The Conservative government of Canada's energy province is promising to inaugurate a new era of efficient regulation -- by going back to the approach taken in its formative times. After 12 years of a forced marriage, Alberta's natural gas, oil and power watchdogs will regain their former stature as two separate agencies responsible for supply development and protecting consumers.

The administration introduced legislation to split up the Alberta Energy and Utilities Board (AEUB) by 2008, after consultations with affected groups.

A revived Energy Resources Conservation Board (ERCB) will concentrate on keeping gas, oil and coal development orderly, safe and environmentally acceptable. A separate Alberta Utilities Commission (AUC) will take over, strengthen and simplify supervision of power deregulation, consumer price protection and the electricity transmission grid.

The split unravels a marriage imposed on the agencies in 1995 by provincial budget cuts. Alberta Energy Minister Mel Knight said in introducing the about-face legislation that it "will help ensure our regulatory system can effectively manage growth pressures and provide all Albertans with access to a robust regulatory authority."

In an interview, Knight said "the situation is very much different than it was 15 years ago." Rising energy prices, surging provincial revenues and rapidly expanding industry overtook the cost savings forecast for the AEUB merger by forcing the combined agency to grow. "We haven't found there was a lot in that," Knight said.

The increasingly busy board handled 60,000 applications last year alone, the energy minister said. Since 1998 the AEUB's staff grew 40% to 880 and its annual budget about doubled to C$136 million, partly covered by levies on oil and gas companies.

The restored ERCB will keep a largely unchanged version of the old agency mandate to ensure orderly development, Knight said. But the return of the word conservation to the 69-year-old board's name revives traditional Alberta emphasis on ensuring the greatest possible value is extracted from provincial resources.

The new Alberta Utilities Commission will be a bigger version of its small ancestor before the AEUB marriage, enlarged by taking command of four agencies spawned by provincial power deregulation. The commission will absorb the Alberta Electric System Operator (AESO), Market Surveillance Administrator, power supply "balancing pool," and Alberta Utilities Consumer Advocate, Knight said.

<>The operator will keep its planning role but do its assessments of needs for additions to the electricity transmission grid at the same time as the commission considers expansion proposals by industry, he said. Up to 18 months could be saved reviewing projects such as a current hotly contested plan for a new power transmission line between Edmonton and Calgary, the energy minister estimated.

In its latest state-of-supplies report, the AEUB warned that annual average growth in power demand of 4.4% threatens to overtake the Alberta power grid. Rising prices and risks of failures are seen ahead unless transmission and generation projects catch up. In the transmission line case, protesting landowners recently won a hearing in the Alberta Court of Appeal with the potential to throw the project into confusion.

The critics were granted leave to appeal AEUB rulings saying the line is needed and choosing a broad "corridor" for sponsor AltaLink to develop a route by negotiating with landowners. The court said the appeal was needed to sort out proper procedures for a previously untried system created by provincial deregulation policy.

Defining the roles of the AEUB and power system operator AESO are central issues in the legal battle. The new legislation is expected to resolve the issues by clarifying the agency's jurisdictions and possibly by effectively ending the AESO's role as a decision-making tribunal.

<>Knight's plan will turn the consumer office, currently a low-profile branch of the Service Alberta administrative department, into a full-time public defender bureau. The power ombudsman would be similar to the California Public Utilities Commission's Office of Ratepayer Advocates. The idea is that an expert public defender will both save time and improve attitudes towards the regulatory system by ensuring consumer interests have an informed, intelligent advocate.

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