Earlier this month, the Market Power Mitigation Regulation, Alta Reg 43/2024, came into effect and is already working to stabilize prices in the market. Where once generators had free reign to economically withhold generation to raise Power Pool prices, they are now limited in their capacity to do so.
On July 22nd, at 10:06 PM, the AESO announced that the secondary price cap of $125/MWh would be in effect until the end of the month. This means that generators can only submit generation offers into the market at $125/MWh or less. The secondary price cap comes on the heels of daily price spikes each evening during the recent (and record) heat wave that enveloped large swathes of Alberta in July.
We congratulate Minister Neudorf and his team on achieving stabilization of market prices through this new temporary Regulation. We are positive the ripple effect will continue across the industry and provide more stability for Albertans.
BACKGROUND
Our government has been working exceptionally hard to stabilize the market and provide some relief from the incredible price volatility that rocked Alberta’s market from 2021 to 2023. During that time, we saw prices regularly hit the price ceiling at $999.99/MWh and the price floor at $0/MWh, sometimes both within a 24-hour period!
This was largely due to more renewable generation coming online, coal generation conversions or closures, and changes to the natural gas market. Renewable generation, while a step in the right direction, has the potential to create too much volatility in the market. Solar generation is strong during the day but then none at night, leading to the infamous “duck curve” that has been problematic in California.
On the wind side, because of the way generators dispatch their generation into the market, when the wind is strong, prices tend to bottom out. Neither of these statements mean that we should not continue to develop renewable generation in Alberta, only that the market must be viewed holistically when it comes to grid planning.
Strong volatility in the market also led to high Regulated Rate Option (RRO) prices in 2023. Last August, prices reached an all-time high at 32.539 cents/kWh. This was the highest realized price, as the RRO would have set the record in February 2023 at 32.957 cents/kWh were it not for Minister Neudorf’s cap on RRO prices which lasted from January 2023 to March 2023 (capped at 13.5 cents/kWh). This is significant because, as the default rate, the RRO is where many vulnerable Albertans or those struggling financially end up.
Stabilize Your Own Pricing
Stability in the market is great in the grand scheme of things, but if you’re looking for more tangible stability for yourself, sign up with NewGen Energy. We offer low fixed rates for 1-year and 3-year term that are sure to amaze.