Status: Closed July 2019
Ministry responsible: Energy

Overview

The Alberta government consulted with a cross-section of stakeholders to determine whether the province should maintain the current energy-only market or create a capacity market for electricity.

Both are proven market-based approaches to the sale and delivery of wholesale electricity.

How an energy-only market works:

  • generators are paid for the electricity they produce based solely on the wholesale price of electricity, which fluctuates
  • these companies decide on the type of generation they produce and on the location of facilities

How a capacity market works:

  • private power generators are paid through a mix of competitively auctioned contracts which pay their fixed capital costs and revenue from the spot market
  • a capacity market requires a government-appointed entity – the Alberta Electric System Operator, in Alberta’s case – to plan, approve and administer the contracts to buy the capacity needed to meet expected demand

Outcome

Alberta is maintaining an energy-only market as a result of overwhelming stakeholder support.

Why an energy-only market is best for Alberta:

  • offers structural and administrative simplicity
  • has a proven track record for providing affordable electricity in Alberta
  • has a proven track record for providing a reliable supply of electricity in Alberta
  • is already established and understood by investors, which offers them greater certainty regarding its future performance
  • is supported by the majority of electricity stakeholders and consumer groups

Next steps

Government will table the necessary legislation and amend regulations to stop the implementation of the capacity market as soon as possible.

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