A power transformer is shown in this January 2023 News File Photo. News File Photo
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Proposed changes to the city’s Electric Bylaw open the door for it to buy more power from franchise customers who produce their own electricity, and allow largest projects to become “net-producers.”
That mirrors incoming rules on the Alberta power grid that could would ease regulatory requirements for large companies to build “own-use” power supply and allow them better access the province’s lucrative provincial grid as well.
That two-year-old proposal is now being developed, and changes to city regulations –that will be debated on Monday – would allow new industrial co-generation plants or even large greenhouses with heat-power-carbon units to sell excess energy to the city, said officials.
“The intent is to future-proof the bylaw for regulations that could be coming from the province in the near future,” manager of electrical distribution Grayson Mauch told the News this week.
“Developers who would have more than 5 megawatts of generation, would have the opportunity to be a net producers on to the city system, subject to rules (being developed by the province).”
Five megawatts – thousands of times larger than the capacity a home roof-top solar system – is the benchmark where Alberta regulators draw a distinction of utility-sized projects.
Whereas, micro-generation rules apply to solar, wind or other renewable sourced power, the new statute includes natural gas-fired plants on sites or other heat-recovery turbines.
For examples, Big Marble greenhouses installed gas generation units at its Highway 3 facility in the late 2010s, and made overtures about a potential supply partnership with the city’s electric division, but talks apparently broke off.
That company did not reply to a request for comment from the News this week.
The city has also contracted power since 2000 with Cancarb’s large heat-cogeneration unit at the carbon black production facility. It was most recently updated to 42-megawatts after a plant expansion in 2020.
The city also has a power-purchase agreement with the Box Springs Wind Farm, a three-turbine, six megawatt wind farm in the city’s far northwest.
That deal was struck in 2013 when the city nixed its own plan to develop the wind site.
The incoming utility bylaw updates for both gas and power were introduced at committee meetings in August and move to final reading at Monday’s council meeting.
Division Head Rochelle Pancoast and administrators told committee that the city should align itself with provincial changes in the “Modernizing Alberta’s Electricity Grid” Act, which could benefit large industrial customers who are planning capital investment or siting new facilities.
“We want to be open to our customers having those opportunities as well,” she said, adding that contract policy would be developed later, but updated legal changes in the bylaw are meant to allow the city to enter such contractual agreements.
That would give the owner of a new, local co-generation power plant the ability to sell surplus power even though they don’t have direct physical access to the provincial grid.
“In Medicine Hat, that market is the City of Medicine Hat,” said Pancoast.
Mauch said Thursday the grandfathered municipal utility has the ability to set its own rules, but tries to meet the spirit of provincial regulations.
“The city is exempt, but we try to align ourselves as closely as we can – while preserving that exemption – to create a fair and competitive market inside our franchise area as it would be outside,” he said.
In 2022, the UCP government announced the changes as a way to contain demand growth on the grid – companies would supply their own needs – and potentially avoid growth of the transmission system.
It would allow a new entry to commission an “unlimited” amount of power for “self-supply” with the ability to access the export market.
Then-Utilities and Natural Gas Minister Dale Nally said it would bring down prices on the Alberta grid bidding market as more customers seek to market excess energy.
It was proclaimed as law last March.
The city already has bi-directional meters for relatively small solar systems, like those on home and even medium-sized businesses, which fall under micro-generation guidelines.
That system credits homeowners for any power put on to the gird, then applies the credit against overall usage, which lowers or can even eliminate the cost of buying energy.
Provincial rules, however, limit small system owners to produce no more energy than they use onsite, meaning residential bills can not go into negative territory.
The concept of allowing larger-than-needed capacity systems and being able to profit above purchasing cost is also called “net-metering” by industry observers.
