On April 4, 2025, the Alberta Electric System Operator (AESO) released a stakeholder update on the Restructured Energy Market (REM), announcing its decision to remove the proposed Day-Ahead Commitment (DAC) market and the Day-Ahead Energy Scheduling (DAES) market from the REM design.
Background
In March 2024, the Minister of Affordability and Utilities (MAU) directed the AESO to begin drafting a technical design proposal for the REM. The AESO proposed a phased approach to implementing the REM, which included introducing the DAC and DAES markets. In July 2024, MAU directed the AESO to proceed with these components. The DAC and DAES markets were intended to enhance certainty and control over generation commitments ahead of time, promoting system stability and minimizing price volatility. For a detailed look at developments since the initial REM announcement, please refer to our earlier updates from March 12, March 15, June 17, and August 23, 2024, as well as our Power Perspectives 2025 Report.
In addition to the design sprints carried out in 2024, between December 2024 and January 2025, the AESO engaged with stakeholders for feedback, followed by two weeks of REM design finalization sessions held between February and March 2025. During these consultations, stakeholders raised serious concerns about the risk of over-procurement in the DAC market—largely attributed to rigid administrative pricing mechanisms. There were also broader concerns that such mechanisms, if not paired with robust governance and independent oversight, could compromise revenue sufficiency and increase costs for consumers.
AESO Stakeholder Update
According to the AESO, the decision not to proceed with the DAC and DAES is grounded in stakeholder input. The AESO further emphasized that this change will not impact the reliability or affordability of Alberta's power system.
Other elements of the REM design remaining in place include:
- Co-optimization of energy and ramping reserves, wider real-time price range (price cap of $3,000/MWh) to send more dynamic signals in the market;
- Congestion pricing (AESO preferred option: Locational Marginal Pricing) in coordination with Optimal Transmission Planning to manage congestion within the market; and
- Market power mitigation measures (secondary offer cap) to provide guardrails against excessive exercise of market power.
Next Steps
The AESO held a stakeholder session on April 10, 2025 to share further insights into this decision, its rationale, and the implications for the broader REM timeline and design. Due to the design modifications, the AESO indicated that these changes might extend the timeline for rule approval into early 2026.
Our team at McCarthy Tétrault is closely observing the development of the REM, and we remain committed to helping our clients navigate the broader regulatory landscape of the energy transition. To discuss these regulatory changes, please contact your trusted McCarthy Tétrault advisor or one of the authors.
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