A lineman reaches for a lift from a helicopter during work on power lines near Carstairs, Alta., on July 23, 2014.Jeff McIntosh/The Canadian Press
Alberta’s electricity act is unfair, undermines reliable power supplies, and must be changed to deal with widespread problems that have plagued the grid this year, Suncor Energy Inc. SU-T says.
The charges are contained in a complaint by Calgary-based Suncor filed to the Alberta Utilities Commission last month. It’s the latest in a string of woes that have beleaguered the province’s power market and the independent body that operates it.
Suncor, one of Canada’s largest oil producers, is a massive industrial power consumer, including at its oil sands sites in the province’s north. It generates some electricity for its own use, with the excess power sold into the Alberta power market.
Its complaint centres on one specific part of the Electric Utilities Act, called Rule 203.1.
Under the rule, generators must always offer the maximum volume of megawatts they are physically able to supply to Alberta’s power market. It’s called the “must offer obligation.”
Power importers, however, are under no such obligation; they can offer any amount of megawatts to the market they please, or none at all. (Alberta imports power from British Columbia, Montana and Saskatchewan to supplement generation in the province.)
Suncor argued in its complaint that the rule is a double standard that creates an unfair, uncompetitive and inefficient market that effectively subsidizes importers. It also said Rule 203.1 results in substandard supply for consumers, who have paid on average more than $200-million a year through the electricity market to guarantee adequate supply that has not been provided.
Suncor’s grievance follows a February complaint by a Berkshire Hathaway-owned energy company, Berkshire Hathaway Energy Canada (BHEC), which alleged that Alberta discriminates against energy imports from the United States. The province’s energy market watchdog last month launched an investigation into whether the Alberta Electric Systems Operator (AESO) is providing a reliable and fair system stemming from parts of the BHEC complaint.
Suncor, in its complaint, pointed to what it said is a very real consequence of Rule 203.1 – a January emergency alert issued by the AESO.
Grid alerts are issued when the power system is under stress and the AESO is preparing to use emergency reserves to meet demand. For days, the AESO asked Albertans to conserve electricity as the grid struggled during a brutal cold snap. The provincial government took the unprecedented step of triggering the emergency alert system, and Albertans’ cellphones and televisions blared warnings to residents telling them to limit electricity use immediately.
In early April, thousands of Albertans grappled with rolling blackouts when the electricity grid again came under extreme pressure from a supply crunch.
Suncor said importers chose to limit their participation in the Alberta electricity market during the January crisis, even though more than 250 megawatts of excess import capacity was available.
“Because importers are not committed to Alberta there is no guarantee that they will submit offers in any period, including critical periods,” it said.
“Simple math suggests that had importers been subject to the Must Offer Obligation that all generators are subject to, it is likely that the January 2024 emergency alert would have been avoided.”
Suncor argued that power imports from outside the province should be subject to a tariff, called a “non-commitment recovery charge,” to level the playing field. It also wants the act to be changed to make importers subject to the same “must offer obligation” as generators, thereby guaranteeing power supply to the grid.
The price of power in Alberta at any given time is called the pool price. It’s intended to pay generators for the delivered energy and to help companies recover the cost of investment in infrastructure that will provide power to Alberta’s grid. By not imposing a tariff nor a commitment obligation on importers, but allowing them to receive the pool price, importers are being paid as if they have provided a capacity commitment, Suncor said.
Suncor has spent more than two years trying to raise the issue with the power system operator, it said, but “there has been no indication that the AESO would address the issue in a timely fashion or, in fact, at all.”
The oil company listed a number of meetings between Suncor and AESO executives about Rule 203.1, but said it was left with little choice but to file a complaint because the AESO has repeatedly said it does not consider the rule a concern.
Heartland Generation, a privately held power generator with assets in Alberta and B.C., was, as of Tuesday afternoon, the only company to register as a participant that may be adversely affected in proceedings that stem from Suncor’s complaint.