Transcript www.ecra.gov.sa

Alberta:
Canada’s First Competitive Electricity Market
Dale McMaster, President & CEO
Alberta Electric System Operator
November 2006
Presentation Overview
 An introduction to Alberta
 The structure of the electricity industry
 Transmission Policy and its implementation
2
Alberta the Centre of Western Canada
3
4
Alberta’s Electric Industry
 More than 21,000 km
transmission
 Single control area of
660,000 km²
 Interties to B.C. (up to 780
MW) & Sask. (up to 150 MW)
 Over 280 generating units
 9,580 MW system peak
BC
Alta
Sask
 About 200 market
participants
 11,734 MW internal
generation capacity net to
grid
5
Alberta’s Electricity Generation
Net to grid
5770
Total
(year-end 2005)
49%
4604
39%
899
.07%
Wind
298
.03%
Wood waste
133
0.1%
Other
30
0.002%
11,734 (MW)
6
Transmission Interconnections
Import Export
 British Columbia
0-780
0-800 MW
 Saskatchewan
0-150
0-60 MW
Note: Intertie capability varies with system
operating conditions including the generation
pattern
7
Alberta Outlook: Load and Supply
 A Bit of History:
 More than 3,000 MW of new generation
added to the system since 2001
 4.2% average annual growth rate over the
past five years for energy and peak demand
 4.9% year-to-date growth in energy
10-year Outlook: 2007 to 2016
 3% average annual growth rate in energy
and peak demand
 requirement for about 3,800 MW of new
generation by 2016
8
Competitive Restructuring
Vertically
Integrated
Utility
Functional
Separation
competitive
forces
Generation
natural
monopoly
Transmission
natural
monopoly
competitive
forces
Distribution
Retail
9
Evolution to Competition Timeline
May
1995
June
1995
Electric
Utilities
Act
passed
Power
Pool
Council
(PPC)
formed
Jan.
1996
May
1998
June
1998
Aug.
2000
Independent
EUA
Transmission
takes
Administrator
effect
appointed
Power
Pool
Gov’t
begins
Independent
auctions
operation PPC & Market
rights to
Surveillance
formerly
Administrator
regulated
appointed
generator
output
(PPAs)
Jan. June
2001 2003
AESO
formed
PPAs go
into affect
Retail
Competition
begins
10
Alberta Industry Structure
Electric Utilities Act
Minister of Energy
Appoints BP and AESO Boards, EUB Chairman & MSA
Balancing
Pool
(BP)
Alberta Electric
System Operator
Wholesale
Energy Market
System Operator
Alberta Energy
& Utilities
Board
(EUB)
Regulates AESO’s
Transmission
business
Market
Surveillance
Administrator
(MSA)
Transmission System
Development
and
System Access Service
11
The AESO: Background
 Created as part of electric industry
restructuring
 Our mandate is defined by legislation
• Do not own transmission or generation assets
• Independent of industry (no commercial interests)
• “not - for - profit” organization
• Act in the public interest
 Our mission:
The AESO facilitates a fair, efficient, openly competitive
and sustainable market for electricity and provides for the
safe, reliable and economic operation of the Alberta
Interconnected Electric System.
12
The AESO: Core Business
 Develop and operate Alberta’s real-time
electric energy market
• Facilitate the fair, efficient and openly
competitive market for electricity
 Direct the operation of Alberta’s power grid
to ensure reliability
 Plan development of Alberta’s
transmission system to ensure reliability
and to facilitate the competitive market and
investment in new supply
 Provide system access for both generation
and load customers
13
Transmission System Roles
AESO
Transmission Facility
Owners
Responsible for system
reliability
Responsible for reliability
of transmission facilities
Directs system operation:
Operating Authority
Operates & maintains
transmission facilities
Plans transmission system
development
Builds and owns
transmission facilities
Develops and implements
transmission tariff
Revenue collected via
AESO transmission tariff
Provides system access
Constructs, owns, operates
and maintains system
facilities providing system
access
Procures ancillary services
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Energy & Utilities Board (EUB)
 The EUB is an independent, quasi-judicial
agency of the Alberta government
 Regulatory oversight of:
• transmission system development
• transmission system access
• AESO transmission tariff
- AESO “own costs” and cost of ancillary services
and system losses
- TFO facility and operating costs
• generation projects
- environmental and siting approvals
15
Transmission Policy:
Drivers for change…
 Alberta relies on the competitive market to provide
investment for new generation
 Only one significant transmission line built in the last 20
years
 A once robust transmission system becoming
inadequate
 Increasing transmission congestion:
• System losses and the associated costs
• System reliability – voltage stability
• Reliance on Transmission Must Run (TMR) generation –
excessive costs and distortion of the price signal
• Compromising the competitive energy market
 Impediment to the investment in new supply
 Potential impact on the economy of Alberta
16
Why was this happening?
 Expectation – “the market” would drive the development
of the transmission system
 The market signals weren’t adequate:
•
•
•
•
Postage stamp transmission tariff
“Energy only” real time pool market – single price
No significant locational signals -- i.e. no LMP
Ineffective system planning
- Absence of decision making criteria
- Chicken and egg conundrum
 Resulted in an over reliance on location critical gas-fired
generation and no new transmission
 A clear government policy for transmission system
development was required
17
The Policy – an overview

Transmission planning must be proactive leading load
growth and generation development -- market signals
and/or congestion pricing schemes will not result in
timely construction of transmission facilities
•
it is appropriate and necessary to align timelines,
milestones and commitment of generation and
transmission to ensure transmission is developed in a
timely manner
•
preconstruction activities (planning, engineering and
ROW) to be proactive and aggressive -- costs deemed to
be necessary and prudent
•
actual construction to be timed with generation
commitment and milestones to assure coincident
completion
18
The Policy cont’d…
 Transmission must facilitate a competitive
wholesale market – system must be
reinforced such that about 95% of expected
wholesale transactions can be realized
without congestion
•
all in-merit generation can be dispatched and
virtually all economic wholesale transactions may
be realized without congestion under normal
operating conditions
19
The Policy cont’d…
 Transmission development should eliminate the need
for most Transmission Must-Run (TMR) Generation
• TMR is not to be considered as a substitute for
transmission development
• ISO to be given flexibility to consider TMR where economic
or an acceptable alternative to transmission
• TMR costs to be based on “cost of service” model
 Internal transmission should be reinforced to restore the
existing inter-ties to their full import/export ratings
• transmission internal to Alberta should be reinforced so
that under normal conditions the existing interconnections
can import and export on a continuous basis in
accordance with design capability
20
Since Policy Implementation…
 AESO has about $1 billion in transmission
investment approved and underway
 Major Projects Approved:
• 500 kV Edmonton to Calgary
• SW System Reinforcement
• City of Edmonton Reinforcement
• NW System Reinforcement
 Upwards of $3 billion in new transmission could be
required in the next 10 to 15 years
 Merchant Transmission – planning stage
• Montana Alberta Tie Line
• Northern Lights (major DC Transmission from
Northern Alberta to the Pacific NW in USA)
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Summary
 Industry/market structure established in 1996
and enhanced in 2003 has served Alberta well
 Merging of the market and transmission
functions within the ISO provided efficiencies
 Independence of the transmission function is
essential to develop competition for generation
 System operation has remained reliable
 The Transmission Policy has proven effective in
advancing the “needs” approvals
 The “energy only” market structure has
provided sufficient incentives for investment in
new supply
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