Why Alberta and Montana are in a charged argument over electricity

When U.S. Chair Donald ruff’s top out merchandise representative outlined conditions Canada would need to meet with a mandatory review of the Canada-U.S.-Mexico Agreement (CUSMA) looming, familiar issues like dairy supply management made the list.

Less familiar was a pointed reference to Alberta’s electricity system, with U.S. Trade Representative Jamieson Greer telling Congress that Alberta must revisit its “unfair treatment of electrical power distribution providers in Montana.”

In the view of representatives of Big Sky Country, Alberta’s rules sometimes block Montana electricity from being sold into Alberta, which they say hurts their power producers and discourages cross-border transmission investment. Alberta, meanwhile, says it isn’t treating Montana any differently than it does its Canadian neighbours.

Last year, the Office of the U.S. Trade Representative listed Alberta's non-profit electrical grid operator, the Alberta Electricity System Operator, or AESO, as a trade irritant.

Zolnikov, who is chair of a Montana legislative committee studying technology and energy, said uncertainty around how transmission lines between Alberta and Montana are used is deterring investment in new infrastructure.

“To us, you’re a good neighbour, and this is not a healthy issue we’re dealing with right now … to say, we’ll fix it in the future is not an answer, right?” he said.

“He hopes a solution can be found to the situation,” Gabby Wiggins wrote in an email.

For his part, Alberta Utilities Minister Nathan Neudorf has disputed Montana’s claims.

Alberta’s system has changed dramatically in recent years, with coal power fully phased out in 2024, along with a growing role of renewable generation in the market. 

The dispute between Alberta and Montana is tied to the practical challenges of running a modern electricity grid, said Ian Nieboer, managing director and head of energy transition research with Enverus Intelligence Research.

“Functionally, Alberta is an energy island,” Nieboer told the Calgary Eyeopener last month.

Alberta has limited connections to other grids, with three transmission lines, or interties, that run between British Columbia, Saskatchewan and Montana, allowing power to flow across borders.

From Alberta’s perspective, grid rules apply equally to all suppliers. When electricity supply exceeds what the system can safely handle, AESO has to curtail power, Nieboer explained. 

“From the perspective of a Montana producer in the U.S., this should be an open free market, where the lowest cost electron wins,” Nieboer said.

“From a system operator standpoint, it’s not just lowest cost, it is also security and reliability of the grid. So when you have that different rubric for making your choices, you may choose more expensive domestic resources over what you are finding from Montana.”

Neudorf, Alberta’s utilities minister, recently returned from a trip to Montana where he spoke to Montana Governor Greg Gianforte about shared issues between the two jurisdictions.

Given the addition of new generation on the grid, in 2024, Alberta went from a net importer of electricity, primarily from British Columbia and Montana, to a net exporter, Neudorf said.

“That has caused some change in that relationship. But explaining that to them, that it’s not treatment of any course, it’s basically just the reliability of the grid and becoming stronger as a generating capacity within our province,” Neudorf told the Calgary Eyeopener.

The current arrangement doesn’t satisfy Zolnikov, the Montana Republican state senator.

“What the solution long-term to this is, we need to build out more to solve this problem. And Alberta’s current solution is preventing us from building out more, because no one knows what they’re going to do,” he said.

“We’re not just saying, Alberta, this is your problem, you solve it. Because we can help solve it with investment from our side, too. But right now, this is not a very smart place.

“I’ve talked to people who want to invest on transmission going north … no one’s going to touch this with a 10-foot pole until there’s surety.”

Jason Wang, a senior electricity analyst with the Pembina Institute, said connections between regions are important because they lower electricity costs and make the system more reliable, and Alberta currently has too few of these compared to other places.

He added that Alberta currently isn’t fully using the connections it has with places like Montana and B.C. Due to technical issues.

“The one thing we’d hope to see come out of the situation, actually, is more regional collaboration. Because, as I said, Alberta needs more interties with all of its neighbours,” Wang said.

“This is beneficial not actually just for Alberta, but also for our neighbours. It’s important for nation building.”

On the Calgary Eyeopener, Neudorf said repairing interties could cost as much as $500 million.

“Who pays for that, how do we pay for that? Does it fix the solution or does it fix the problem immediately? Does it fix it over the long-term?” he said. “Those are the conversations that we continue to have.”

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