Alberta’s Energy Only Power Pool – 20 Years of Retail Competition

2020 marked the end of the first 20 years of retail competition through Alberta’s energy-only Power Pool that is administered by the Alberta Electric System Operator (“AESO”).  The electricity market trades energy at the hourly settlement Pool Price, which is derived from the real-time 60-minute System Marginal Prices (“SMP”).  Alberta’s electricity market prices can range from the floor of $0/MWh to the administrative cap $1,000/MWh.  As the chart illustrates, the bulk of historical annual pricing has averaged $57/MWh over the last 20 years, ranging from as low as $18/MWh to a high of $90/MWh.  These historical ebbs in price have been driven by pure competitive market supply demand fundamentals and the underlying cost structure of supply resources.  The make-up of the annual price from the 10 bands segmented, shows that Alberta’s large base load generation prices its capacity less than $100/MWh 58% of the time, whereas the scarcity pricing at prices above $500/MWh only amount to 19% of the time.  Finally, on-peak pool prices averaged $70/MWh over the 20 year period with corresponding off-peak prices averaging only $31/MWh and super-peak prices reach an average of $77/MWh.  Alberta’s Power Pool has gone through a lot in the past 20 years, but has been very resilient in serving the needs of power producers and consumers alike!