Transmission's New Role - Beyond Reliability

AltaLink is Alberta’s transmission leader, owning and operating 11,600 kilometres of transmission lines and approximately 260 substations. Serving 85 per cent of Alberta’s population, the cost of using AltaLink’s grid has reduced by more than 40 per cent since the opening of deregulation in 1996, while generation capacity in Alberta has risen by 38 per cent and demand has risen by 21 per cent.

After more than 20 years without a significant upgrade to Alberta’s transmission system, the province is positioned to move forward with much needed transmission development for the benefit of Albertans. Transmission has a new role in the electrical industry beyond its cornerstone focus on safety and reliability; transmission can also act to reduce customer’s costs by increasing system efficiency, enhancing market effectiveness, expanding access to the lowest cost generation and protecting customers from price shocks by accessing the most diverse generation fuel sources available.

To fully realize the goals of deregulation, customers will need to access the lowest cost generation sources, reduce their reliance on expensive Transmission Must Run (TMR) generation, continue to develop supply diversity and synergy through interconnections with other regions, and reduce the barriers to transmission investment.

In some circumstances, future transmission development will save customers more than the costs of development through increased efficiency on the province-wide grid. In fact, transmission improvement may go well beyond grid efficiency savings, providing Albertans with substantial generation savings.

However, before beginning the critical investment in the transmission system, three barriers to investment must be broken. Encouraging non-conflicted, independent transmission service providers is the first step. Independent transmission service providers, like AltaLink, have no internal competition for investment capital. Transmission solutions are therefore brought forward without the risk of adversely affecting the profitability of other business lines within the same organization.

The creation of clear, focused government policies on the development of transmission within any electric system is the second essential component to increasing transmission investment. Policies like the Alberta Transmission Development Policy help to stabilize transmission development, thereby securing investors in all sectors of the industry.

Strong regulatory leadership is the third important component required to increase transmission investment. Regulators have the ability to create a stable investment climate by ensuring competitive equity returns for transmission facility owners, enhancing bondholder security and collaborating with transmission owners to provide appropriate technological incentives. Regulators must recognize the vital new role of transmission and secure it for both today’s and tomorrow’s electricity consumer.

Transmission is the backbone of the power system – “the electricity highway.” Yet, transmission represents a very small part of the average utility bill in Alberta – between five and ten percent or less than cent per kW/h. However, despite its relatively small cost, transmission development will significantly improve the Alberta electricity market, creating greater efficiency and effectiveness for Alberta consumers and saving them money.

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• Transmission's New Role - Beyond Reliability