On October 1st, members of Alberta’s Progressive Conservative (PC) Party elected their new leader and Alberta’s new Premier, Alison Redford. The Premier has advised Albertans that a general election will be called in 2012, giving Redford little time with her newly appointed cabinet to implement her energy strategy which was a key pillar of her leadership platform.

The Strategy

Redford envisions Alberta at the centre of the international energy industry, promising to position Alberta as a global leader in sustainable hydrocarbon production, and the global leader in renewable energy production.  While supportive of the Ethical Oil characterization of Alberta’s oil sands, Redford would promote (and to a large degree defend) Canada’s energy resources in Northern Alberta by “telling the story” of the success achieved to date in environmental regulation and improvements and technical innovation.

For Redford, “sustainable hydrocarbon production” puts greater emphasis on environmental stewardship by promoting energy efficiency, research and technical innovation and collaboration, and regulatory and monitoring systems of “the highest standard” which would function independently of both government and industry.  Redford’s recent media comments and the rebranding of the environmental portfolio as the Ministry of Environment and Water, suggests an increased emphasis on water issues and protection of the Province’s water resources.

The proposed shift in Alberta’s energy strategy from the conventional hydrocarbon sector to a greater emphasis on renewable energy sources would leverage current revenues generated from conventional sources “to ensure that Alberta remains a leader when the shift to renewables occurs on a large scale.” The strategy, to date devoid of any suggestion of subsidies or subsidized tariff rates for renewable generation, involves establishing an authority to direct government involvement in renewable energy, operating in partnership with the academic and private sectors, promoting education and research initiatives, and updating the Alberta Electric System Operator’s (“AESO”) terms of reference to facilitate connection of renewables to the electricity grid, creating greener energy choices for consumers.

Alberta Land Stewardship Act

The Alberta Land Stewardship Act (“ALSA”) is the Government of Alberta’s primary tool for the regulation of land use management (see: http://www.gowlings.com/KnowledgeCentre/enewsletters/energy/HtmFiles/V9N04_20110721.en.pf.html?lang=0). Redford’s leadership campaign included a proposal to suspend the ALSA on account of the controversy over its impacts on real property rights, until the contentious issues of compensation, consultation and access to the Alberta courts are more adequately addressed.

Electric Transmission Infrastructure

Premier Redford has also questioned the Electric Statutes Amendment Act, legislation which empowered the Government of Alberta to (i) designate specific transmission projects and lines as “critical transmission infrastructure” thereby bypassing the AESO “needs” application to the Alberta Utilities Commission (“AUC”), and (ii) requiring the AESO to procure certain of that critical transmission infrastructure on a competitive basis.

Under the Electric Statutes Amendment Act, the Government of Alberta has designated four transmission projects as “critical” including: (i) two high-voltage lines from the Edmonton area to the Calgary area; (ii) a line from Edmonton to the Heartland (Ft. Saskatchewan) Region; (iii) a line from west of Edmonton to the Fort McMurray area (supporting oil sands development) and from the Fort McMurray area to the Heartland region connecting oil sands cogeneration facilities to the provincial grid; and (iv) reinforcement of the grid in the Calgary region.  The Premier has confirmed her support for the development of the Edmonton to Heartland line, and for one of the two Edmonton to Calgary lines, but has suggested a reconsideration of whether the other transmission projects are indeed “critical”. The AUC has completed hearing the Heartland facilities application, and a similar application to the AUC for the Calgary region reinforcement, given the lack of public objections, will be decided without a hearing.

With AUC facility applications for the two Edmonton to Calgary transmission lines scheduled to go to their respective hearings on November 7, 2011 and January 16, 2012,  further legislative amendment would be required on a priority basis if the Premier’s reconsideration of these transmission lines is to occur without wasted regulatory effort.

Appointments

Premier Redford has appointed Ted Morton, who ran against her in the PC leadership race, as her Minister of Energy.  Mr. Morton was Finance Minister in the Stelmach government, and was previously the Minister of Sustainable Resource Development.  In his new ministry, Mr. Morton will play a key role in advancing export avenues for Alberta’s bitumen, including increased transportation capacity to the U.S. and to Canada’s west coast en route to Asia.  Both the Premier and Mr. Morton are avid supporters of the proposed Keystone XL pipeline, running essentially from Alberta’s oil sands to the U.S. Gulf Coast (which is anticipated to receive approval from the U.S. Department of State before year-end).  Both also support development of Enbridge’s proposed Northern Gateway pipeline from Edmonton, Alberta to Kitimat, B.C. and the negotiation of requisite economic benefits agreements with the First Nations living along the proposed route.  (See “Bringing Bitumen to Market”: http://www.gowlings.com/KnowledgeCentre/enewsletters/energy/HtmFiles/V9N03_20110510.en.html#5).

Mr. Morton has also acknowledged the importance of promoting development of Alberta’s liquefied natural gas (“LNG”) sector by the creation of access to Asian markets via British Columbia’s west coast, a goal that was advanced earlier this month when the National Energy Board granted a LNG export licence to the Kitimat LNG project.

Gary Mar, who lost the PC leadership race by a slim margin, has been appointed by Premier Redford as Alberta’s trade representative to Asia.  Mr. Mar was Minister of  Health and Wellness and Minister of Education in the Klein government and then served as Alberta’s trade envoy to Washington under Premier Stelmach.  This important appointment further cements Alberta’s commitment to expanding access of the Alberta energy industry to new opportunities in diversified markets.

Conclusion

While Premier Redford is not required to call an Alberta provincial election until 2013, the likelihood of a much earlier call is high.  How the Redford government implements its energy strategy will go some way in assisting the Alberta electorate in its decision on whether to continue and extend the current 40-year PC mandate.