For industrial customers, the Phase I Revenue requirement includes oilfield, small and large industrial customers. In the past, the cost allocation between the industrial customers has been set such that large industrial customers pay significantly less, on a unit basis, than their smaller counterparts. Since the smaller industrial accounts have not had effective representation, there has been a tendency for subjective costs to be allocated towards to them. Over time, and in theory, the pool price should reflect the full cost of new generation and provide the appropriate price signal for developers to build new generation. All of the existing generation will initially remain in regulation with the price fixed to distributors under legislated entitlements and obligations.
All incremental generation is intended to be competitively procured in the open market.
Given Alberta's current surplus of generation capacity and load growth projections, no significant capacity additions are expected until after 1998. As with the gas distribution business, an effort has been made to encourage negotiated rate making and reduce the cost of regulation. Negotiated settlements and incentive regulation schemes are now used extensively. The next step required is the implementation of Retail Competition in 2000, which will allow customers to choose their electricity supplier. Over time, the electric industry needs multiple buyers and sellers to promote competition and market liquidity.