Alberta is changing the way it produces and pays for electricity.
Speaking at the Alberta legislature on Wednesday, Energy Minister Marg McCuaig-Boyd said the province is moving away from full deregulation to what’s known as a capacity market.
Power producers will be paid to build up capacity, even if it isn’t needed, to ensure there is always enough electricity in reserve.
“We are learning from the experts, other jurisdictions and industry input to ensure that we get the best system that delivers reliability at the best price,” McCuaig-Boyd said.
The minister said the move to a capacity system will ensure prices remain affordable as Alberta moves away from coal-fired electricity to natural gas and renewables such as wind and solar.
She added the government will work closely with industry experts during the transition to ensure “long-term stability and certainty”.
She also said the approach is expected to reduce market volatility.
“The system is used in the majority of the U.S. … and delivers reliable and affordable power to jurisdictions around the world.”
Capacity markets exist in New York, Maine, Pennsylvania and Michigan to name just a few states.