Three key power-market concepts:

• Prices track supply and demand. When supply is tight (for example, because of generator outages or extreme weather), wholesale prices rise. When supply is abundant (for example, during strong wind or sunny periods, or when new capacity comes online), prices tend to fall.
  
• Private investors carry generation risk. In Alberta’s energy‑only market, developers earn revenue largely from the energy they actually produce, so they’re incentivized to build efficient, well‑run plants. That discipline can help keep wholesale costs competitive over time (fuel and carbon costs still matter).
  
• Transmission enables competition. Transmission lines move power to consumers and connect new suppliers. More accessible supply generally deepens competition and can put downward pressure on prices. Transmission costs are recovered through the AESO tariff approved by the AUC.

Who oversees Alberta’s electricity market:

• Alberta Electric System Operator (AESO) – Operates the real‑time wholesale market (the power pool) and the provincial grid; plans the transmission system; and develops ISO rules (subject to AUC approval). It provides open, non‑discriminatory grid access.
  
• Market Surveillance Administrator (MSA) – The independent market monitor. Promotes effective competition and enforces compliance with legislation, market rules, and reliability standards.
  
• Alberta Utilities Commission (AUC) – Alberta’s independent, quasi‑judicial regulator. Reviews and approves the AESO’s ISO tariff and rule changes, adjudicates market‑related proceedings, and oversees utility rates and facilities.
  
• Office of the Utilities Consumer Advocate (UCA) – Provides consumers with impartial information about retailer choices, the default rate, and consumer rights; also participates in AUC proceedings on behalf of small customers.

Facts about Alberta’s market (latest snapshot):

• Installed capacity and additions. By year‑end 2024, Alberta’s installed generation capacity reached 23,122 MW, up 2,345 MW in 2024. Of the new capacity, ~976 MW was gas‑fired and ~1,369 MW was wind and solar.
  
• Coal‑to‑gas transition completed. Alberta’s last coal units were converted/retired in June–July 2024, completing the coal phase‑out and shifting the fleet toward natural gas and renewables.
  
• Prices and demand. Average pool price fell from $133.63/MWh (2023) to $62.78/MWh (2024) as new supply came online and gas prices eased. Average Alberta Internal Load rose 2.6% year‑over‑year.
  
• Interties. Alberta exported more electricity than it imported in every month of 2024; on average, exports exceeded imports by ~212 MW over the year.

Electricity is complicated. Would an analogy help?

• Producers are like airlines. They compete to offer “seats” (megawatt‑hours) in a market. If they run inefficient operations, they struggle to recover costs and may exit.
  
• Wires are like runways. We don’t duplicate them. One centrally planned system (the transmission network) serves everyone, and regulated tariffs spread those costs across users—similar to airport fees embedded in tickets.
  
• Retailers are like tour operators. They buy from the wholesale market and package options for customers—fixed‑rate, variable‑rate, renewable (“green”) content, etc. If you don’t choose a retailer, you’re served on the Rate of Last Resort (RoLR)—the province’s fixed default electricity rate introduced January 1, 2025 (replacing the RRO).

Why restructure the market in the first place?

• To harness new, scalable technologies. In the 1990s, gas turbines and wind scaled down in size and cost, enabling many firms—not just utilities—to build projects and compete.
• To shift investment risk from consumers to developers. In regulated models, consumers can end up carrying the risk of large capital projects. As a cautionary example, Ontario’s 1999 restructuring left $38.1 billion in Ontario Hydro debt and liabilities, with $19.4 billion designated as “stranded debt” recovered from ratepayers. Alberta’s competitive, energy‑only design leaves most generation investment risk with private developers.
• To let price competition discipline costs. Generation is the largest cost driver in a power system; open competition helps reveal efficient prices and investment choices.
• To create customer choice. A competitive retail market allows customers to pick products that fit their needs (long‑term fixed price, green add‑ons, time‑varying or variable rates) or remain on the default RoLR.

What’s new for 2025 and beyond:

• Market design update. In August 2025 the AESO released the final design for Alberta’s Restructured Energy Market (REM), a modernization of the current energy‑only framework. Implementation steps—including related ISO rule updates—are now underway.