Canada: Energy @ Gowlings, February 17, 2012 - Volume 10, Number 3

Last Updated: February 24 2012
Article by Lisa Jamieson

Edited by Paul H. Harricks

Report Issued by Government Review Committee: Two Alberta North-South Transmission Lines get Green Light

On February 13, 2012 the Critical Transmission Review Committee struck by the Minister of Energy, the Honourable Ted Morton, on December 6, 2011, issued its report entitled Powering Our Economy: Critical Transmission Review Committee Report The Committee was tasked with reviewing the process and information used by the Alberta Electric System Operator (AESO) in considering and developing the north-south transmission reinforcement plan.

Background:

In 2009 the Electric Statutes Amendment Act was passed, enabling the Alberta Government to designate certain transmission facility projects in Alberta as Critical Transmission Infrastructure Alberta (CTI).  The Electric Utilities Act (EUA) was amended to set out four projects that the Government designated as CTI.   Included were two high voltage direct current (HVDC) transmission facilities between the Edmonton and Calgary regions, with a minimum capacity of 2000 megawatts each.1 

An important practical consequence of the CTI designation was that the Alberta Government identified certain projects as needed, and therefore, the AESO was no longer required to submit an application to the Alberta Utilities Commission (AUC) for approval of the need for those particular projects.  In the normal course, approval of a new transmission line is a two stage process:  the first is the consideration by the AUC or Commission of the need for transmission system expansion or enhancement identified by the AESO; and, the second is the facility application to meet that need that is filed by a particular Transmission Facility Owner (TFO), as directed by the AESO for approval by the AUC.  A CTI designation, however, eliminated the requirement for the first stage, and instead, proceeded directly to the second stage, the consideration of the facility application submitted by the TFO. 

There was vocal criticism of the amendments to the EUA by various interested parties and stakeholders, fearing that it limited their participation in the process designed to consider whether the new transmission lines proposed by the AESO were in fact needed.

On October 19, 2011, Minister Morton advised of the Alberta Government's intention to conduct a review of the WATL and EATL projects, for which facility applications had been filed with the AUC.  Minister Morton  requested that the Commission suspend its consideration of the applications until the review was completed.  The oral hearing for the WATL application had been set to commence on November 7, 2011. Then on December 6, 2011, the Critical Transmission Review Committee (CTRC) was created by Ministerial Order, naming Brian Heidecker, Dr. Roy Billinton, Dr. Joseph Doucet, and Mr. Henry Yip as its members.

The Report: Powering Our Economy  

The CTRC report reflects the following conclusions:

  1. the AESO's economic, load and generation forecasts for Alberta are reasonable;
  2. the AESO's recommendation to proceed with the development of the two 500 kV transmission lines is reasonable;
  3. the AESO's decision to use HVDC technology is reasonable;
  4. it is reasonable for the Alberta Government to proceed with the development of the two 500 kV HVDC transmission lines as soon as possible;
  5. the committee recommends the Alberta Government amend the Electric Statutes Amendment Act, 2009, such that a determination of whether a particular CTI project is needed is returned to the jurisdiction of the AUC;
  6. the CTRC Committee understands that there will be rate increases associated with the north-south system reinforcements and recommends the AUC consider options that will mitigate the impact to consumers; and
  7. the CTRC Committee encourages the use of a competitive procurement process for future CTI infrastructure projects.

The CTRC made the following comments about the AESO:

  • The AESO's economic, load, and generation forecasts for Alberta are reasonables.
  • The data, methodology and intellectual rigor used to determine future demand for electrical transmission is credible and robust.
  • The AESO has access to exclusive statistics from real time data points across the provincial grid to analyze the transmission system as well as appropriate information on load and generation development.
  • The "committee believe that the AESO's team has greater specialized knowledge of the Alberta electric demand than any other single organization and also consults widely with stakeholders and external forecasting experts to vet its approach and results."

The Current State of the Transmission System in Alberta

With respect to the state of the current transmission system in Alberta, the CTRC  noted that Alberta's social and economic well-being currently relies on an electrical energy transmission system that was largely built in the 1980's and reached capacity in the late 1990s. They stated that the current transmission system has not kept pace with Alberta's rising economy and growing electricity consumption. In particular, the CTRC noted that:

  • the existing transmission system is congested, ageing, and results in excessive energy loss;
  • as the population continues to grow, Alberta's demand for electrical power is forecast to grow 2.5% each year; and
  • to power the Alberta economy in 2027, Alberta will need twice the amount of electricity it currently consumes.

The CTRC made a number of comments generally on the transmission system in Alberta, and specifically stated that the costs associated with an overstressed system or disruptions in service are often not appreciated until it is no longer available, explaining that the winter storms of 2010 in southern Alberta caused ratepayers to absorb $500 million due to damage to transmission towers connected to the Sheerness generation facility.  Prices for electricity rose due to the use of higher-cost, gas-fired electricity called upon to substitute for the low-cost, coal-fired electrical power that couldn't be reached due to the disruption. Three days of disruption resulted in lost revenues  estimated at $240 million. 

The Report notes that "transmission infrastructure  is a public good that must be available in advance of need, enable addition of new generation and be capable of meeting long-term growth throughout the province."  The Report acknowledges the challenges to planning and maintaining system reliability in a province where expanding wind generation, low natural gas prices, scheduled retirement of coal fueled generators and increased use of co-generation facilities make it more difficult to forecast investment in, as well as location of, new generation, as well as the long-term supply of electrical energy.

However, the Committee stated that the "AESO's team has greater specialized knowledge for the Alberta electric demand than any other single organization and also consults widely with stakeholders and external forecasting experts to vet its approach and results."  It noted  that the AESO's  load forecast is "based on global, regional and local considerations and is closely correlated to Alberta's GDP which is a recognized global measure for the predictable use of electricity."  It notes that the AESO took into consideration the uncertainties in corporate development investment plans, as well as industry location and shifts, real-time statistics of co-generated electrical energy and power that is produced 'behind the fence', and monitors and measures the flow of electrical energy in and out of Alberta.

The Impacts of the Delay to the north-south transmission reinforcement

In the Report the CTRC provides a brief summary of the history of the north-south transmission system.  It acknowledges that the global recession in 2008 resulted in "lower power transfer requirements on the existing north-south transmission lines in 2011", but that there is a need to "prepare for expected growth in Alberta's robust economy including the oil sands region."  It notes that "pressure continued to mount to develop the north-south lines due to other operational realities such as system stability concerns in the Wabamun area and voltage stability in the Calgary area."   The Report also stated that the $400 million spent to maintain system reliability since the decision in 2007 to delay the north-south transmission reinforcement project demonstrates the need for increased investment in transmission capacity.   

Amendments to the Electric Statutes Amendment Act, 2009

There was little discussion surrounding the Committee's recommendation to amend the Electric Statutes Amendment Act, 2009.  It simply stated that it recommends that the Government amend the legislation authorizing it to designate future proposed transmission facilities as CTI, such that the need for any future CTI would then be considered under the authority of the AUC.  In other words, and assuming the recommendation is adopted by the Government, the need for any future CTI projects in Alberta will not be a matter for the Government to determine.

Footnote

1. Known as the Western Alberta Transmission Line, or "WATL", and the Eastern Alberta Transmission Line, or "EATL".

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