Alberta is the only Canadian Province with a fully competitive wholesale/retail electricity market. Generation has been deregulated, save for siting issues, while wires remain regulated, with both their costs and permitting requiring approval of the Alberta Utilities Commission (AUC or Commission). The Alberta Electric System Operator (AESO), a statutory, not-for-profit corporation, facilitates the wholesale market and is also responsible for the safe, reliable and economic planning and operation of the transmission system.1

Until December 9, 2009, two regulatory approvals from the AUC were required to construct and operate new transmission facilities in Alberta. First, the Electric Utilities Act (EUA) required the AESO to obtain approval from the Commission of the need for an expansion or enhancement of the system. If granted, a Transmission Facility Operator (TFO) then required a permit and licence from the AUC to construct and operate specific facilities to meet that need. In both cases, the Commission was required to make its decision having regard to the public interest; insofar as the AESO’s application was concerned, the Commission was to consider the AESO’s assessment of need to be correct, unless it was satisfied that such assessment was technically deficient or that approval of the need would not be in the public interest.

Effective December 9, however, this two-step regime no longer applies to a discreet class of transmission facility, known as Critical Transmission Infrastructure (CTI). By virtue of amendments to the legislation2, CTI includes four specific projects indentified in the EUA itself, as well as transmission facilities that are included in an AESO plan and which may be designated by the Lieutenant Governor-in-Council, or the Cabinet. As such, CTI facilities may include interties to other jurisdictions, transmission lines which serve areas of renewable energy, double-circuit facilities energized at 240 kilovolts (kV), transmission facilities that exceed 240 kV, or those which, in the opinion of the Cabinet, are critical to the safe, reliable and economic operation of Alberta’s transmission system.

In short, and while noting that the two-step regime remains fully in force for other proposed expansions or enhancements of the transmission system, the new legislation eliminates the requirement for AUC approval of the need for CTI3, and assigns that responsibility to the Government of Alberta.

The legislation effecting these changes was first tabled by the government in June, 2009 as Bill 50, and was subsequently the subject of much heated debate and discussion, far too complex to be fully addressed in this space. Much of the debate is a matter of public record, in any case. Those opposed to the change were critical on several fronts. For example, they argued that eliminating the first AUC process/approval removed the ability to publicly test whether these projects are in fact required to meet Alberta’s needs, in favour of a unilateral determination by government on the expenditure of billions of dollars to be ultimately paid for by Albertans. A further criticism was that short-term political interests could drive these CTI projects, as opposed to reasoned decision-making by the independent Commission that would more properly reflect a transparent assessment of the longer term benefits and costs to the Province of these projects.

In support of the changes in the legislation, the Alberta government and others emphasized, among others matters, the requirement for the expeditious approval of transmission facilities to enable the continued growth of generation to serve Alberta’s fast growing power market. Supporters also argued that the changes are required to expeditiously address growing reliability concerns about the aging and often constrained transmission system in Alberta, and to harness increasing wind power developments in remote areas of the Province.

As noted, the debate was heated, and often aggressive. In some respects, it was clearly driven – on both sides – by the lengthy regulatory proceedings undertaken between 2004 and 2007 concerning the AESO’s proposal to enhance the transmission system by adding a 500 kV line between Edmonton and Calgary. While the AESO’s original need application was approved by the Commission’s predecessor, this project was derailed in late 2007 by reason of procedural irregularities on the part of the regulator, which led to the setting aside of all decisions and proceedings concerning that project.

However, that chapter ended with the proclamation of the legislation, and the relevant question for all concerned is: what now? Little is known with absolute certainty – indeed, there have been some suggestions that the new legislation could itself be the subject of a judicial challenge. What is clear, however, is that the legislation requires the AESO to direct TFOs to make timely applications to the Commission for the necessary approvals to construct and operate CTI.4 Notable among the projects already designated as CTI are not one, but two, HVDC lines between the Edmonton and Calgary regions, each having a minimum initial capacity of at least 1000 megawatts.

The changes in the legislation make it clear that, in a hearing or proceeding on specific CTI facilities, the Commission may not consider whether they are required to meet Alberta’s needs, and neither can it refuse to approve such an application on the basis that the facilities do not meet Alberta’s needs.5 The Commission’s own legislation contemplates that it must continue to consider whether applied-for CTI facilities are in the public interest having regard to their social, economic and environmental effects.6 Here, a relevant factor may be the declaration which is now found in the Hydro and Electric Energy Act – the basis of such CTI facility applications – that the construction and operation of CTI is not only required to meet Alberta’s needs, but is also in the public interest.7

The Commission retains its authority to require changes in the plans and specifications for such CTI facilities, or their location and route, but the legislation also enables the government to prescribe by regulation principles and criteria to which the Commission must have regard when it determines the specific location or detailed routing of CTI facilities. These regulations have yet to be promulgated.8

Transmission facility applications in Alberta are currently subject to extensive public consultation requirements established by the Commission. If anything, the new legislation serves only to underscore the importance of those obligations. Commission hearings on CTI facility applications are likely to break new ground, and are sure to engender a further chapter of heated debate and discussion on various issues, not the least of which may be the continuing obligation of the Commission to determine whether applied-for CTI facilities are in Alberta’s public interest.