Under provisions set out in the Electric Utilities Act, the Balancing Pool has an obligation to ensure that any net amount in the Balancing Pool accounts that is greater or less than $0 is included in the Alberta Electric System Operator’s (AESO) Tariff. Therefore, each year the Balancing Pool is required to forecast its revenues and expenses to determine any excess or shortfall of funds. Based on this forecast, the Balancing Pool determines an annualized amount that will be paid or “allocated” to electricity consumers (in the case of an excess of funds) or collected from or “charged” to electricity consumers (in the case of a shortfall of funds) over the year in accordance with the Balancing Pool Regulation. This amount is referred to as the Consumer Allocation/Charge and applies to all market participants who receive system access service from the AESO in accordance with Rider F of the AESO’s Tariff.
Consumer Allocation 2022
The Consumer Allocation for 2022 has been calculated in accordance with the requirements set out in the amended Balancing Pool Regulation Section 5.2(1). A consumer charge of $2.20/MWh has been set for an estimated annual amount of $131 million.
Any cash shortfall that the Consumer Allocation is unable to satisfy will be financed by funds obtained through the loan agreement with the Government of Alberta and recovered from electricity consumers over the period of January 1, 2021 to December 31, 2030.
Consumer Allocation 2001-2021
In 2001, $1.1 billion was paid out to consumers from the funds derived from the proceeds of the initial Power Purchase Arrangements (PPA) auction through the Consumer Allocation in the form of a credit. In 2002, an additional $1 billion from the subsequent sale of shorter term financial swap contracts associated with the PPAs held by the Balancing Pool was also paid out to consumers through the Consumer Allocation in the form of a credit.
From 2002-2005 the Balancing Pool operated on a break-even basis. From 2006 to 2016, the Balancing Pool paid out an additional $2.6 billion to consumers via the Consumer Allocation in the form of credits on consumer bills..
Following the PPA terminations in 2015 and 2016, the Government of Alberta enacted changes to the Electric Utilities Act in December 2016 that allow the Treasury Board to make loans to the Balancing Pool at the recommendation of the Minister of Energy and to guarantee the Balancing Pool’s obligations.
The Government of Alberta also enacted changes in 2016 to the Balancing Pool Regulation that established the Consumer Allocation for 2017 at a rate of $1.10/MWh for an estimated annual collection of $65 million. From 2017 to now it has been necessary for the Balancing Pool to implement a charge through the Consumer Allocation to recover the losses associated with the PPAs.
The Consumer Allocation for 2021 was set at a charge of $2.30 per MWh, which amounted to approximately $1.38 per month on the average household bill (based on monthly consumption of 600 kwh).
The following table lays out the rate at which consumers were either rebated or charged and the total dollars paid out by the Balancing Pool.