We have prepared this report to aid the Alberta Electric System Operator (AESO) in its efforts to analyze the Principles set out by the Alberta Utilities Commission (AUC) in Decision 2013-135 regarding changes to the Transmission Constraint Management (TCM) Rule. The scope of this report is limited to assessing the efficiency implications of implementing the AUC’s newly defined Principles, relative to maintaining the existing TCM framework within Alberta’s energy-only market design. Due to time limitations, we have not examined alternative market design options for the purpose of compliance.

Based on our analysis of the AUC’s Principles in the context of the structure of the Alberta electric system and market fundamentals, we find that implementing design changes according to the Principles would reduce the efficiency and fidelity of Alberta pool prices and likely create uneconomic barriers for future generation and transmission investments. We believe that the Commission has not accurately interpreted all of the information provided in the record of the proceeding and that additional evidence shows that the decision would likely harm Alberta’s electricity market.

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