AESO reaffirms need for upgrades; seeks comments on draft transmission plan

CALGARY, June 2, 2011 /CNW/ - The need for a significant investment in transmission infrastructure was reaffirmed today with the release of the draft Alberta Electric System Operator's (AESO) 2011 Long-term Transmission Plan (the Plan).

"The 2011 Plan provides efficient, reliable and cost effective solutions to meet the growing needs of Alberta's economy, including industries, business and household demand," says David Erickson, AESO president and chief executive officer. "It has gone through comprehensive internal and external expert analysis and development as well as thorough consultation with public stakeholders including industry, customers and government."

Designed to be a comprehensive, flexible and dynamic roadmap, the 2011 Plan outlines future transmission development required to meet forecasted growth, provide continued reliability, facilitate a fair, efficient and openly competitive market and support short and long-term economic development in Alberta. It is consistent with legislation, regulation and government policy.

The 2011 Plan relies on updated inputs to forecasts, economic trends, changing customer demand and regulatory requirements to identify system upgrades required over the next 10 years. The Plan validates the need for four projects previously identified as critical transmission infrastructure (CTI) by the Government of Alberta in 2009 as well as the major regional transmission projects required to meet future demands.

The total estimated cost for the projects identified in the 2011 Plan is $13.5 billion. Sixty per cent of the total cost, or $8.3 billion, relates to approximately 50 regional projects and supports more than 200 customer connection requests. The remaining forty per cent of the total cost, or $5.2 billion relates to the four CTI projects. To put this into perspective, for every $1 billion spent on transmission, the increased cost to the average residential consumer is about one dollar per month.

All of the regional projects have or will be subject to a two-stage regulatory review including fulsome consultation prior to proceeding. It should also be noted that no new CTI projects have been identified in the 2011 Plan.

"Demand for electricity has increased 32 per cent over the last 10 years with annual peak demand growth forecast to average 3.2 per cent over the next 20 years," adds Erickson. "The fact of the matter is that transmission capacity has not kept pace with load growth or generation development in the last decade and, as a result, we need to invest in upgrades today in order to maintain reliability of the system, now and into the future."

As part of its ongoing public education and consultation efforts, the AESO released the 2011 Plan as a draft to allow for input from Albertans prior to filing the final copy with the Alberta Utilities Commission. Interested parties can view a copy of the Plan and Executive Summary, as well as submit comments through the AESO's public engagement website, www.poweringalberta.com.


AESO Backgrounder
Understanding the Draft 2011 Long-term Transmission Plan

The Alberta Electric System Operator's (AESO) draft 2011 Long-term Transmission Plan (2011 LTP or the Plan) is a blueprint of how Alberta's electric transmission grid needs to be developed to support continued provincial economic growth and our quality of life. It sets out a roadmap for securing Alberta's energy future to ensure that we continue to have a reliable and robust electricity system to meet the growing needs of the province, today and in the future.

Electricity transmission in Alberta supports a $5 billion wholesale electricity market which is a key enabler of our roughly $300 billion economy. The draft 2011 LTP relies on updated inputs to forecasts, economic trends, changing customer demand and regulatory requirements to identify system upgrades required over the next 10 years. It outlines the technical solutions required to meet future demand and identifies cost estimates, in-service dates, and where prudent, the staging of key projects.

In an effort to enhance our transparency, the draft 2011 LTP introduces a supplement that will be updated every six months to track and publish project updates, plus any material changes to the forecast, including refined project cost estimates.

In the 2009 LTP, the AESO projected significant growth in our economy. The draft 2011 LTP confirms that direction by relying on updated inputs to load and generation forecasts, economic trends, changing customer demand, and regulatory requirements.

Planning by its very nature is an evolving and constantly changing process. The draft 2011 Plan provides a picture of the province's needs now and well into the future. The draft 2011 LTP identifies continued growth in the economy at a rate of 3.2 per cent per year for the next 20 years, which is the equivalent of adding two cities the size of Red Deer to the power system each year.

The AESO takes public consultation seriously; it is one of three criteria we use to make recommendations about strengthening the transmission grid. An AESO recommendation is based on a balance of technical, economic and social considerations.

The draft 2011 LTP has already gone through significant expert analysis and development as well as thorough consultation with industry, customers and government. As part of its continuing consultation efforts, the AESO is providing Albertans with an opportunity to review the draft and provide additional feedback prior to the formal filing of the final 2011 Plan.

As part of our continuing effort to consult with Albertans and provide them with up-to-date, unbiased information about our province's electric system, the AESO invites all Albertans to provide their comments on the draft 2011 LTP through our public engagement website: www.poweringalberta.com

The AESO will continue its ongoing dialogue with industry stakeholders and will hold a stakeholder session in June where we will present the draft 2011 LTP and accept stakeholder comments. A summary of the input received with the AESO's responses included will be posted to the AESO's public engagement website following receipt of comments.

The AESO will monitor key economic indicators, changes to legislation or the regulatory framework, respond to customer requests for generation connections and evaluate the requirements for upgrading the transmission system. We will continue to plan the transmission system with input from many sources, including stakeholder engagement, government policy, legislation and regulations, the Provincial Energy Strategy and other technical planning considerations. The AESO will track and publish project updates, any material changes to the forecast and refined cost estimates.

 

Highlights of the Draft
2011 Long-term Transmission Plan

The AESO's draft 2011 Long-term Transmission Plan (2011 LTP or the Plan) provides a blueprint for the development of Alberta's electrical system — one that can accommodate the province's growth for the next 40 years. It details the transmission facilities needed to meet forecasted growth, ensure continued reliability, facilitate the fair, efficient and openly competitive operation of the market, and support long-term economic and social development in Alberta.

2011 LTP Highlights

  • The draft 2011 LTP reconfirms the need for four Critical Transmission Infrastructure (CTI) projects previously identified and approved under the Government of Alberta's Electric Utilities Act as well as the major regional transmission projects identified in the 2009 LTP. These projects have been reviewed and reflect updated cost estimates and changes to in-service dates where appropriate. Changes to in-service dates are consistent with the updated forecasts of demand growth.
  • No new CTI projects are being proposed within the draft 2011 LTP.
  • The draft 2011 LTP has identified several smaller additional regional projects required to facilitate timely execution of connection requests from customers while meeting the Alberta Reliability Standards that became effective in 2010.
  • The draft 2011 LTP is dynamic, comprehensive and flexible, reflecting the complexities of project development as well as the variability of industries and business cycles.
  • The draft 2011 LTP presents an integrated, comprehensive and strategic upgrade of the transmission system that meets statutory requirements, aligns with government policy respecting electricity, meets load growth, and facilitates development of Alberta's abundant natural resources.
  • The magnitude of the planned transmission build detailed in the draft 2011 LTP reflects current and future needs, while also recognizing that minimal bulk system transmission infrastructure has been built in Alberta since the early 1980s.
  • The AESO's forecasts show demand will increase by more than three per cent a year until 2029 — the equivalent of adding two cities the size of Red Deer to the power system each year. Demand for electricity will nearly double in the next 20 years, with 13,000 megawatts (MW) of new generation needed.
  • The draft 2011 LTP provides efficient, reliable, cost effective solutions to Alberta's electric transmission system and facilitates non-discriminatory system access service to customers by timely implementation of transmission system enhancements.
  • The draft 2011 LTP has been prepared considering inputs from various sources including consumers, market participants, public information sessions and third party experts.
  • The AESO is reinforcing its commitment to transparency by introducing a supplement that will be updated every six months to track and publish project updates, plus any material changes to the forecast, including refined project cost estimates.

2011 LTP Cost impact

  • As part of the planning requirement for the projects identified in the draft 2011 LTP, the AESO prepares estimates of the capital costs and timing of the transmission facilities expected to be required.
  • The total estimated cost for the projects identified in the draft 2011 LTP required to 2020 is $13.5 billion (in 2011 dollars). This is slightly less than the estimated cost of the 2009 Plan ($14.5 billion in 2008 dollars).
  • The draft 2011 LTP includes more than 50 regional projects and supports more than 200 customer connection requests which account for approximately 60 per cent of the total estimated cost ($8.3 billion) and four CTI projects designated in legislation which account for approximately 40 per cent of the total estimated cost ($5.2 billion).
  • Nearly 55 per cent of the projects are in development stages, with $3 billion at the needs identification stage and approximately $5.2 billion at the facilities application stage. The remaining projects (45 per cent) are in the planning stage representing approximately $ 5.3 billion.
  • The new transmission projects identified in the draft 2011 LTP will reduce operating and maintenance costs associated with older transmission facilities which are being replaced and, in some cases, removed. The additional capacity resulting from the new projects will allow flexibility in operation and permit optimal management of the transmission system.
  • The projects will improve the efficiency of the transmission system and reduce the amount of energy lost in the form of heat. The transmission projects will also reduce costs resulting from transmission system congestion which can prevent the operation of low-cost generation.
  • The total cost of all the transmission projects in the draft Plan will be recovered over the life of the transmission facilities, which is typically more than 40 years.
  • Not all projects are built at the same time, and the cost impact of the projects in the draft Plan will occur gradually as the projects are placed in service over the years from now until 2020.
  • For every $1 billion spent on transmission, the cost to the average residential consumer is about one dollar per month. Transmission charges account for approximately 10 to 20 per cent of the total residential bill for electricity.
  • Estimated project costs are refined as projects move forward and technical scoping, engineering studies, stakeholder consultation and additional in-depth analysis are completed.
  • Transmission planning is an ongoing process. Changes in economics, government policy, project timelines and customer connection requests are continuously monitored to assess their impact on forecasting.
  • By staging projects and adjusting in-service dates accordingly, the AESO ensures it only builds to the capacity needed.
  • The allocation of costs of transmission is in direct correlation to the use of the transmission system. The highest users pay the highest costs for building new transmission. Transmission costs in Alberta are split in the following ways:
    Industrial: 61% Commercial: 19% Residential: 16% Farms: 4%
  • It is challenging to estimate the impact of the transmission projects, given potential changes to project cost estimates and timing. To make this process easier for interested parties, the AESO is developing a rate impact model for the 2011 Long-term Transmission Plan which will be provided in working Microsoft Excel format on our website, at www.aeso.ca.

AESO Draft 2011 LTP
Alberta's Economy Depends on an Adequate Supply of Electricity

Alberta's transmission system is running close to capacity with congestion on many lines around the province. Upgrades to the system are required now in order to preserve the overall reliability of the system and ensure continued economic growth.

If we don't plan for the future we can't power it

  • Alberta's quality of life and economic well being, especially the maintenance and creation of jobs, depends on an adequate and reliable supply of electricity to all Albertans, now and into the future. Transmission capacity has not kept pace with generation development in the last decade and, as a result, generation is curtailed in many parts of the province.
  • A strong transmission grid enables a reliable, competitively priced supply of electricity for industries, businesses and individual consumers
  • .When the transmission grid is constrained or congested, investment is stalled, which results in market prices that reflect lower competition as not all supply can reach the marketplace.
  • Transmission, like other forms of infrastructure, is a huge factor for enticing investment to the province of Alberta.
  • Electric transmission in Alberta supports a $5 billion wholesale electricity market which is a key enabler of our roughly $300 billion economy.
  • In forming the 2011 LTP, the AESO has sought input from other credible sources, such as the Conference Board of Canada, the Canadian Energy Research Institute (CERI), and the Canadian Association of Petroleum Producers (CAPP), to anticipate where electric demand will grow, the efforts required to meet that demand and the additional transmission infrastructure that will be necessary.
  • Economic fundamentals for Alberta appear to be strong, showing a forecasted long-term GDP growth in the range of 3.0 to 3.2 per cent annually for the next 20 years.
  • Strong energy growth is expected from 2011 to 2015, driven by oilsands development and corresponding economic and population growth.
  • Demand for power has increased 32 per cent over the last 10 years with peak demand growth forecast to average 3.2 per cent per year over the next 20 years. That's a rate equal to adding two cities the size of Red Deer to the power system each year.
  • Our forecasts suggest that over the next 20 years 13,000 MW of new generation is needed to ensure we have enough power to meet the needs of Albertans. That's nearly equal to the current amount of electricity that can be produced in the province today. (Current generating capacity: 13,510 MW)
  • Without upgrades to the transmission system, it is difficult to ensure the most economic or environmentally friendly renewable energy is getting on the grid and to customers throughout the province.

SOURCE Alberta Electric System Operator

For further information:

Dawn Delaney, External Communication Advisor
Phone: 403-539-2846  Cell: 403-671-6129  Pager: 403-515-9450
dawn.delaney@aeso.ca

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Alberta Electric System Operator

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