Re-regulating power generation is an obvious way to help address the affordability crisis for working Albertans, says AFL

“Affordability is a worker issue – and one of the most obvious and effective ways to bring down costs for working Albertans is to re-regulate power generation. Deregulation is an ideological experiment that has failed and cost us billions,” says McGowan.

EDMONTON – The Alberta Federation of Labour (AFL) released a report by regulatory economist Edgardo Sepulveda, entitled, “Power in the Public Interest: Re-regulation and Increased Public Ownership in Alberta’s Electricity Sector”. The report lays bare the failures of the current system and offers a bold vision for change.

“The change to deregulated electricity generation was an ideological leap of faith,” says AFL president Gil McGowan. “Returning to a regulated system is the opposite of that – it’s a return to the tried, tested, and true. Regulating the profits of generators to avoid price gouging and ensure reliability is literally what we used to do successfully for decades here in Alberta, and it’s what they currently do in almost every other province and state in Canada and the US. We must stop being an outlier and return to what works. And that’s regulation and a larger share of public ownership.”

The report highlights the shocking economic and labour costs of Alberta’s deregulated, mostly privatized electricity generation industry, including the following:

• Alberta is consistently home to the highest consumer electricity prices in the country, harming working families and placing a drag on economic development.
• Alberta’s high electricity prices may have moderated in recent months, but since the province deregulated power generation in 2001 Alberta’s electricity consumer price index increased by an average of 1.8% per year higher than that of Canada as a whole or double the difference prior to deregulation.
• This means that since 2001, Albertans have paid about $24 billion more for their electricity than if they had paid the same prices as other Canadians.
• Alberta residential consumers accounted for about $7 billion of that total, that is an average of about $690 per year per household for each of the 24 years.
• Alberta’s industrial, commercial, and farm electricity customers overpaid about $17 billion since 2001, compared to the average prices paid by their peers across other provinces (industrial users paid $13.8 billion more; commercial and farm users paid $2.9 and $0.4 billion more, respectively).
• Since the early 2000s, volatility of prices has increased as well, making it harder for families to plan their budget.
• Privatization has increased during the deregulation period, and now only a handful of private companies own 54% of Alberta’s electricity generation market (TransAlta, Capital Power, Suncor, ATCO, and Heartland). The cause of Alberta’s high electricity prices are above-normal profits for the big companies that dominate the province’s electricity market.
• Despite the high cost of electricity in the province, Alberta’s electricity grid is one of the most fragile in Canada or the United States. While Alberta accounts for under 2% of electricity demand in the two countries, since 2022 the province’s grid has been responsible for about 35% of emergency alerts in Canada and the US when blackouts are imminent or in progress.
• Alberta’s deregulated power generation industry is an outlier in Canada – with worse outcomes to show for it. Most provinces have regulated systems that are majority publicly owned because they understand electricity is a vital, province-building strategic sector.
• Electricity is not a normal commodity that responds well to price signals. It needs to be treated differently. Regulated markets don’t allow companies to exercise their market power at the expense of consumers, like what occurred with the price spikes in Alberta in 2021-2023 that was facilitated by Alberta’s Energy-Only market.
• Alberta’s small, concentrated market is ill-suited for effective competition, resulting in market power abuse and excessive profits for generators at the expense of consumers.
• Alberta’s electricity sector has traditionally had comparatively low union rates that declined even further during deregulation. In the late-90s, unionization in Alberta’s electricity sector was 19% lower than the rest of Canada. By the 2020s, the gap increased to about 27%.
• Alberta’s electricity sector has historically employed fewer workers than the rest of Canada. Since deregulation, Alberta’s electricity sector employed an average of 141 workers per TWh (terawatt hour), or 16.6% below the rest-of-Canada average of about 169 workers per TWh.
• Workers in the electricity sector tend to have higher earnings than those in the economy generally. The ratio of Alberta electricity sector earnings to all earnings has remained steady over the deregulation period. This suggests that labour inputs (wages and benefits) are not the cause of higher and increasing electricity prices in Alberta.

“Any plan that fails to restore regulation will likely fall short, and the recently proposed Restructured Energy Market is no exception. By re-regulating our electricity generation industry and increasing public ownership across the power sector, we can create a system that works for all Albertans, not just corporate shareholders,” says McGowan. “We’re also calling for the creation of Alberta Power, a new Crown corporation that would put control of our electricity back in the hands of the people. This isn’t just about lower bills – it’s about creating good jobs, ensuring a stable grid, and accelerating our transition to clean energy. As workers and as citizens, we have the right to demand better. We urge all Albertans to join us in the fight for an electricity system that serves the public interest.”

[Link to report]
[Link to fact sheet]

– 30 –

MEDIA CONTACT:
Ian Hussey
Director of Energy Policy, AFL
Email: ihussey@afl.org

BACKGROUND

About the Author

Edgardo Sepulveda is a regulatory economist with more than 30 years of experience in the telecommunications and electricity sectors. He has advised governments, regulatory agencies, companies, unions, and consumer advocates in more than 40 countries. Born in Chile, Edgardo received his B.A. (Honours) from the University of British Columbia and his M.A. from Queen’s University, both in Economics. He established Sepulveda Consulting Inc. in 2006.