So You Want to Supply Your Own Power: Key Considerations for On-Site Generation in Alberta

Legislative Amendments and Grey Areas

The amendments to section 2(1)(b) in March 2024 clarified that self-supply may include export of surplus generation and that self-supply may be subject to tariff charges under the AESO tariff. This clarified longstanding uncertainties following earlier AUC rulings like EPCOR's E.L. Smith Solar Project. As noted in our prior commentary, these legislative changes sought to address those regulatory gaps.

Nonetheless, ambiguities persist, including:

• permissible self-supply configurations and ownership structures;
• defining “that person” when multiple infrastructure owners or users occupy a single facility;
• the application of ISD criteria amid evolving power generation and use models; and
• securing the necessary land rights for both generation and load facilities, particularly on Crown land.

If a particular power user is unable to rely on an EUA exemption (such as section 2(1)(b)), it is not allowed to supply its own power and must secure electricity service from the local utility.

Limitations on the Self-Supply Exemption

The self-supply exemption in section 2(1)(b) is narrowly defined:

• Generation and load must reside on the same property.
• Electricity must be used exclusively by the person who owns or leases the property on which the generation occurs.
• Self-suppliers must hold appropriate property rights for both generation and load facilities and related land uses. For instance, an existing lease or licence to generate power may not permit the addition of on-site load, such as a data centre.
• The AUC recently stated that supply must not cross roads, railways, or third-party owned lands (although that conclusion is under appeal).

In addition, while the self-supply exemption permits arrangements between a generator and load customer on the same property (per s.2(3)), the AESO generally prohibits two distinct entities from sharing a common system connection for both load and export, restricting possible structures and configurations.

In its June 2025 ruling on McCain Foods’ Coaldale Project, the AUC strictly applied these requirements. Renewable facility collector lines traversing road and rail infrastructure rendered the configuration non-exempt, which precluded the proponent from advancing its power project as a direct source of electricity. In September 2025, the Alberta Court of Appeal granted permission to appeal the AUC decision, including its strict interpretation of the self-supply exemption and conclusion that "electric distribution systems" include self-supply wires.

Meanwhile, local utilities, the AESO and the AUC continue to monitor power plant applications to ensure compliance with the limited exemptions under the EUA. In some cases, utility opposition to proposed self-supply arrangements has led to the cancellation of proposed projects, including data centres.

The Medicine Hat Exception: A Unique Self-Supply Regime

The City of Medicine Hat stands apart with a unique self-supply framework ˗ it is exempt from the requirements of the EUA. That is, due to its historical status of self-sufficiency in generation and distribution, it does not form part of the provincial grid. The key features of interest to potential self-suppliers include:

• The City owns and operates its own generation, distribution, and retail utilities, and serves as the sole electricity retailer in its franchise area.
• The recently amended bylaw allows industrial-scale producers to sell electric energy back to the City grid. Amendments to the City's bylaws in October 2024¹ contemplate "Self-Supply and Export Sites" where electric generation capability is used for both self-supply and "the actual and/or potential exportation of any unused electrical energy produced on the Consumer’s property to the City’s Electrical System."²
• The City's regulatory framework for self-supply and export has already been operationalized. For example, in February 2025, the AUC approved an application by Big Marble Farms Inc.,³ to interconnect its existing 12-megawatt power plant⁴ to the City's electric distribution system.⁵ The related self-supply and export arrangement between the City and Big Marble Farms is separately governed by a confidential commercial agreement between the parties.⁶

Although geographically limited, Medicine Hat’s model reflects long-standing municipal control that is separate from certain provincial rules, providing local self-suppliers with an alternative template that is not possible elsewhere in the province.

In Summary: The Key Issues for Developers

• Property Contiguity: Generation and load should reside on contiguous land, with the least risk arising from co-location on a single titled parcel with no public infrastructure separation. Further clarity on this issue may come from the Court of Appeal when it rules on McCain Foods' Coaldale Project.
• Definition of “That Person”: Electricity must be used solely by the owner or tenant of the property in question, which property includes the generation sites.
• Property Rights: All necessary land rights must be secured for both generation and load facilities and associated uses.
• Transmission Cost Allocation: Self-suppliers may incur tariff charges under the AESO tariff, including for the portion of the electricity that is consumed on-site. It is currently unknown what these charges will be.
• Project Ownership: Shared ownership of generation and load can allow a single connection. The AESO generally opposes split-entity connections.
• ISD Requirements: Although an ISD exemption provides more flexibility, the criteria are prescriptive and designations are traditionally reserved for combined (electricity + thermal) uses.
• Medicine Hat Exception: If located within Medicine Hat’s franchise, alternative local rules may apply, including municipal contractual arrangements relating to the export of electric energy and tailored bylaw treatment of industrial self-suppliers.