Impacts of deregulation on Alberta’s electricity prices Introduction In the last decade a number of electricity markets have been undergoing restructuring shifting from a single regulated monopoly to a deregulated competitive market in which power is now a traded commodity. Any energy sector has several different types of market structures in which firms can operate. The type of structure influences the firm’s actions, the amount of profits it can gain and whether it is efficient. In the past electricity markets were a highly regulated monopoly type structures defined by a single seller within the market, in contrast, a competitive market is economic market conditions with a number of sellers in the market. Alberta has a very short history …show more content…
This paper will examine a history of Alberta’s deregulation, restructuring initiatives, how it influenced electricity prices, along with other factors contributing to electricity prices in Alberta and a comparison of Alberta’s electricity price to other provinces that have not undergone restructuring. I will also examine the effects of deregulation on pool prices and how this relates to Alberta’s electricity prices. History- The Electricity Industry in Alberta During the 20th century North American electricity generation was owned by private investors both in Canada and the US. Since the early 1960’s most electric generation utilities in Canada came to be publicly owned through vertical integration of generation, transmission and distribution. Alberta differed slightly as they never had a single, vertically integrated, government owned monopoly that supplied electricity to the province. Alberta was composed of three large generation utilities, Alberta Power, TransAlta Utilities and Edmonton Power. Alberta Power (now ATCO) and TransAlta Utilities was investor owned rather than public entities and the other major generation utility Edmonton Power (now EPCOR) are municipally owned by Edmonton. Of these three utilities, …show more content…
In 1998, the average price for the year was $33.02/MW while in 2000 the average price was $133.21/MW. The median price in 1998 was $27.75/MW compared to $68.70/MW, which more than doubled in 2000. Rising prices were associated with deregulation so the government of Alberta decided to place a hold on the plans for a deregulated retail market. Financial contracts for the years 2001 to 2003 on the energy from the PPAs that did not sell in the original auction in August were sold at a second auction. In 2001 retail prices were capped and effectively stalled the restructuring of the demand side of the market. Following government action electricity prices ranged from $117 per MWh for base-load power in 2001 to $153 per MWh for peak periods with an average of $122 per MWh. For 2002, the average price was $67 per MWh and for 2003 it was $60 per