Operating Costs

In 2001, Alberta’s electricity and natural gas industries were restructured to provide consumers with a more efficient, competitive marketplace and greater choice of providers. Consumers began directly participating in the wholesale energy market, or participating through retailers acting on their behalf. As a result, operating costs in Alberta’s Industrial Heartland (AIH) are competitive compared to many large and medium sized North American cities.

Competitive Alternatives – KPMG’s guide to international business costs (2010) compared 26 cost factors, including labour, capital investment, taxes, transportation and utilities. The results rank Edmonton’s business operating costs seventh among 22 large midwest United States and western Canadian locations. Edmonton shows a  4.3% cost advantage over the United States.


Water

Alberta’s economic well-being depends on maintaining its healthy, sustainable water supply with stringent water quality standards. Alberta Environment is the provincial government ministry responsible for legislation on water quality and quantity. The Water Act guides water approvals, licenses, guidelines, and codes of practice.

Water Management Operations is responsible for over $5 billion of water management infrastructure, including more than 200 water management systems. Oil and gas companies are subject to the same conditions as any other licensed water user in Alberta. The Water Conservation and Allocation Policy for Oilfield Injection (2006) requires oil and gas operations to investigate alternative recovery methods and water sources before applying to use potable groundwater. The policy also outlines water diversion time limits and quantity limitations.

There are about 164 million cubic metres of groundwater allocated for use in Alberta. Approximate consumption is as follows:

  • 53% — commercial/industrial
  • 25% — agricultural
  • 18% — municipal
  • 2% — recreational
  • 1% — irrigation
  • 1% — fish management

Additional Water Resources


Electricity

Alberta’s electricity system is owned and operated by a mix of investor and municipal companies. More than 20 businesses compete to sell power to the province’s larger commercial and industrial users, who account for 64% of Alberta’s electricity use. The Utilities Consumer Advocate provides information about Alberta’s restructured and competitive electricity and natural gas markets.

The provincial government ministry, Alberta Energy, develops, supports, and monitors the framework of competitive electricity markets and delivery systems. Power is freely traded through an exchange operated by the independent Alberta Electric System Operator (AESO). Competing generators submit price bids for specific electricity amounts. The price which supply becomes available to satisfy demand becomes the hourly pool price.

The Alberta Energy Resources Conservation Board (ERCB) ensures all transmission charges to generators, industrial, commercial, or residential customers are fair.  The ERCB also ensures power facilities are built, operated, and decommissioned in an economic, efficient, and environmentally responsible way.

Additional Electricity Resources


Natural Gas

The industrial sector uses 60% of the natural gas consumed in Alberta. Natural gas rates reflect the forecast market price for each upcoming month. There is no profit or mark-up on regulated natural gas rates and natural gas prices are subject to ERCB verification.

Rates are set in an open, competitive market and influenced by North American, as well as world variables. These include:

  • supply and demand
  • production and exploration levels
  • storage injections and withdrawals
  • global weather patterns
  • pricing and availability of competing energy sources
  • market views of future trends

Two major companies provide industrial natural gas service in Alberta.  Those two companies are:

The Utilities Consumer Advocate provides information on:

  • options for large volume consumers
  • electricity and natural gas retailers
  • distribution companies

Additional Natural Gas Resources