The History of Energy Deregulation in Alberta

Many people across North America enjoy energy choice by living in a deregulated energy market. However, Alberta residents are especially fortunate because they have access to energy choice in both the gas and electric markets.

The Deregulation of Alberta's Natural Gas Market

Alberta residents have enjoyed energy choice in the province's gas market since the signing of the Natural Gas Markets and Pricing Agreement in 1985. Signed October 31st of that year, the so-called "Halloween Agreement" dictated that natural gas prices would now be decided by the forces of the open market. Before the signing of the agreement, the price of gas was set by agreements between the provinces of Alberta, Saskatchewan, and British Columbia, as well as the federal government.

The agreement shifted market pricing to the laws of supply and demand and was seen as a way to increase natural gas production and exports in the provinces. Canada is the world's third-largest producer of natural gas (after the United States and Russia), and 75-80% of those gas products are produced in Alberta. The Halloween Agreement's signing ignited rapid growth and pipeline expansion in the natural gas industry throughout the 1990s, occurring after decades of stagnant growth.

Today, the daily price of gas can be influenced by several factors. In addition to standard supply or demand, weather conditions, including coastal storms or frost, can affect the short-term price. Long-term prices are dictated by the state of the economy in Alberta, environmental concerns, and total population growth.

The Deregulation of Alberta's Electricity Market

Eleven years after the Natural Gas Markets and Pricing Agreement, Alberta became the first province to deregulate its electricity market when it passed the Electric Utilities Act in 1995. The act took effect January 1, 1996, creating a power pool in Alberta. Managed by Alberta Electric System Operator, the power pool creates an electricity marketplace in the province where new prices are set each and every hour by matching demand with the lowest-priced supply.

The distribution, transmission, and retail sale of electricity remained regulated under the act, and utility companies in the market are required to separate these functions to comply with accounting the regulatory guidelines.

The act expanded the parameters established by competitive wholesale markets in the 1990s and offered full retail access in 2001. The Regulated Rate Option was also installed to protect consumers from price volatility in the energy market.

The Choice is Yours!

As an Alberta energy consumer, the deregulation of both the gas and electricity markets in the province has left you with choices many other Canadians don't enjoy. Now it's up to you to make the most of your opportunities and exercise your rights to enjoy energy choice.