Alberta's Restructured Energy Market Design Significantly Altered Following Stakeholder Feedback and Ministerial Direction
Alberta's Restructured Energy Market (REM) design has undergone a significant shift. On April 4, 2025, the Alberta Electric System Operator (AESO) announced the removal of the proposed Day-Ahead Commitment (DAC) and Day-Ahead Energy Scheduling (DAES) markets from the REM framework. This decision follows a direction from the Minister of Affordability and Utilities (MAU) in March 2024 to initiate a technical design proposal for the REM, initially including these markets as part of a phased implementation approach. The intention behind the DAC and DAES markets was to increase predictability regarding generation commitments, aiming for improved system stability and reduced price fluctuations.
Extensive consultations were undertaken throughout 2024 and into early 2025. Following initial design sprints, the AESO sought feedback from stakeholders between December 2024 and January 2025, followed by finalization sessions in February and March 2025. Concerns emerged during these discussions, particularly regarding the potential for over-procurement within the DAC market, largely linked to inflexible pricing structures. Stakeholders also voiced broader concerns about the need for strong governance and independent oversight to ensure financial stability and prevent increased consumer costs.
The AESO maintains that the decision to exclude the DAC and DAES markets is directly responsive to stakeholder input and will not compromise the reliability or affordability of Alberta’s power system. Key elements of the REM design remain, including the co-optimization of energy and ramping reserves, a wider real-time price range (with a $3,000/MWh cap), congestion pricing (with Locational Marginal Pricing as the preferred method), and measures to mitigate market power through a secondary offer cap.
The AESO hosted a session on April 10, 2025, to provide further details on the decision, the reasoning behind it, and its effect on the REM's overall timeline. These design changes are anticipated to extend the timeframe for rule approval into early 2026.
