AESO may be an acronym you’ve heard when looking up different energy-related topics or looking into power outages. AESO is seen across the board when it comes to energy and power, but most don’t know what it stands for or what it does. This post will explain what AESO is, what it does, how it works, why it’s important to all Albertans, and how it correlates to the Alberta provincial grid overall. This article will have acronyms used that as well are used within the electrical field and will be described when first mentioned. A glossary of terms used can also be found here.
AESO is an incredibly important part of electricity and the power grid in Alberta, helping all Albertans get their power and have it also come back up sooner when it goes down, such as during a storm, blizzard, or during construction mishaps.
What is the AESO and what do they do?
AESO stands for the Alberta Electric System Operator. The AESO oversees managing and operating the provincial power grid and is a not-for-profit organization with no financial investment into the industry while working together with the industry partners and government to ensure that reliable power is available when it’s needed most.
The independent System Operator, established in 2003 under the EUA (Electric Utilities Act) of the Province of Alberta, is a corporation that operates under the name of AESO, the Alberta Electric System Operator. Their mandate is derived from the EUA and related regulations. They’re also governed by its board which is comprised of individuals appointed by the government of Alberta, and each member/individual must be independent of any person having a material interest in the Alberta electric industry. AESO bylaws, the EUA, the Board Charter, and any related governance documents set out the general responsibilities of the board in that regard, as the Board is actively involved with the AESO executive planning and budgets. They adhere to best-practice governance principles when fulfilling its mandate to act in the public interest of all Albertans.
Being actively involved with the AESO executive in the strategic planning process and approving the organization’s Strategic Plan, the annual Business Plan and Budget, and its annual corporate objectives and key results (OKRs), makes it essential for how it runs. The Board also oversees risk management and AESO executive succession planning and compensation, assessing the organization’s performance on an annual basis. Members are required to act in good faith and with sound judgement on all matters that affect the organization, and the board retains the advisory services of independent third-party experts as appropriate to assist with the execution of its responsibilities.
The AESO’s corporate structure along with the board’s commitment to incorporating best practices in its processes and behaviour, transparency, and accountability with internal and external stakeholders in its business dealings, as well as ethical expectations set out in the AESO code of conducts work to keep the corporation accountable and in good standing. All members, employees, and contractors agree to abide by their conduct code – the board annually reviews the status of complaints within the organization and updates the procedures as needed. The Alberta Public Agencies Governance Act of the province of Alberta also sets out procedures to formalize the roles and mandate of AESO with its relationship with the Government of Alberta and the public.
AESO Contact Information
Address: Calgary Place 2500, 330 – 5th Ave SW Calgary, AB T2P 0L4
How does the AESO work?
Their System Controllers work around the clock, 24/7 and 365 days a year to make sure that electricity is available to meet supply and demand no matter the season to the millions of Albertans that need it. AESO dispatches the power sold by the companies that own the generation, transmission, and distribution by using the lowest-priced electricity first, followed by the next lowest until the need for power has been met – this is the basis of Alberta’s competitive electricity market and has been working this way for over 20 years. They plan ahead with expanding the grid, ensuring the proper transmission lines are built as efficiently as possible, and as the province moves away from coal-fired power plants, enabling investment into renewable energy sources is looking ahead towards the future.
Connecting customers to the grid by making sure the generators and large power consumers can connect to the transmission systems in a safe and reliable fashion. Efficient, fair, and open transmission system access is facilitated through AESO’s Connection Process and transmission tariff.
AESO also heavily plans Alberta’s grid to function safely and reliably while planning to ensure there is the least number of issues as the population grows and electricity gets used more and more in daily life. The transmission network works much like a major highway for electricity, moving large quantities of power from its generation points to consumers. Over time the system needs to be upgraded and expanded to meet demands and as equipment ages that needs to be kept in top shape as additional sources of energy and weather are created in different areas of the province.
Factors that contribute to the need to strengthen and plan the transmission system grid include:
- Alberta’s economic outlook, including growth of gross domestic product, population, and industrial production.
- Fulfillment of reliability requirements as part of a network of electric utilities and independent system operators across North America as a whole.
- Electricity demands, growth rate, and locations.
- Timing and location of future electricity generation developments.
- Condition and age of the transmission assets.
- Contributions of new facilities to maintain a competitive market.
- The ability of the system, to transmit energy during emergency conditions and allow for maintenance and construction of new facilities.
Planning the transmission grid also includes sharing information with stakeholders, in accordance with legislation, reliability standards, government policies, and economic outlook are imperative. Open and transparent communication with stakeholders happens throughout the transmission development process and AESO is proud to be a source of credible information for all. Comprehensive planning and engineering studies present high-level alternatives that address the need for transmission. These alternatives are evaluated, compared and ranked based on their technical, economic, environmental, and social merits.
Once they’ve identified a preferred alternative for transmission development, they will prepare a Needs Identification Document (NID) application. The application is filed with Alberta’s independent utility regulator, the Alberta Utilities Commission (AUC) for approval.
Locations of needed transmission facilities, including siting and routing are determined in a standalone facility application that is either filed sequentially or concurrently with AESO’s NID. The potential routing and siting is proposed by the TFO (Transmission facility owner) who constructs, owns, and maintains transmission facilities. Alberta has four major TFOs:
- ATCO Electric Ltd.
- AltaLink Management Ltd.
- EPCOR Utilities Inc. (which is owned by the City of Edmonton.)
- ENMAX Power Corporation (owned by the City of Calgary.)
TFOs must also file a facility application with the AUC for approval of the routing and siting of proposed transmission facilities.
The AUC itself is Alberta’s regulator for the electric industry, being responsible for reviewing and approving the need, the preferred option to meet said need, transmission siting and construction, and the associated costs of construction and operation within Alberta’s electricity system.
With its unique access to credible, accurate, and real-time electricity data, AESO is the single largest source of transmission planning expertise in Alberta.
AESO Energy Emergency Alerts
Also, in AESO’s wheelhouse of responsibilities is sending out energy emergency alerts when necessary, and the alerts themselves aren’t talked about much or known to many Albertans. Energy Emergency Alerts (EEA) and their colour coding are as follows. Most Albertans are not aware of the EEA’s or have received them, but they are good to know:
- AESO’s Energy Emergency Alert Level 1
- Energy Emergency Alert Level 2
- Energy Emergency Alert Level 3
- Level 0
How does the Alberta provincial grid work, and what is it?
In Alberta, the power grid includes approximately 26,000km of transmission lines and connects approximately 426 qualified generating units and nearly 250 market participants to the wholesale market. Alberta is the third largest producer of electricity in Canada and has an estimated generating capacity of 16,330 megawatts (MW). About 89% of electricity in Alberta is produced by fossil fuels, with 36% from coal and 54% from natural gas.
Alberta’s interconnected electric system, or ‘the grid’, consists of electricity generators that are powered by a variety of different fuel sources, large power lines and equipment, and the way they all work together to bring electricity where it’s needed. As an example, transmission lines can be likened as if they were an extension cord in your home that transports the power from the wall outlets to where it’s needed, such as appliances and TVs, as an example. This also includes large commercial businesses and small businesses as well, especially those that have electricity and lighting running 24/7, like freezers and natural gas heating.
Keeping the power on requires that the grid is monitored 24/7, all year. Within AESO, the SCC (System Coordination Centre) monitors the entire system including generation and demand that the two are connected through the grid. If a power line goes down or if something unexpected happens like a thunderstorm or blizzard knocking out power, the controllers can reroute electricity through other lines to make sure that enough electricity is delivered while never compromising another area. If one region has exceptionally high electricity demand, the system controllers make sure it’s delivered while never compromising another area. Alberta’s grid isn’t entirely independent either as the SCC ensures that electricity can move between our neighbours through interties – these transmission lines connect us to the rest of western North America, through British Columbia, Saskatchewan, and Montana.
Being able to forecast and look ahead at what the demands may be in the future and how much electricity will be needed to ensure that there will be enough power and that the grid is capable of handling it is a complex task, especially with volatile weather and other issues that can arise. A robust and unconstrained transmission system provides open access and sufficient transmission capacity so that all available energy can be transmitted under normal circumstances. If the grid itself isn’t sufficient, it puts the livelihood and economy at risk, so there are important checks and balances.
Farms and large industrial areas are also considered for the AESO’s planning and monitoring of how much of the grid is being used.
The Electric Utilities Act which was passed by the Government of Alberta, is legislation that establishes AESO’s mandate to operate and monitor the electrical grid. At all times they act in public interest and must adhere to rules and reliability standards that are set by several organizations including the Alberta Utilities Commission, the North American Electric Reliability Corporation, and the Western Electricity Coordinating Council.
What is grid safety and what are the peak hours in Alberta?
Peak hours for energy use in Alberta are between 4-7 pm, according to AESO. If there is an emergency alert for energy, you can help by conserving power by closing blinds/curtains to keep in (or out) heat, lowering thermostats, and avoiding using major appliances between 4-7 pm.
Grid safety is what AESO keeps an eye on and is what keeps Albertans able to use electricity on a constant basis. Ensuring that it does not hit over capacity or otherwise has issues. Deep freezes or heatwaves, including severe weather events such as intense thunderstorms or tornadoes, can have a large impact on the Alberta power grid, especially farming or other rural areas that rely on electricity to keep heat and lighting where it’s more imperative to users wellbeing and animals. Protecting the grid may mean rolling brownouts being implemented until the electricity grid can be used at full capacity once again without any issues and not leave consumers without power for longer than is necessary.
Low electricity supply means higher demand and higher bills at the end of the month, especially if a consumer is on a variable plan. Ensuring that electricity usage isn’t always in demand is AESOs job, to better help consumers and to make sure that the grid is stable more often than not when it can be helped.
What is the pool price and how is it determined?
The pool price regarding electricity is the dollar cost of a megawatt hour of electricity at the end of a given hour that is paid out to electricity generators for supplying electricity by retailers (local service providers, for example.) At the heart of Alberta’s electricity system is AESO’s SCC (System Coordination Centre) which is staffed 24/7 by a team of system controllers.
- Retailers purchase electricity to supply residential and business customers, including large industrial customers. Setting the pool price is highly detailed and regulated as every minute, the highest priced offers/bids submitted from the market and dispatched by the system controllers are designated as the SMP (System Marginal Price).
- For each hour, the pool price is calculated by averaging all 60 of these one-minute SMPs. The SMP is posted to the AESO website in real time and the pool price is then posted at the end of the hour
- That price is then used in financial settlement to calculate payments to suppliers and charges to wholesale consumers.
An easy explanation is the pool price is the average of 60 one-minute system marginal prices accumulated over an hour and then that price is determined.
The SCC manages the real-time operation of Alberta’s electric system and facilitates the operation of Alberta’s wholesale electricity market. Electricity is generated, sold, and bought in an openly competitive wholesale electricity market and AESO plays an instrumental key role in developing and operating the market. A fundamental principle of the electrical system is that supply (the electricity produced by generators) and demand (electricity used by consumers) must be perfectly matched at all times and monitored. The Energy Management System continually collects data from every generator connected to the transmission system, enabling the system controllers to match the supply of electricity with demand and continually monitor the health of the provincial electric system across the entire province.
The SCC also is home to the Energy Trading System, as the wholesale electricity market in Alberta operates itself much like a stock exchange, matching offers from market participants that wish to sell electricity with bids from market participants who wish to buy it. Any organization that buys, sells, transmits, distributes, imports, or exports electricity in the Alberta market counts as a market participant. With approximately $5.7 billion in energy transactions per year, the market is a key enabler of the province’s $300 billion economy and is taken very seriously to keep up to date and on track.
Electricity Supply and Demand
In the same pool price information, electricity supply and demand are sorted by how market participants buy and sell and submit several supply offers and demand bids to the market on a day-ahead basis for every hour, 24 hours a day.
These supply offers and demand bids are sorted from lowest to highest price for each hour of the day, into a list that’s called a merit order. System controllers use the merit order to balance the supply of electricity, starting at the lowest-priced supply offers and moving upwards to the highest. AESO ensures that Alberta’s overall electricity needs are met by the most competitively priced electricity needs are met. Typically speaking, the demand for electricity is higher in the morning and declines to a steady level throughout the day. A second increase occurs in the early evening as consumers return home from work and school, placing more demand for electricity by using home appliances and outdoor things such as street lighting turns on.
Demand changes throughout the seasons as well, with cold weather in the winter increasing the demand for heaters, lighting, and furnaces, while in the summer air conditioning, fans, and refrigeration are higher. System controllers constantly monitor these fluctuations and match the supply from generators with consumers of electricity.