Key Features of the Restructured Energy Market

Locational Marginal Pricing (LMP) ensures electricity prices vary by location based on real-time grid conditions, including system line losses. This helps guide investment, reduce congestion and make better use of existing infrastructure. Most consumers will continue to pay a single Alberta-wide price. Eligible large customers will have a one-time option to choose to pay their local price instead.

• Energy market offer cap: $1,500/MWh, increasing to $2,000/MWh in 2032
• Overall price cap: $3,000/MWh, governed by scarcity pricing curve
• Price floor: remains $0/MWh, dropping to –$100/MWh in 2032

This is a new reliability service to compensate generators that can quickly ramp up their output, improving grid stability during real-time changes. The cost of this new reliability service will be shared between consumers and generators, based on the extent to which each causes the need for this service.

Market power mitigation ensures that when there is limited competition, generators cannot use market power to maintain prices above fair levels. These rules protect consumers while allowing cost recovery to attract investment.

Expanding participation eligibility to more facilities, along with hourly and simplified procurement, will increase competition in Alberta’s existing day-ahead market for operating reserves.

If forecast supply is insufficient, the AESO can trigger the reliability unit commitment process to turn on slow-to-start power plants in advance—ensuring reliability with minimal market disruption.

More advanced IT solutions, including security-constrained economic dispatch, will help ensure reliable grid operations and dispatch as conditions become more complex. Starting in 2032, the system will settle payments more often to align with dispatch instructions which will make price signals clearer and more attractive to flexible generators and demand response.

To ease the transition, temporary financial transmission rights will offset congestion pricing impacts for generators that made investments under the current market framework. These will be phased out over eight years. Long-term financial transmission rights will be discussed through engagement in fall 2025.