Canada: Alberta’s Electricity Transmission Debate – An Update On Bill 50

On November 25, 2009, Bill 50, the Electric Statutes Amendment Act, 2009, was passed (as amended) by the Alberta Legislature. The bill amends three existing pieces of legislation: the Alberta Utilities Commission Act, the Electric Utilities Act and the Hydro and Electric Energy Act.

With the passing of Bill 50, the need identification process is eliminated for "critical transmission infrastructure" as designated by the Lieutenant Governor in Council, or as set out in a schedule to the Electric Utilities Act (the schedule having been added as a result of the amendments created by Bill 50). The Lieutenant Governor in Council can now designate "critical transmission infrastructure" if the infrastructure is:

  • An intertie;
  • To serve areas of renewable energy;
  • A double circuit transmission facility that is designed to be energized at a nominal voltage of 240,000 volts;
  • Designed to be energized at a voltage in excess of 240,000 volts; or
  • Critical to ensure the safe, reliable and economic operation of the interconnected system, in the opinion of the Lieutenant Governor in Council.

The Alberta government, rather than the Alberta Utilities Commission (AUC), now becomes the responsible authority for determining whether certain transmission infrastructure projects are needed in Alberta. As a result of Bill 50, a series of major electrical transmission projects deemed as "critical infrastructure" are exempted from the normal regulatory and cost assessment process previously undertaken by the AUC. Essentially, the provincial cabinet is provided with more control over which power lines are built and when, but the AUC retains control over where they are to be built.

The Alberta Independent Electric System Operator (AESO) had previously identified the immediate requirement for five critical infrastructure projects. The first project, a southern system reinforcement intended to open the grid to more wind power, was approved by the AUC on September 8, 2009, with a cost estimated at $2.5 billion by the Alberta government. With the implementation of Bill 50, four additional proposed infrastructure projects will be constructed, including (associated costs estimated by the provincial government in brackets):

  • Two high-voltage direct current lines between Edmonton and Calgary, to provide power to consumers in central and southern Alberta ($3.1 billion);
  • One alternating current line between Edmonton and Alberta's Industrial Heartland, to provide power to industrial consumers (e.g. upgrading facilities) ($400 million);
  • Two alternating current lines between Edmonton and Fort McMurray to carry power from co-generation plants to consumers ($2 billion);
  • A substation in Calgary to provide more reliable service to customers in south Calgary ($100 million).

The total cost for the five projects identified by the AESO was estimated by the provincial government at $8.1 billion, but critics of Bill 50 had suggested that significantly higher costs will be involved, in the range of $14–20 billion.

In passing Bill 50, the government argued that major transmission projects are akin to roads and hospitals, and should not require public input if the project is critical to the province. In support of the bill, Energy Minister Mel Knight indicated that the current power transmission system is inefficient, as it has not been upgraded in more than 20 years, resulting in approximately $220 million worth of electricity being lost in 2008, enough to power approximately 350,000 homes. The government also argued that the current system is congested and limits the connection of new generation sources. Proponents were fearful that the power line system in Alberta has not kept pace with the province's growing population, creating the potential for widespread electricity shortages. Additionally, some suggested that an increase in transmission capacity would prevent consumers from being stranded without power and more transmission lines would create competition in the electricity market, giving consumers more choice.

Critics of Bill 50 disagreed with the notion that an increase in transmission would increase competition in the market, arguing that deregulation of the electricity industry in Alberta was intended to achieve this purpose. These parties also expressed concerns regarding transparency and that public consultation was to be removed from the needs assessment process. Critics maintained that if the AUC were involved in the determination of need, a more thorough analysis of electricity system capacity and cost issues would occur. Some accused the government of proposing Bill 50 with the ulterior motive of ultimately exporting electricity to the energy-hungry U.S. An increase in transmission would entrench Alberta's reliance on coal-fired electricity, some said. Natural gas-fired power plants and an increase in generation facilities closer to electric consumption points were identified as possible alternatives to the bill.

Bill 50 has potential implications for several of the players in Alberta's electricity market. Prior to the passing of the bill, ATCO Electric and Altalink had been approved by the government to begin preliminary design plans and environmental and site-location assessments with respect to the power lines between Calgary and Edmonton, while EPCOR and Altalink had begun similar work with respect to the lines between Edmonton and the Industrial Heartland. Enmax Corporation has been, and continues to be, the most vocal in its opposition of Bill 50, preferring the establishment of electricity generation closer to where it is ultimately used, with plans to build three facilities that would add over 1,000 MW of power to Calgary and surrounding areas.

On November 24, 2009, the Alberta government amended Bill 50 with amendments focusing on public interest, access to costs information and staging. The amendments clarified that the AUC must consider the public interest in the decisions it makes on the siting of critical transmission infrastructure and provided for the establishment of an oversight committee, including members from the AESO and customer representatives, intended to give consumers regular and timely access to project information, including project cost, scope and timelines. Additionally, amendments provided for the staging of the Edmonton to Calgary project and the Edmonton to Fort McMurray project, which, according to the government, is expected to defer approximately $2 billion in expenditures.

Although passed on November 25, 2009, it is not clear that Bill 50 will be the last word on the transmission infrastructure debate in Alberta. On November 19, 2009, a Notice of Complaint (Application No. 1605627, Proceeding ID No. 398) was issued by the AUC respecting a claim by the Lavesta Area Group that the AESO has breached section 34(1) of the Electric Utilities Act. The Lavesta claim alleges that the AESO has not filed a valid needs identification document (NID) in association with its determination that the proposed expansion of Alberta's transmission system is required to meet the needs of Alberta. The Lavesta Area Group claims that the AESO is relying on a NID that is invalid as a result of the November 2007 Alberta Court of Appeal Decision in Lavesta Area Group and Alberta (Energy and Utilities Board) 2007 ABCA 365, which dealt with the highly publicized controversy respecting the proposed 500 KV transmission facilities between Calgary and Edmonton. It is unclear what impact the AUC's determination on the Lavesta claim will have on the transmission infrastructure debate in Alberta, however interveners have now registered with the AUC and a formal proceeding is underway.

Since the passing of Bill 50, chief executive officer of Enmax, Gary Holden, has publicly denounced the Alberta government with accusations that during information sessions held prior to the passing of Bill 50 the government agreed to allow power companies to build certain projects regardless of need or regulatory requirements. Enmax's allegations have caused outgoing auditor general Fred Dunn to comment that an investigation is warranted into whether the government colluded with power companies respecting the construction of the various transmission projects proposed by Bill 50. The claims have also led to a request for Ethics Commissioner Neil Wilkinson, who is normally limited to probing the actions of members of the legislative assembly, to examine the matter.

Whatever the outcome of the various processes that are occurring following the passage of Bill 50, it is clear that the debate regarding the construction of critical transmission infrastructure in Alberta has yet to be resolved.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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