Alberta is moving to dissolve the electricity Balancing Pool. Here's why that matters to you

Many people will never have heard of the Balancing Pool. But look closely at a power bill and you'll see a Balancing Pool rate rider charge tacked on each month. But that will be a thing of the past as Alberta's government says it is winding down the operations of a major player in the province's power market. More than 20 years after Alberta began privatizing electrical generation, Premier Jason Kenney says the Balancing Pool is no longer needed. "It just constitutes an additional cost," he said at a news conference in February. "We need to reduce power costs for Albertans and this is one small way of doing so." But questions remain about who will take over some roles the organization still plays and pool or no pool, consumers will be paying off its expenses and debt for years to come. To understand why the pool exists and what it does, we'll have to look back to the late 1990s.

Unlike many provinces, Alberta has never had a Crown utility company responsible for generation, distribution and sale of electricity.

The government did control electricity prices, though.

Faced with a couple of frustrating brownouts, Premier Ralph Klein's government believed deregulating generation would encourage more companies to produce power in the growing province, and that increased competition would lead to better power prices.

However, new power plants weren't going to manifest overnight.

At first, the government needed a way to artificially create competition in the market, to buy time for more corporations to enter the fray.

So, the Progressive Conservative government created a scheme to auction off all the power produced in the province to bidders for the next 20 years.

The winning bidders of these power purchase agreements, or PPAs, would pay the power plants for their electricity, then sell power back to the grid. They would assume the risks and rewards of fluctuating prices.

However, the government needed a safety net — a default corporation that would manage these power contracts if a company became insolvent or reneged on the contract. The government also had trouble finding buyers when it first took the contracts to auction. And so, the Balancing Pool was born.

Created by government in 1998, the corporation has managed any PPAs that electricity companies wouldn't run.

For about 15 years, the Balancing Pool profited from power it sold. It returned those profits to Albertans with monthly credits on power bills, handing out almost $4.6 billion over the years.

But the former NDP government's green policies and carbon taxes prompted big changes.

TransCanada, AltaGas and Enmax made headlines in 2016 when they terminated their PPAs early.

The corporations said that in combination with low power prices, the government's moves were making the contracts too unprofitable.