What is the AESO?

The AESO is key to keeping Alberta’s grid running smoothly.

When you’re trying to navigate Alberta’s energy market, you get bombarded with more government and industry acronyms than you can handle.

Let’s try and whittle that list down a bit by answering the question: what is the AESO? Even if you have only a passing familiarity with Alberta’s energy sector you’ll likely have heard of the AESO, which stands for the Alberta Electric System Operator.

This in turn begs the question: what exactly is a system operator? System operators are the organizations that oversee and manage a region’s electricity grid.

They have a host of responsibilities including; ensuring reliable and sufficient generating capacity, directing and managing actors involved in energy initiatives, and running the virtual energy market.

What does the AESO do?

With regards to that last point, the AESO is responsible for setting the province-wide electricity price, which is set each hour throughout the year, via a competitive market clearing mechanism, also known as the ‘pool price’.

What this means is that the AESO pools all the energy, from all the generators in the province and then dispatches that energy based on price. This means that the energy from the cheapest source is dispatched first, followed by the next cheapest, and so on until all demand has been met.

The AESO is also tasked with monitoring provincial energy usage and for determining Peak pricing structures. In Alberta, this means that the AESO sets and re-evaluates its Coincident Peak (the terms Peak and Coincident Peak are interchangeable, the latter is the industry term, the former a more succinct alternative) price every 15 minutes, based on something called Coincident Metered Demand (CMD).

CMD is just a fancy term for the amount of energy you’ve used (as per your meter readout) during a Coincident Peak. The AESO uses a 12 Coincident Peak system, which means that your usage during the 12 highest Peaks of the year counts towards your bill. Consequently, your Peak charges are determined based on your usage during just a few minutes each month, so making sure you hit all the relevant Peaks is crucial.

The AESO is also responsible for making sure that Alberta’s energy mix and strategy is robust enough to not only weather the highest Peaks, but also to provide grid stability/reliability for the future.

To this end, the AESO plays an important role in planning future capacity expansion, implementing demand response and energy efficiency programs, and promoting renewable energy. The AESO also helps with the upkeep and upgrading of electricity infrastructure and assists new generators and large customers to safely connect to the grid.