Capacity market transition
Alberta’s competitive electricity market is changing to ensure reliable power at reasonable cost to consumers
Alberta’s electricity market is transitioning from an energy-only market to a new framework that includes a capacity market. The Government of Alberta has begun a review of the capacity market and will be consulting with stakeholders and the AESO in the coming weeks. The Alberta Utilities Commission (AUC) is also reviewing the proposed ISO rules related to the capacity market. We look forward to working with the government and AUC on a framework that attracts new investment and continues to provide Albertans with reliable, reasonably priced power.
Why a capacity market is right for Alberta:
- Ensures reliability as Alberta’s electricity system evolves
- Increases stability of prices
- Provides greater revenue certainty for suppliers
- Maintains competitive market forces and drives innovation and cost discipline
Review of proposed ISO rules
The AESO filed its application with the Alberta Utilities Commission (AUC) on January 31, 2019 for approval of the first set of proposed ISO rules that are essential for the establishment and operation of the Alberta capacity market. The AUC is currently reviewing our application under Proceeding 23757 and a decision is expected by July 31, 2019. The AUC then has an additional 18 months to review and approve the first set of ISO rules.
To see the current set of proposed ISO rules, please visit the AUC website.
The Electric Utilities Act was amended in August 2018 to support Alberta’s transition to a capacity market. To review the EUA click here. To review the associated Capacity Market Regulation click here.
Capacity Procurement Process
The Capacity Procurement Process (CPP) is a competitive process that we use to procure capacity through an auction for an obligation period. Suppliers will compete to sell capacity and commit to having that capacity available three years in the future.
The first three auction cycles will include three phases: Base Auction CPP, Rebalancing Auction CPP and Performance & Settlement. The Base Auction and Rebalancing Auction include the same four stages that capacity market participants (CMPs) will follow: Initiation, Qualification, Pre-Auction and Auction.
Further details and timing for the first capacity auction cycle will be available on aeso.ca following a decision from the AUC on the first set of ISO rules in late July 2019. Subscribe to our stakeholder newsletter to receive updates as soon as new information is available.
See below for a brief description of each stage and phase in a capacity auction cycle. Further details can be found in our Capacity Market FAQ and in our Capacity Market 101 training course, available here.
Base Auction CPP Infographic
- Click here to see an infographic that details the sequence of events for a Base Auction Capacity Procurement Process, including key activities in each stage
- Click here to see a supplemental slide deck that provides further details on the activities shown in the infographic.
During this first stage of a CPP, the Capacity Market Auction Guidelines will be published on the AESO website, in addition to other key information necessary to participate in an auction. Capacity market participant (CMP) registration will commence during this stage and registered CMPs will gain access to the IT system required to participate in the capacity market.
During the Qualification stage, CMPs will submit applications and requests in accordance with the ISO rules to qualify capacity for participation in the capacity market auction. The AESO will review and evaluate all applications to determine qualification eligibility.
CMPs will make determinations regarding the participation of their qualified assets in this stage.
During the Auction stage, CMPs will submit offers and bids for one-year capacity commitments in a future obligation period. Obligation periods are 12 months long, running from November 1 to October 31. The obligation period for the first auction is expected to be November 1, 2021 through October 31, 2022.
Two types of auctions take place in a capacity auction cycle: base auctions and rebalancing auctions. Assets first offer to sell their capacity for a future obligation period in a base auction. A rebalancing auction occurs next and allows CMPs to make changes to their capacity commitments, and also allows the AESO to make changes to procurement volumes before the obligation period begins.
Performance & Settlement
This last phase in a capacity auction cycle includes the 12-month obligation period when CMPs with capacity commitments will make capacity available to the Alberta electricity grid in real time through the energy and operating reserves markets. This phase also includes performance assessments and settlement.
- Capacity market training
- Capacity market engagement
- Subscribe to our our stakeholder newsletter for updates