Energy deregulation in Alberta

Updated on March 29, 2024

4-minute read

Energy deregulation in Alberta

Updated on March 29, 2024

4-minute read

A deregulated energy market gives people the freedom of choice. In Alberta, we have a deregulated market for natural gas and electricity. What does that mean, and how do we benefit from it?

Here is an overview of how Alberta’s energy market evolved and how it impacts home and business owners today.

photo of the Alberta legislative building
photo of the Alberta legislative building
photo of the Alberta legislative building

The deregulation of Alberta's natural gas market

The official deregulation of Alberta’s energy market is known as the Halloween Agreement. It took effect on October 31, 1985, with the Natural Gas Markets and Pricing Agreement.

Since then, Albertans have enjoyed having a choice in the province’s natural gas market. Before the Halloween Agreement, regulatory bodies in Alberta, Saskatchewan, British Columbia, and the federal government had set natural gas prices. Now, the open market dictates natural gas prices.

The Halloween Agreement shifted market pricing to the laws of supply and demand. That increased natural gas production and exports in the provinces throughout the 1990s. Energy deregulation:

  • Affected Alberta, British Columbia and Saskatchewan
  • Allowed oil and natural gas prices to be negotiated.
  • Separated the sales of gas from the sales of transmission services.
  • Established open access for shippers on natural pipelines.

Current daily natural gas rates in Alberta are established by the Natural Gas Exchange (NGX). The NGX provides an open exchange floor where prices can be set based on supply and demand.

Depending on the contract, agreed-upon gas rates are set to last for one day, the rest of the month or several months. NGX typically sells more natural gas than is produced in Alberta on a given day. So, energy deregulation in Alberta has increased the movement of natural gas prices and prompted more production.

The deregulation of Alberta’s electricity market

Eleven years after the Halloween Agreement, Alberta became the first province to deregulate its electricity market. Here is the timeline for Alberta's deregulated electricity market:

  • 1995: Alberta passes the Electric Utilities Act, which took effect on January 1, 1996: Alberta’s deregulated electricity market kicks off!
  • 1996: The Electric Utilities Act takes effect, and the Power Pool of Alberta (PPA) is born. The PPA was a non-profit entity responsible for dispatching energy to the electricity utility providers.
  • 2000: The Power Purchase Arrangements allow energy dispatching rights to be auctioned off to new buyers. This change allowed more competition and less regulation in the electricity market.
  • 2001: Alberta's electricity market reaches complete deregulation.
  • 2003: Alberta Electric System Operator (AESO) starts managing the entire deregulated electricity market in Alberta.  

The AESO promotes a fair, efficient, and openly competitive electricity market. Electricity providers calculate Alberta electricity rates and send them to the Alberta Utilities Commission (AUC) for review. Under AESO's direction, the AUC is responsible for ensuring consumers pay reasonable rates for their electricity. These steps are in place to promote market competition within Alberta's deregulated electricity market and protect home and business owners from wild rate fluctuations.

Learn more about the major players in Alberta’s energy market.

Energy deregulation means you have more control!

The deregulation of gas and electricity markets gives home and business owners more choice and power. Now, you can choose your energy provider and shop around for rates and service features. This freedom of choice feels good and can help you save money!

While deregulation is a positive thing, you still need to keep an eye on your bills and energy use. Reducing energy use is good for the planet, your home and your wallet. If you’re shopping for a new natural gas and electricity provider, check out our best energy plans.

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