Alberta’s Bill 86 updates three electricity statutes to recognize energy storage as a regulated part of the power system. It defines storage facilities and storage resources, requires Commission approval for most facilities, and gives the Alberta Utilities Commission authority over their construction, operation, reliability, security and connection to the grid.
The bill also draws a line between storage used as a competitive market asset and storage embedded in regulated transmission or distribution infrastructure. Utilities generally cannot offer power from infrastructure storage into the power pool, and distribution-system owners need Commission approval to own storage facilities.
The framework separately accommodates self-supply, municipal systems, non-wires services and existing facilities.
At a Glance
What It Does
The bill adds energy storage facilities and energy storage resources to the Alberta Utilities Commission Act, the Electric Utilities Act and the Hydro and Electric Energy Act. Except for specified exemptions, no person may construct or operate an energy storage facility without Commission approval, and the Commission may regulate its location, construction, operation, connection, reliability and abandonment.
Who It Affects
The changes directly affect storage developers, transmission and distribution owners, municipalities, the Independent System Operator, electricity market participants and owners of facilities that were already operating or under construction. They also affect industrial operators and property owners that use storage solely for self-supply.
Why It Matters
The bill treats storage as neither simply generation nor ordinary distribution equipment. Its distinctions determine who may own a storage asset, whether the asset can participate in the power pool, when competitive procurement is required and which regulatory safeguards apply.
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What This Bill Actually Does
Bill 86 creates two related concepts. An “energy storage facility” is the overall facility capable of taking in electric energy, holding it and discharging it later.
An “energy storage resource” is the component of that facility that performs the storage function, together with a share of associated equipment needed for safe, reliable and economic operation. The Electric Utilities Act separately treats that resource as distinct from a generating unit, while the Hydro and Electric Energy Act can treat an approved storage facility as part of an electric distribution system.
The core approval rule appears in the Hydro and Electric Energy Act. A person cannot construct or operate an energy storage facility without an order approving both activities.
The Commission may establish procedures for siting, construction and operation, and it may inspect storage facilities, require assistance from operators and regulate connections, discontinuance and environmental or safety measures. The bill exempts storage used solely by a person for that person’s own use, unless the Commission directs otherwise, and storage included in a distribution system or transmission line.
Regulations may still require self-use operators to notify the Commission and provide information.The Electric Utilities Act determines how storage fits into Alberta’s electricity market. Storage resources become part of the statutory vocabulary for owners, market participants, distribution systems, transmission facilities, rates, isolated units and reliability standards.
A transmission owner cannot offer energy from a storage resource included in a Commission-approved needs identification document to the power pool. A distribution owner faces the same restriction when the resource forms part of a Commission-approved storage facility.
Those provisions preserve a distinction between storage procured as infrastructure and storage competing as a market asset.The bill also gives distribution planning a broader mandate. Distribution owners must prepare system plans in accordance with ministerial regulations, and their statutory duty to make decisions about system construction, upgrades and improvements expressly includes non-wires services.
The Commission must generally be satisfied that the owner cannot competitively procure those services before approving utility ownership of a storage facility. It may nevertheless approve ownership where only one provider exists, competitive procurement is uneconomic, or the storage proposal offers superior safety and reliability.Finally, Bill 86 extends existing electricity rules to storage, including tariff treatment, municipal ownership restrictions, transmission definitions, land-acquisition rules, security regulations and reliability standards.
It also deems a person already operating or constructing a storage facility under authority of the Act to hold a subsisting approval, subject to the Commission’s ability to issue a replacement approval. The result is a framework that recognizes storage throughout the electricity regime without granting every storage asset the same legal or market status.
The Five Things You Need to Know
The bill requires Commission approval before a person constructs or operates an energy storage facility, but exempts storage used solely for the owner’s own use and storage included in a distribution system or transmission line, subject to Commission directions and possible reporting rules.
An energy storage resource includes the storage component and a share of associated facilities such as fuel-handling equipment, cooling-water facilities and switchyards; it does not include a generating unit.
A transmission owner may not offer energy from storage included in an approved needs identification document to the power pool, and a distribution owner faces the same restriction for storage approved as part of its system.
The Commission generally must find that a distribution owner cannot competitively procure non-wires services before approving utility ownership of a storage facility, subject to exceptions for sole-source supply, uneconomic procurement, or superior safety and reliability.
A person already operating or constructing an energy storage facility when the new provision takes effect is deemed to hold a subsisting approval, allowing the Commission to issue a replacement approval on terms it considers suitable.
Section-by-Section Breakdown
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Adds storage to Alberta Utilities Commission oversight
The bill inserts energy storage facilities into the Alberta Utilities Commission Act wherever the statute governs power plants, including hearing exemptions, public-interest considerations, local interveners, Commission applications, security regulations and the Market Surveillance Administrator’s mandate. The market-surveillance changes expressly cover the storage of electricity, not only its supply, generation, transmission or sale.
This matters because storage projects will enter an existing regulatory system rather than operate under an unclassified asset category. The Commission can consider social, economic and environmental effects in relevant proceedings, while market surveillance can address storage activity as part of electricity-market conduct.
Defines storage resources and sets market rules
The amendments to the Electric Utilities Act establish the legal vocabulary for storage. They distinguish an energy storage resource from a generating unit, add storage resources to the definitions of owners and transmission facilities, and clarify that distribution systems and transmission facilities generally exclude storage unless the Commission approves its inclusion through the statutory planning process.
The section also adds the principal market restrictions. Storage embedded in approved transmission or distribution infrastructure cannot offer electricity to the power pool, and municipalities may hold interests in storage resources subject to the existing framework governing municipal interests in generation. The section extends storage to tariff, isolated-unit, reliability and system-operator provisions.
Creates approval and inspection rules for storage facilities
The Hydro and Electric Energy Act receives the bill’s central permitting framework. It defines an energy storage facility, permits the Commission to classify facilities and systems, and gives the Commission authority over storage regulations, inspections, testing, records, connections and operational requirements. The statutory regime also reaches environmental protection, public safety, security and the discontinuance of operations.
The approval requirement is broad but not absolute. A person cannot construct or operate a storage facility without Commission approval, while self-use storage and storage incorporated into a distribution system or transmission line receive specific exemptions. A storage facility that contains an isolated generating unit or is included in a transmission line remains subject to additional provisions, including rules on connections and discontinuance.
Limits utility ownership and requires non-wires analysis
An electric distribution-system owner cannot own or operate an energy storage facility without Commission approval. The Commission must generally be satisfied that the owner cannot competitively procure the relevant non-wires services before granting approval.
The bill allows approval despite that general rule when only one provider is available, procurement would not be economic, or the proposed facility would provide superior safety and reliability. This makes utility-owned storage an exception tied to a system need, rather than an unrestricted asset class for regulated distribution companies.
Extends land, reliability and transitional protections
The bill allows the statutory land-acquisition and expropriation provisions to apply to qualifying storage facilities, including facilities containing isolated generating units. It also extends the definition of an operator and other operational provisions to storage, ensuring that storage projects can be addressed through the same property and regulatory mechanisms used for electricity infrastructure.
The transitional rule protects facilities already operating or under construction under authority of the Act. Those operators are deemed to hold an approval, although the Commission may issue a replacement approval and impose notice requirements it considers appropriate. The provision avoids leaving existing projects outside the new framework while preserving regulatory oversight.
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Explore this topic in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Storage developers that build independent, market-oriented projects benefit from a defined legal category and a clearer approval pathway rather than having to fit their assets into generation or distribution classifications.
- Transmission and distribution owners gain a statutory route to use storage as infrastructure where it is justified by system needs, including reliability, safety or uneconomic alternatives to competitive procurement.
- Municipal utilities, including the City of Medicine Hat and its subsidiaries, receive express authority to hold interests in qualifying storage resources within the existing municipal-ownership framework.
- Industrial operators and property owners using storage solely for on-site consumption benefit from a targeted exemption from the ordinary facility-approval requirement, subject to possible Commission directions and reporting rules.
Who Bears the Cost
- Storage developers must account for Commission approval, inspections, connection requirements, reliability standards, security rules and possible environmental or operational conditions before constructing or operating most facilities.
- Electric distribution owners face additional planning and procurement obligations and cannot own storage facilities freely; they must demonstrate why competitive non-wires procurement is unavailable, uneconomic or inferior on safety and reliability grounds.
- Transmission and distribution owners with storage embedded in approved infrastructure lose access to power-pool participation for the energy discharged by those resources, limiting their commercial flexibility.
- The Alberta Utilities Commission, the Independent System Operator and the Market Surveillance Administrator receive broader responsibilities for classifying, monitoring, planning for and regulating storage, creating administrative and technical demands that the bill does not separately fund.
Key Issues
The Core Tension
The bill tries to encourage storage where it solves a genuine grid problem without allowing regulated utilities to acquire market assets without competitive discipline. A strict separation protects competition and ratepayers from utility self-dealing, but it can make it harder to deploy storage quickly when a utility is best positioned to provide reliability or non-wires services. The framework leaves that balance to Commission findings about procurement, economics, safety and reliability.
The bill’s most important design choice is its treatment of storage as infrastructure in some settings and as a market participant in others. A facility can be physically capable of buying, storing and selling electricity, but its legal treatment depends on how it is approved and who owns it.
That distinction may affect investment decisions, rate recovery, market access and the allocation of operational risk.
The non-wires-services test also leaves meaningful implementation questions. The bill identifies circumstances in which a utility may own storage, but the Commission must determine issues such as what counts as competitive procurement, when procurement is uneconomic, how to compare storage with alternatives and how to measure superior reliability or safety.
Those decisions will shape whether utility-owned storage remains an exception or becomes a common distribution-planning tool.
The self-use exemption reduces regulatory friction for behind-the-meter projects, but its boundaries may require careful interpretation. Questions can arise when a facility occasionally exports energy, serves multiple properties, supports a broader industrial system or shares equipment with a regulated network.
The bill gives the Commission and future regulations tools to address those cases, but it does not resolve them in the statute itself.
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