ENMAX QUICK BITES Alberta s electricity market

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1 In Alberta, electricity is a commodity with prices set by supply and demand. It is very costly to store electricity, so generation facilities produce it in real-time. The Alberta Electric System Operator (AESO) is responsible for monitoring the power grid and balancing supply and demand. As such, the AESO directs generation facilities on and off to meet demand for electricity as it is needed.

2 Every hour, electricity generators offer a price to the AESO for the electricity they produce. Prices are set per megawatt hour (MWh). The AESO accepts the lowest price of electricity to meet demand and those generators offering at that price then produce and provide their electricity. This system marginal price is posted on the AESO website as updates occur.

3 The demand for electricity varies depending on weather, temperature, time of day, time of year and other factors. The amount of electricity supply is affected by events such as generation facilities experiencing a planned outage for maintenance, or an unplanned outage due to unforeseen circumstances.

4 Electricity used by industry accounts for approximately 65 per cent of demand in Alberta. Residential demand for electricity peaks between 4 p.m. and 8 p.m. daily as Albertans return home from school or work. Electricity prices tend to increase as the demand for electricity grows in the late afternoon and early evening hours, then tend to fall off in the late evening and early morning hours.

5 Electricity generators can offer to sell their electricity between $0 to $1,000 per MWh. Base load generators, such as coal-fired plants, tend to run continuously as they can take several hours, or even days, to start-up. Peaker facilities are often natural gas-fired and have the ability to come on for short periods of time typically during peak demand for electricity as they can start-up in a matter of minutes.

6 Rendering of the National Music Centre Wind electricity is a price taker as it can only be generated when the wind blows. For this reason, wind electricity is offered into the market at $0 per MWh. This means that if the hourly price of electricity is $40 per MWh, wind power generators will also receive $40 per MWh. The result is that wind energy is used as it s produced.

7 Periods of very high electricity demand are usually associated with extreme hot and cold temperatures, typically experienced in July and January. Electricity prices near the $1,000 per MWh cap can occur during very high electricity demand, usually for very short periods of time, and typically in circumstances where there s also unplanned generator outages.

8 Generators sell their electricity to the AESO where electricity retailers can purchase it as required to meet customer demand. Although electricity retailers have the option to purchase electricity as required, many purchase electricity through other market transactions including long-term contracts and short-term purchases with generation companies.

9 Residential and small business customers are charged for their electricity in kilowatt hours, which are one-thousandth of a MWh. Customers who ve not entered into an electricity contract with a retailer are subject to fluctuating electricity prices through the default Regulated Rate Option (RRO). Customers can avoid fluctuating electricity rates by entering into a fixed rate* energy agreement such as one offered through EasyMax by ENMAX Energy Corporation. Note: You can choose any retailer listed at or at Electricity delivery to your home or business isn t affected by your choice of retailer.

look A closer Have you ever wanted to look into what makes up electricity prices and find out how the electricity market works? at electricity prices

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