Starting on Monday, July 1, the province said it's implementing temporary rules to limit the practice of economic withholding, which is meant to lower power prices with the Market Power Mitigation Regulation and the Supply Cushion Regulation.

The government stated that these changes still allow power generators to earn revenue while ensuring Albertans have access to affordable and reliable power as Alberta’s government works to modernize the province’s electricity system.

"Alberta’s government is encouraging investment in the electricity market so that the province’s energy sector can continue to create jobs in the long-term while making sure electricity is affordable for Albertans."

The province said that the new temporary regulations are based on recommendations from Alberta’s Market Surveillance Administrator (MSA) and the Alberta Electric System Operator (AESO).

The Market Power Mitigation Regulation is meant to address economic withholding while ensuring generators make a reasonable rate of return by limiting the offer price for large generators if their net revenues exceed a monthly predefined threshold.

"The Supply Cushion Regulation ensures our grid will remain reliable by requiring natural gas power plants to be online in times of high demand if there is not enough power supply to meet Alberta’s needs," the province stated in a news release.

According to the provincial news release, the current market rules around economic withholding were designed two decades ago, when coal was the primary source of power generation.

"The rules did not account for what Alberta’s power supply mix would look like today. Alberta’s accelerated coal phaseout significantly reduced the amount of reliable baseload power, decreasing the amount of competition in Alberta’s market. This led to Albertans seeing prices spike on their power bills, as competition was no longer able to offset the negative impacts of economic withholding."

In the government's view, this changed when the accelerated phaseout of baseload coal, and emphasis on intermittent renewables, altered Alberta’s supply mix.

"The negative impacts of economic withholding would normally be offset by having adequate competition in the market. However, the accelerated coal phaseout significantly increased the impact of economic withholding on ratepayers, beyond the original intent of the policy."

Both the temporary regulations were established in March 2024 and are set to expire in November 2027.

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