How AltaLink Generates Revenue
1. AltaLink invests in the transmission grid through the money it spends on maintaining
the existing system and building new transmission lines and substations when directed
by the Alberta Electric System Operator. Maintaining Alberta’s transmission grid is a
big investment, and AltaLink earns a regulated return on its investment.
2. The rate of return is determined by the Alberta Utilities Commission (AUC),
an independent agency established by the Government of Alberta. In 2009, the rate
of return was set at 8.75% per year. In 2010, the rate of return is set at 9% per year.
3. AltaLink earns this return by recovering a portion of the transmission charge that is on
every ratepayer’s electricity bill. This transmission charge represents less than 10 per
cent of the average total electricity bill.
Does AltaLink want to build lines at the lowest cost in order to save money?
If a project is built for a lower cost than originally estimated, AltaLink does not make a return on this difference.
As a regulated utility, we must carefully consider all aspects of our projects including the associated costs and we must be prudent in all matters that affect ratepayers.
Who is to prevent AltaLink from overspending to earn a bigger return?
1. The AUC
AltaLink has to justify every dollar it spends to the AUC. The AUC ensures our costs are prudent.
2. Consumer Groups
Associations including the Consumers’ Coalition of Alberta, the Public Institutional Consumers of Alberta, and the Office of the Utilities Consumer Advocate are all active in proceedings to determine AltaLink’s tariff revenue.
3. Industry Groups
Since industrial customers use the largest amount of Alberta’s electricity, industry groups like the Industrial Power Consumers Association of Alberta also participate in proceedings to determine AltaLink’s tariff.
How can investing in new transmission infrastructure benefit Albertans?
1. By providing access to the lowest cost sources of electricity generation.
Electricity is generated in different ways and in different places. Some electricity costs much more to generate than others.
When a transmission system becomes too congested to transport power from the lowest-cost generators in the province, the high-cost generators must be used. These expensive sources of electricity meet the immediate demand, but their higher cost must be paid by all Albertans. Investment in Alberta’s transmission infrastructure is a reliable, long-term solution.
2. By increasing the efficiency of Alberta’s transmission grid.
Today, Alberta’s grid is operating at close to capacity. As transmission lines move power, electricity is lost in the form of heat. The closer the grid is to full capacity, the greater the transmission losses that occur.
In the past decade, these losses have cost Albertans more than $1 billion. Investing in transmission infrastructure in a timely way is the key to reducing these losses.
To download a printable version of How AltaLink Generates Revenue, click here.
