The Alberta Utilities Commission (AUC) regulates investor-owned electric, gas and water utilities, some municipally owned electric utilities, and regulated retailers of electricity and natural gas.
When a utility company or regulated retailer applies to change the rates they charge consumers, an open and public regulatory proceeding takes place before the AUC makes a decision. This kind of process typically includes:
- An invitation for interested or affected parties (persons or organizations) to get involved
- Formal questions and answers between the utility and people affected (can be done in writing or in person at a hearing, similar to a court case)
- Formal arguments, where the utility and people affected each make their case to the AUC
After the regulatory proceeding, the AUC issues a decision defining the rates that are allowed to be charged.
The AUC's role
The AUC is a quasi-judicial body, meaning it has many of the same powers as a court of law. Instead of judges, the AUC has Commissioners who are experts in utility regulations. They act in the ‘public interest’ by balancing the needs of both customers and utilities while taking into consideration the economic, social, and environmental impacts of the application.
How the AUC oversees the electricity market
Generation
The AUC must approve the construction of new generation projects. However, it does not regulate the wholesale prices charged for the electrical output. This is determined by the market.
Transmission
The AUC must approve construction and costs of new transmission projects. The AUC also regulates and sets the prices charged to deliver electricity over the transmission system.
Distribution
Similar to transmission regulation, both the construction of new distribution facilities along with the prices charged for distribution services are regulated and set by the AUC.
Retail
The AUC approves the Rate of Last Resort (RoLR) every two years. Every two years, the rate will be re-evaluated. Proposed changes cannot normally exceed 10% of the current rate.
The AUC does not approve rates for competitive retailers, but these are subject to competitive forces of the market.
The provincial and federal regulators' role in the natural gas market
Development and production
The Alberta Energy Regulator (AER) makes decisions on applications for most aspects of natural gas development. That includes wells, intra-provincial gas pipelines, and gas processing plants. It also monitors compliance to ensure that environmental and safety standards are met.
Transmission
The AER conducts field inspections and responds to issues on natural gas pipelines located in Alberta. Rates and services on Alberta gas transmission pipelines fall under the jurisdiction of the AUC. Natural gas pipelines that cross provincial or federal borders are regulated by the Canada Energy Regulator (CER), including the construction, rates charged, and services provided on those pipelines. Interprovincial and international pipeline safety standards and pipeline abandonment are also regulated by the CER.
Distribution
The AUC regulates Alberta natural gas distribution pipelines and approves distribution pipeline construction. It also regulates and sets the prices charged for distribution services.
Retail
The AUC approves the Default Rate Tariff (DRT), which is the default rate for natural gas and the method of setting the price each month. The AUC verifies and approves the prices just before a new month starts.
The AUC does not approve rates for competitive retailers, but these are subject to competitive forces from other retailers.
