Canada: Applicable Legislation And Governing Agencies

Applicable Legislation

The Alberta Electricity Market is regulated by two primary statutes and a number of substantive regulations enacted under these statutes:

  1. Electric Utilities Act ("EUA"): The EUA is the main piece of legislation that governs the Alberta Electricity Market. Among other things, the EUA:
    1. Defines the structure of the Alberta Electricity Market, including the competitive aspects of generation and retail, and the regulated aspects of transmission and distribution.
    2. Establishes the Independent System Operator (the "Alberta Electric System Operator" or "AESO") and the Balancing Pool and sets out their roles and powers.
    3. Creates the Power Pool and provides for the making of rules by the AESO that define the fair, efficient and openly competitive (generally referred to as "FEOC") functioning of the Power Pool. The AESO is given authority to make ISO Rules in accordance with Section 20 of the EUA and that authority also requires market participants to comply with the ISO Rules. The AESO has made extensive ISO Rules (over 250 pages of them) that govern the Power Pool, including its operation, exchange of energy, transmission system planning and load settlement.
    4. Permits small consumers to have choice on whether to choose a retailer or choose the RRO.
    5. Provides for the continuation of the PPAs.
    6. Grants broad oversight powers to the AUC, especially with respect to the amounts charged by, and terms of service for, the TFOs, DFOs and the AESO.

Regulations passed under the EUA govern matters such as the role of the Balancing Pool in administering the PPAs, the content of customer bills, codes of conduct for market participants, the distribution tariff, the FEOC obligation, payments in lieu of taxes to be paid by non-taxable market participants (i.e. municipalities), the RRO, distribution connected micro-generation of less than 1 MW, and the regulation of transmission.

  1. Hydro and Electric Energy Act ("HEEA"): HEEA is the primary piece of legislation that governs how the AIES or grid is built. It ensures that generation, transmission and distribution facilities are constructed in an economic, orderly, efficient and safe manner that is in the public interest. To construct and connect new generation, transmission and distribution facilities, certain approvals under HEEA must be obtained from the AUC. There is only one regulation that has been enacted under HEEA and it deals with the requirement of generators and transmitters to provide certain statistical information about their operations.

Governing Agencies

In addition to the Department of Energy for Alberta, the Alberta Electricity Market has four key not-for-profit quasi-government agencies that play a significant role in regulating Alberta's Electricity Market.

The roles of the AESO and Balancing Pool have already been previously explained in some detail. The AESO is the public body that plans, develops and controls access to the transmission system, directs the operation of the AIES, and designs and operates the Power Pool that determines the Pool Price. The Balancing Pool is the public body that manages any PPAs for which there is no independent buyer, and also acts as a backstop for the other PPAs in the event of force majeure or termination by Buyers. Any profit or loss of the Balancing Pool from these PPAs is passed on to Alberta consumers.

The AUC is an independent, quasi-judicial agency of the province. The AUC is responsible for implementing the legislation, regulations and policies of the Department of Energy for Alberta. In addition, it is responsible for generation facility oversight; ensuring each facility is built, operated and decommissioned in an efficient and environmentally responsible manner. The AUC does not generally regulate REAs, municipally owned utilities (with the exception of EPCOR in Edmonton and ENMAX in Calgary), or competitive retailers.

The Market Surveillance Administrator ("MSA") is a public agency created under the Alberta Utilities Commission Act whose mission is to take action to promote effective competition and a culture of compliance and accountability in the Alberta Electricity Market. The MSA undertakes surveillance and investigation to ensure that market participants are conducting themselves in accordance with the FEOC (fair, efficient and openly competitive) obligation, the EUA and its regulations, and the ISO Rules. As an example, in 2015 the MSA assisted in the prosecution of TransAlta before the AUC for breaching the FEOC obligation in a manner that caused a manipulation of the Pool Price. This resulted in TransAlta agreeing to pay the MSA approximately $56 million to settle the FEOC prosecution.

Other non-profit agencies that participate on behalf of their members in shaping the Alberta Electricity Market include the Independent Power Producers Society of Alberta, the Industrial Power Consumers Association of Alberta, Alberta Direct Connect Consumer Association, Alberta Federation of Rural Electrification Associations, Canadian Wind Energy Association and the Canadian Solar Industries Association.

All of these public agencies and non-profit associations have websites that also provide useful background information about the Alberta Electricity Market.



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