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Alberta's New Transmission Rules: AUC's role in project approval strengthened [free access]

December 1, 2012

Given Alberta’s economic growth and increasing population, demand for power in the Canadian province is forecast to double over the next 20 years. Building a robust grid is critical to meeting these requirements. Equally critical is public participation in a transmission project’s planning process. According importance to the same, the Energy Ministry of Alberta under the Electric Utilities Amendment Act recently issued Bill 8, which requires future transmission projects to be reviewed completely and receive approval (for both need and routing) from the Alberta Utilities Commission (AUC), instead of the provincial cabinet. The decision on the construction of projects will be taken by an independent agency.

 

Based on the Alberta Electric System Operator’s (AESO) assessment of current and future needs for transmission, the AUC will act as the approval body for the need for new transmission projects. The AUC will review the needs identification documents prepared by the AESO and decide whether or not to approve them. The AUC will also approve, modify or deny permits to build and operate transmission lines. The commission may make decisions based on whether the proposed transmission is in the public interest and may also hold hearings in which directly and adversely affected parties may participate.

 

The move reverses the step that the Alberta Government had taken in 2009 by introducing Bill 50, which limited the role of the AUC in the approval process of critical transmission infrastructure projects. Bill 50 created a category of “critical transmission infrastructure” under the Electric Utilities Act. Under this, the provincial Cabinet could designate a proposed transmission project as “critical” if, among other factors, it felt that the project is “critical to ensure the safe, reliable and economic operation of the interconnected electric system.” The cabinet was not required to consult the public or affected parties prior to designating a project as critical. Nor was a needs document required to be prepared by the AESO or approved by the AUC. As a result, Bill 50 removed the need for the AUC to consider public interest, including social, economic and environmental considerations in critical transmission applications. So while such projects were placed before the AUC, the latter had no meaningful role to play and could not deny a critical infrastructure application on the basis that it was not needed or was not in the public interest.

 

While the government contended that Bill 50 was necessary to speed up and facilitate construction of transmission lines, it faced a lot of criticism. The Bill granted excessive discretion to the cabinet and offered no meaningful improvement to the transmission planning process. Also, it meant that environmental conservation, sustainability, public participation and other important factors in transmission planning were not given due consideration. Hence, restoring the powers of the AUC was very important to ensure that upcoming transmission lines are in the public interest. This was in fact one of the key recommendations of the Critical Transmission Review Committee report published in February 2012 and Bill 8 is a direct response to the same. The other recommendations of the report included considering options that will mitigate transmission rate increases for consumers and to adopt competitive procurement for future critical transmission projects. Public needs assessment becomes even more important when the cost of projects is in question because all costs of bulk transmission systems are paid by customers. Construction of lines that have been deemed critical may lead to uncompetitive prices and inefficient construction processes.

 

Though the introduction of Bill 8 seems positive for Alberta’s transmission sector, concerns remain. Bill 8 will not impact the lines that were approved under Bill 50. Four currently planned projects, including the controversial Heartland transmission line, the Edmonton to Fort McMurray transmission lines, reinforcement lines between Edmonton and Calgary (north-south lines), and a Calgary substation were approved as critical transmission infrastructure projects under the Electric Statutes Amendment Act, 2009. These projects will be an exception and proceed as approved projects. The argument here is that any improvements to the transmission planning and approval process should apply to all projects without exceptions. It is not clear why transmission lines that were approved under Bill 50 are still considered as approved. There is a need to question whether these lines are needed and in the best interests of the public given that they have been opposed. Like other future transmission projects, these projects should also be subject to a transparent needs assessment by the AUC before receiving the go-ahead.

 

Secondly, for the new Bill 8 to be effective, the electricity regulator should determine the need for a project in the true sense and in an unbiased manner. It has been argued that even if members of the public intervened in past AUC hearings opposing the need for specific new lines, they have lost. Even when there has been a disagreement on line routes, the approval process has seemed to favour applicant transmission companies’ preferred route. This needs to be checked and the process should be made transparent. Sometimes it is argued that landowners get to know about the exact route of the transmission line only after public consultations have been organized. So the needs assessment and the routing should be more coordinated with such landowners in affected areas.

 

That said, subjecting new projects to the AUC needs assessment process as per the amendment will ensure that citizens have an opportunity to share their views on the need for transmission infrastructure but there is a need to ensure that public participation is weighed fairly while making decisions about projects. The amendment should indeed lead to an overall improvement in the transmission planning process.