pathways:

  1. If you are on the Rate of Last Resort, your default supplier buys electricity from the wholesale market across a smoothing window. The monthly RoLR price you see is a weighted average of pool-price expectations and hedges within that window, plus a small administrative margin approved by the AUC. So your bill follows the pool — but through a buffer.
  2. If you are on a fixed-rate contract, your retailer hedged the energy ahead of time. They pay AESO the pool price, you pay them the contract price, and they pocket or absorb the difference. You see no pool-price movement on your bill until the contract ends.

The non-obvious thing about the offer cap

The $999.99/MWh cap looks abusive on the surface. In practice, the hours where the price actually hits the cap are tiny in number but huge in revenue. A natural-gas peaking plant that runs 200 hours a year at $1 to $400/MWh might earn the bulk of its annual revenue from twelve cap-hours during heat waves or January cold snaps. Take away the cap-hours and that plant stops being economic to build, and the system loses the firm capacity it needs to keep the lights on at peak.

This is the central tension of energy-only markets. Households see the spike and feel gouged. Engineers see the spike and see the reason a peaker plant agreed to exist at all. Both are correct. The current cap is a compromise that has been debated for two decades.

What this means for your household

  1. You will rarely see hour-by-hour pool-price movement on your bill, even if you are on the Rate of Last Resort.
  2. You can shift large flexible loads (EV charging, dishwasher, dryer) to overnight hours where pool prices tend to be lowest. Even on a flat retail rate, this reduces grid stress and is one of the simplest tools the system has.
  3. Watching the AESO live pool price as a household is interesting but not actionable. Watching the 30-day rolling average over a longer window is what tells you whether the market is favouring fixed contracts or variable plans right now.

Frequently asked questions

No. The pool price is a wholesale rate that retailers and the default supplier pay AESO. Your bill smooths it out either into a single contract rate (if you have a fixed plan) or into a regulated monthly Rate of Last Resort.
Yes. AESO publishes the current hourly pool price, the rolling 30-day average, and historical data on its public website at aeso.ca. Many traders and households watch it during summer heatwaves and cold snaps.
Alberta runs an "energy-only" market with a uniform price. Every accepted bid in the hourly auction is paid the same clearing price as the most expensive accepted bid. This is the standard design for North American restructured markets and is meant to give clear price signals for new generation.
AESO uses an offer cap of $999.99 per MWh — the highest price a generator is allowed to bid. In tight supply hours, the clearing price can hit this cap. These spikes are rare but drive a disproportionate share of annual revenue for peaking plants.
Yes, indirectly. Generators that burn natural gas or other fossil fuels factor their carbon-compliance costs (Alberta TIER for large emitters) into their bids. The clearing price therefore reflects current carbon-pricing policy as it applies to industry.