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The spatial behaviour of Alberta's electricity industry, 1888-1965 : the impact of economies of scale Mullins, Gary Edward 1970

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THE SPATIAL BEHAVIOUR OF ALBERTA'S ELECTRICITY INDUSTRY, 1 8 8 8 - 1 9 6 5 : THE IMPACT OF ECONOMIES OF SCALE by GARY EDWARD MULLINS B. A., University of B r i t i s h Columbia, 1964 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF Master of Arts i n the Department of Geography We accept t h i s thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA March, 1970 i i In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the require-ments for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y a v a i l -able for reference and study. I further agree that permission for extensive copying of t h i s thesis for scholarly purposes may be granted by the Head of my Department or by his repre-sentatives. It i s understood that copying or p u b l i c a t i o n of th i s thesis for f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of Geography The University of B r i t i s h Columbia Vancouver 8, Canada" March, 1970 ABSTRACT i i i This study describes the s p a t i a l evolution of the e l e c t r i c i t y industry i n A l b e r t a over the period 1885-1965 i n terms of production f a c i l i t i e s , transportation linkages and market nodes and seeks to i d e n t i f y the forces which brought about the observed patterns, 1 Three d i s t i n c t patterms of s p a t i a l organization are i d e n t i f i e d ? ( l ) a dispersed pattern of i s o l a t e d generating stations serving proximate consumers through d i s t r i b u t i o n l i n e s only, (2) a pattern of a large generating s t a t i o n or generating complex serving numerous communities through an incomplete network of transmission l i n e s , and (3) a pattern of numerous generating stations serving a regional or pro-v i n c i a l market through an e l e c t r i c i t y g r i d . The major c h a r a c t e r i s t i c s which d i f f e r e n t i a t e d one s p a t i a l pattern from another, and which i n i t i a t e d these changes i n s p a t i a l organization, i s shown to be the increasing use of large and/or s p e c i a l purpose generating units and the l i n k i n g of these f a c i l i t i e s to markets by transmission l i n e s . I t i s argued that the s i g n i f i c a n t l y reduced unit costs of large generating f a c i l i t i e s was the primary force bringing about the evolution of the industry from one s p a t i a l pattern to another and that transmission f a c i l i t i e s are the s p a t i a l l i n k -ages which permit the expansion of an e l e c t r i c i t y system by the i n c l u s i o n of a d d i t i o n a l market nodes. As these represent a d d i t i o n a l costs, they also e s t a b l i s h l i m i t s to the areal ex-pansion of an e l e c t r i c i t y system at each stage of development. V TABLE OF CONTENTS CHAPTER PAGE I. INTRODUCTION . . . . . . . . . 1 II. THREE STAGES IN THE DEVELOPMENT OF ALBERTA'S ELECTRICITY INDUSTRY TO 1965 . . 9 The P r o l i f e r a t i o n of the Isolated Generating Station, 1888-1925 . . . . . . 11 Ar e a l Expansion and Corporate Consolidation, 1926-1948 . 20 Spa t i a l Integration, 1949-1965 . . . . . . 32 Summary of the Industry's Growth, 1888-1965 . . . . . 44 II I . ECONOMIES OF SCALE AND SPATIAL INTEGRATION . . . . . . . . . . . . . . . . 4,7 Sp a t i a l Integration:. The Key to Incomplete Networks . . . . . . . . . . . 53 Spa t i a l Integration: The Key to Complete Networks . . . . . . . . . . . 57 IV. ELECTRICITY TRANSMISSION: THE KEY TO SPATIAL INTEGRATION . . . . . . . . . . . 72 Basic C h a r a c t e r i s t i c s of Transmission Systems « « « • • • <> o * « • « « © 7,3 Alberta's E l e c t r i c i t y Transmission System 79 V. SUMMARY AND CONCLUSIONS . . . . . . . . . 85 v i LIST OF TABLES TABLE PAGE I i Timetable of Power Development i n Alberta, 1888-1921 . 14 II System Generator Capacity Increases 1952-1965 . . . . . . . . 40 III E l e c t r i c Load i n Alberta, Selected Years . . . . . . . . . . . . 58 IV System and Grid Reserves, 1962-1964 . . . 61 • . ' / . . . V Alberta System Load, Generation and E l e c t r i c i t y Interchange for Monday, March 7, 1966. . . . . . v ... . . . . . . 66 v i i L I S T OF FIGURES FIGURE PAGE 1. Map o f G e n e r a t i n g S t a t i o n s and T r a n s m i s s i o n F a c i l i t i e s , 1921 15 2. Stage 1 i n t h e Development o f an E l e c t r i c Power System 16 3. Map o f G e n e r a t i n g S t a t i o n s and T r a n s m i s s i o n F a c i l i t i e s , 1930 . . . . . . . . 23 4. Stage 2 i n t h e Development o f an E l e c t r i c Power System 26 5. Map o f G e n e r a t i n g S t a t i o n s and T r a n s m i s s i o n F a c i l i t i e s , 1942 , 29 6. Map o f Bow R i v e r Hydro P l a n t s . . . . . . . 31 7. Map o f G e n e r a t i n g S t a t i o n s and T r a n s m i s s i o n F a c i l i t i e s , 1954 . . . . . . . . . . . . . . 35 8. Map o f G e n e r a t i n g S t a t i o n s and T r a n s m i s s i o n F a c i l i t i e s , 1965 . . . . . . 41 9. Stage 3 i n t h e Development o f an E l e c t r i c Power System . . . .. . . . . . '-'42 10. Maps Showing A r e a s o f S p a t i a l O r g a n i z a t i o n i n A l b e r t a ' s E l e c t r i c i t y I n d u s t r y - S e l e c t e d Y e a r s 45 11. C a p i t a l C o s t s p e r MW by Index Numbers f o r * V a r i o u s S i z e G e n e r a t i n g S t a t i o n s 49 12. M a i n t e n a n c e and O p e r a t i n g C o s t s by Index Numbers f o r V a r i o u s S i z e G e n e r a t i n g S t a t i o n s . . . . . . . . . 50 13. H o u r l y Load Curves and G e n e r a t i o n Curves f o r Canad i a n U t i l i t i e s Two M a j o r Power T e r r i t o -r i e s - The N o r t h and The South . . . . . . 67 ACKNOWLEDGEMENTS The author i s most appreciative of the d i r e c t i o n and encouragement given "by Dr, J.D.Chapman and Dr. W.G. Hardwick, and to the Research Committee of the Faculty of Graduate Studies who helped to make t h i s thesis poss-i b l e through a research grant i n 1 9 6 5 . CHAPTER I INTRODUCTION This study i s an examination of the s p a t i a l behaviour of the e l e c t r i c i t y industry i n Alberta. A de s c r i p t i o n of the evolution of the industry i s presented i n order to determine i t s varying s p a t i a l patterns through time and to i s o l a t e the key c h a r a c t e r i s t i c s of each stage of development and the major elements of change. The two major functions, generation and transmission are analyzed i n order to determine t h e i r respect-ive r o l e s , and the interplay of these roles i n determining the industry's s p a t i a l pattern. The approach to the study i s com-prehensive. By analysing the general s p a t i a l patterns of the industry through time as w e l l as the s p e c i f i c l o c a t i o n a l cha-r a c t e r i s t i c s of each major element i n the industry, i t i s possible to portray the industry's dynamic s p a t i a l behaviour. Previous geographical studies of the e l e c t r i c i t y industry have been limited i n scope. Most have dealt with eit h e r a spe-c i f i c problem i n generation, transmission or d i s t r i b u t i o n , or the r o l e of the e l e c t r i c a l p o t e n t i a l i n the resource base of a region. Studies concerning e l e c t r i c i t y generation are often .related to the resource base of an area,1 or to the r e l a t i v e 1. F a r r e l l , Brian H., Power i n New Zealand: A Geography  of Energy Resources i n New Zealand, Wellington, A.H. Reed, 1962. 2 influence of f u e l s , process water or e l e c t r i c i t y markets i n the s e l e c t i o n of a steam generating site.2 Transmission studies include comparisons of the advantages of the movement of p r i -mary energy compared to the movement of e l e c t r i c i t y . - ^ One study raised the importance of a transmission f a c i l i t y ' s r o l e i n e l e c t r i c i t y system operation, but f a i l e d to discuss the impact of this r o l e on the s p a t i a l pattern of the industry.^ The most prominent analysis of e l e c t r i c i t y d i s t r i b u t i o n d i s -cusses the s p a t i a l c h a r a c t e r i s t i c s of power t e r r i t o r i e s i n terms of size, consumer density and d i s t r i b u t i o n system ownership.5 But i n no case i s there a geographic treatment of the e l e c t r i -c i t y industry as a manufacturing industry which discusses the interplay of each element of the industry i n determining i t s s p a t i a l pattern. 2. Deasy, G.F. and Greiss, P.R., "Factors Influencing D i s t r i b u t i o n of Steam E l e c t r i c Generating Plants", Professional  Geographer; Volume 12, May 1960, pp. 1-4. 3. Manners, Gerald, The Geography of Energy, London, Hutchinson and Co., 1964, pp. 69-115. 4. Rawstron, E.M., "Changes 'in the Geography of E l e c t r i c i t y Production i n Great B r i t a i n " , Geography, Vol. 40, 1955, p. 93. Rawstrom indicates the use of transmission grids to pool reser-ve capacity, but f a i l s to draw out i t s s i g n i f i c a n c e i n system planning. 5. Church, Martha, The S p a t i a l Organization of E l e c t r i c  Power T e r r i t o r i e s i n Massachusetts, Chicago, The University, of Chicago, 1960. An area which lends i t s e l f w e ll to an analysis of the s p a t i a l behaviour of the e l e c t r i c i t y industry as a whole i s the Province of Alberta. This area has been selected because of i t s pattern of population d i s t r i b u t i o n , i t s abundant supply of prime energy sources, and the fact that i n 1965, the p r o v i n c i a l boundary e f f e c t i v e l y delimited the e l e c t r i c i t y industry's func-t i o n a l area. Alberta's population i s concentrated i n two urban centres, set i n a background of numerous small communities and r u r a l areas. No c i t y , or any e l e c t r i c i t y intensive industry domina-tes either the province or the e l e c t r i c i t y industry. Abundant sources of a l l f o s s i l fuels, are located throughout the pro-vince with hydroelectric p o t e n t i a l along i t s western l i m i t s . Therefore the region has no p a r t i c u l a r physical r e s t r i c t i o n s which could seriously l i m i t a l t e r n a t i v e patterns of development or'predeterminate' the industry's s p a t i a l patterns. Alberta i s also the sole remaining province with major private e l e c t r i c u t i l i t i e s . As such, industry development patterns are more 'li k e l y to r e f l e c t a c t u a l : i n d u s t r y costs, rather than being multi-purpose developments which may be i n -fluenced by s o c i a l , p o l i t i c a l , or r egional growth considera-t ions. • ...... ... . . . . , This study includes an analysis of the two major elements i n the industry," production and transportation. - Although-the p r o d u c t " e l e c t r i c i t y " i s an i n t a n g i b l e , the e l e c t r i c i t y i n d u s -t r y may be c o n s i d e r e d as a m a n u f a c t u r i n g i n d u s t r y . E l e c t r i c i t y i s produced t h r o u g h the c o n v e r s i o n o f b a s i c raw m a t e r i a l s i n t o a more c o n v e n i e n t and u s e f u l p r o d u c t , d i f f e r i n g c o m p l e t e l y from i t s raw m a t e r i a l s . The f u l l range o f economic a c t i v i t y , from the e x t r a c t i o n o f raw m a t e r i a l s . , t h r o u g h the ma n u f a c t u r e o f a d i s t i n c t i v e p r o d u c t , t o i t s t r a n s p o r t a t i o n , m a r k e t i n g and con-s u m p t i o n a r e s h a r e d w i t h p r o d u c e r s o f more t a n g i b l e p r o d u c t s . E l e c t r i c i t y a l s o competes i n the market p l a c e w i t h s u b s t i t u t e p r o d u c t s f o r many u s e s . The p r i m a r y p r o d u c t i o n phase o f the e l e c t r i c i t y i n d u s t r y i s f u e l e x t r a c t i o n f o r t h e r m a l g e n e r a t i o n o f e l e c t r i c i t y and the h a r n e s s i n g o f the k i n e t i c energy p o t e n t i a l o f r i v e r f l o w t h r o u g h t h e c o n s t r u c t i o n o f dams and w a t e r s t o r a g e f a c i l i t i e s , f o r h y d r o g e n e r a t i o n . I n b o t h c a s e s , secondary p r o d u c t i o n t a k e s the form o f c o n v e r t i n g t h e r m a l o r k i n e t i c energy i n t o e l e c t r i -c i t y . I n p r e p a r a t i o n f o r t r a n s p o r t a t i o n , e l e c t r i c i t y i s t r a n s -f o r m e d 6 f r o m one v o l t a g e ? t o a n o t h e r t o a c h i e v e g r e a t e r e f f i -c i e n c i e s i n e l e c t r i c i t y t r a n s m i s s i o n . The p r o c e s s o f t r a n s -f o r m a t i o n i s s i m i l a r t o t h a t o f ' p a c k a g i n g ' . H i g h v o l t a g e 6 . The p r o c e s s o f c h a n g i n g v o l t a g e from one l e v e l t o a n o t h e r i s known as t r a n s f o r m a t i o n . 7. V o l t a g e r e f e r s t o e l e c t r i c a l p r e s s u r e . 5 l e v e l s a r e used f o r l o n g d i s t a n c e t r a n s m i s s i o n o f l a r g e quan-t i t i e s o f e l e c t r i c i t y , medium v o l t a g e l e v e l s a r e u s e d f o r s e c -ondary t r a n s m i s s i o n o r f o r p r i m a r y d i s t r i b u t i o n , and low v o l t a g e l e v e l s a r e u s e d f o r u l t i m a t e d i s t r i b u t i o n t o d o m e s t i c and c o m m e r c i a l consumers. The m ajor d i f f e r e n c e between t h e e l e c t r i c i t y i n d u s t r y and o t h e r m a n u f a c t u r i n g i n d u s t r i e s i s e l e c t r i c i t y ' s n o n - s t o r a b i l i t y . Because o f t h i s f e a t u r e , t h e e l e c t r i c i t y i n d u s t r y ' s p r o d u c t i o n f a c i l i t i e s o p e r a t e c o n t i n u o u s l y , c h a n g i n g o u t p u t d i r e c t l y and i n s t a n t a n e o u s l y i n r e s p o n s e t o changes i n demand. Second, the i n d u s t r y a l s o has a u n i q u e method o f t r a n s p o r t i n g i t s p r o d u c t , " e l e c t r i c i t y " . T h i s t r a n s p o r t a t i o n u n i q u e n e s s a i d s i n t h e i d e n t i f i c a t i o n o f a l l elements i n an e l e c t r i c i t y system. T h i r d , e l e c t r i c i t y i s a form o f energy w h i c h has been m a n u f a c t u r e d a c c o r d i n g t o r i g i d s p e c i f i c a t i o n s w h i c h a r e i d e n t i c a l t h r o u g h -out r e g i o n a l , n a t i o n a l , and, o f ten, c o n t i n e n t a l a r e a s . As a r e s u l t o f i t s . u n d i f f e r e n t i a t e d c h a r a c t e r , i t s n o n - s t o r a b i l i t y and i t s u n i q u e method o f t r a n s p o r t a t i o n , t h e r e i s n o r m a l l y o n l y one s u p p l i e r o f e l e c t r i c i t y a t any g i v e n p o i n t , and t h e r e f o r e the i n d u s t r y o p e r a t e s on a r e g i o n a l monopoly b a s i s . B a s i c a s s u m p t i o n s used i n t h i s s t u d y d i f f e r from t h o s e made i n s t u d i e s o f c o m p e t i t i v e m a n u f a c t u r i n g i n d u s t r i e s . Because o f e l e c t r i c i t y r a t e and c o r p o r a t e p r o f i t c o n t r o l s p l a c e d on t h e i n d u s t r y by p u b l i c r e g u l a t o r y b o d i e s , p r o f i t i s maximi-6 zed within an established range. As rate changes are subject to public review, profit maximization takes the form of cost minimization. Cost minimization, compatible with service r e l i a b i l i t y , i s therefore taken as the industry wide operating and planning objective. 1 Because the e l e c t r i c i t y industry i s a basic u t i l i t y , i t s product being ubiquitous to individual residences and commer-c i a l and industrial establishments, the magnitude, location, and growth of e l e c t r i c i t y demand are taken as independent variables. E l e c t r i c i t y demand increases through time with the development of new uses for e l e c t r i c i t y , with increases i n general prosperity, with growth i n population or industrial and commercial activity. The location of ele c t r i c i t y demand i s therefore a function of population distribution, and in only one case i n Alberta, the location of an el e c t r i c i t y intensive indus-try. Therefore, the spatial pattern of the el e c t r i c i t y industry i s visualized as that of generating stations and transmission f a c i l i t i e s locating i n response to the independent demands of the market. Chapter II, "Three Stages in the Development of Alberta's E l e c t r i c i t y Industry to 1965", presents a basic description of three growth periods, each characterized by distinctive spatial patterns of generating stations and transmission f a c i l i t i e s linked to market areas. Each pattern i s described i n detail, 1 . J.G.McGregor, Chairman, Alberta Power Commission, personal interview, June 1966. and schematic i l l u s t r a t i o n s of each stage of development have been constructed. The overlying feature throughout the indus-t r y ' s development i s that of successive increases i n the scale of the industry, marked by the areal extent of the e l e c t r i c i t y system(s) and the degree of transmission f a c i l i t y linkage through a l l generating stations and a l l market areas. Chapter I I I , " S p a t i a l Integration: Advantages to E l e c t r i -c i t y Production" presents a systematic study of the basic eco-nomies of scale i n the e l e c t r i c i t y industry and an analysis of the role of s p a t i a l i n t e g r a t i o n i n reducing t o t a l e l e c t r i c i t y system costs through maximization of the economies of large scale generators. S i m i l a r l y , Chapter 17, " E l e c t r i c a l Transmission: The Key to S p a t i a l Integration", contains an analysis of the techno-logy and cost structure of e l e c t r i c i t y transmission f a c i l i t i e s which provide the s p a t i a l linkages i n the e l e c t r i c i t y industry. Hypotheses i n d i c a t i n g the role of e l e c t r i c i t y transmission f a c i l i t i e s i n influencing the s p a t i a l structure of the industry are developed. With t h i s appreciation of the role of trans-mission f a c i l i t i e s discussion of Alberta's transmission g r i d i n 1968 i s presented. Chapter V, "Summary and Conclusions" presents a summary of the basic i n t e r r e l a t i o n between economies of scale i n gene-r a t i o n and the degree of s p a t i a l i ntegration. Predictions con-8 cerning future developments in Alberta's ele c t r i c i t y are pre-sented. Information for this study was gathered primarily f i r s t hand from the major el e c t r i c i t y producers i n Alberta (Calgary Power Limited, Canadian U t i l i t i e s Limited and the Corporation of the City of Edmonton) and from the Alberta Power Commission, the provincial regulatory body. Historical f i l e s and as much current and historic a l cost data as was suitable for public release were made available. Government publications concerning Alberta's e l e c t r i c i t y industry were limited to the Alberta Power Commission Annual Reports and to directories. No publications giving details of the industry and no studies of the industry in Alberta i n any of the social sciences had been completed by 1966. Most information was gathered i n two f i e l d trips to Alberta i n 1965 and 1966. No attempt has been made to include more recent events, as the author has been out of Canada for most of the intervening period. CHAPTER II THREE STAGES IN THE DEVELOPMENT OF ALBERTA'S ELECTRICITY INDUSTRY TO 1965 Alberta's e l e c t r i c i t y industry had i t s s t a r t i n 1888 when a d i r e c t current generating plant was established i n Calgary's business d i s t r i c t to serve the area's hotels and streets with e l e c t r i c l i g h t . ^ From that date, the e l e c t r i c i t y industry grew through three d i s t i n c t patterns of s p a t i a l organization u n t i l 1965, by which time there was a province-wide, interconnected e l e c t r i c i t y g r i d serving Alberta with a r e l i a b l e supply of low cost e l e c t r i c i t y . Each of the three stages of development i s characterized by d i s t i n c t i v e s p a t i a l r e l a t i o n s h i p s between producing and con-suming u n i t s . These stages are i d e n t i f i a b l e by the pattern of transmission f a c i l i t i e s l i n k i n g these units and by the manner i n which these f a c i l i t i e s are operated. The three stages of deve-lopment are discussed within the context of three growth periods. During the industry's early days, described i n the section "The P r o l i f e r a t i o n of the Isolated Generating Station 1888-1925", i n d i v i d u a l nodes of e l e c t r i c i t y generation and consumption, and an absence of transmission f a c i l i t i e s characterized the industry. 1. G.G. White, " F i f t y Years of Power Production from the Horseshoe Plant", The Relay, Calgary, Alberta, XXI (Spring, 1961), p. 7. 10 Growth took the form of e s t a b l i s h i n g generating f a c i l i t i e s i n communities previously without e l e c t r i c i t y , and of adding capa-c i t y ' to generating complexes i n areas experiencing increases i n e l e c t r i c i t y demand. Transmission f a c i l i t i e s were introduced during the period e n t i t l e d here as "Areal Expansion and Corporate Consolidation 1926-1948". The s p a t i a l organization c h a r a c t e r i s t i c of this period was that of an incomplete network of transmission f a c i -l i t i e s connecting a single generating s t a t i o n or complex to numerous market areas served with more r e l i a b l e and lower cost e l e c t r i c i t y . The industry grew by a process of extending transmission f a c i l i t i e s outward from a large, low cost source of r e l i a b l e e l e c t r i c i t y to new market areas or to communities previously served by i s o l a t e d generating s t a t i o n s . The f i n a l pattern of s p a t i a l organization evident i n Alberta p r i o r to 1965 was that of an integrated e l e c t r i c i t y g r i d , or complete network. I t i s discussed i n the section, " S p a t i a l Integration, 1949-1965". Alberta's separate e l e c t r i -c i t y producers, each with i t s own incomplete network, integrated t h e i r respective systems so that the p r o v i n c i a l market was ser-ved by a l l power producers operating within a province-wide e l e c t r i c i t y g r i d . Large scale s p e c i a l purpose generating fa-c i l i t i e s , trunk transmission f a c i l i t i e s and small peripheral market areas were added to the system during t h i s period. 11 The Proliferation of the Isolated Generating Station 1888-1925 During i t s period of i n i t i a l development, the electricity-industry in Alberta was characterized by numerous isolated elec-t r i c i t y systems, each containing a small generating station ser-ving a proximate market area. These scattered nodes of e l e c t r i -city production and consumption were separated by distances greater than the maximum range for the economical transmission of e l e c t r i c i t y . By the year 1900, only Calgary, Edmonton and Lethbridge were served with electricity.2 Calgary had been the f i r s t to i n s t a l l generating f a c i l i t i e s , with the formation of the Calgary Electric Lighting Company in 1888. This direct current station became obsolete the following year when the Eau Claire and Bow River Lumber Company set up an alternating current generator to u t i l i z e i t s steam engine during off hours.^ Edmonton and Leth-bridge installed electric power stations in 1891 and 1893 res-pectively. ^  Both were privately owned coal-fired stations, which provided alternating current for lighting purposes in the evening hours. 2. Leo G. Denis, E l e c t r i c a l Generation and Distribution  in Canada, Part II, Directory, Ottawa: Commission of Conserv-ation, 1918, pp. 204-206. 3. G.G. White, op. c i t . , p. 7. 4. Leo G. Denis, op. c i t . , pp. 204-206. 12 During the industry's "early days", mechanization was limited to the hand-fed b o i l e r s operated i n response to the steam engineer's experience and i n t u i t i o n . Unreliable service, technical d i f f i c u l t i e s , and frequent breakdowns characterized e l e c t r i c a l service. The l i n e losses in.the early Calgary system were believed to exceed actual demand.^ These i n e f f i c i e n t systems were accompanied by high elec-t r i c power rates. The rate i n Lethbridge was 50£ per month per 16 candlepower bulb.^ In Edmonton, the following s l i d i n g rate scale for e l e c t r i c i t y consumption was used.? For 1 - 16 candlepower lamps $1.00 For 2 - 16 candlepower lamps 1.70 For 3 - 16 candlepower lamps 2.10 For 4 - 16 candlepower lamps 2.40 For 5 - 1 6 candlepower lamps 2.50 S i m i l a r l y high prices and the limited uses for e l e c t r i c i t y res-t r i c t e d the market to prestige customers such as l i g h t i n g f o r the better hotels and for the c i t y ' s main s t r e e t . Because d i s -t r i b u t i o n losses were great, stations were located close to the compact "downtown" market. 5. G.G. White, op. c i t . , p. 8. 6. R.D. H a l l , U t i l i t y Director, City of Lethbridge, per-sonal l e t t e r , July 14, 1966. 7. Supplied by J.G. McGregor, Chairman, Alberta Power Commission, personal interview, June 1966. 13 Towns and v i l l a g e s throughout Alberta were slow to e l e c t r i -fy. As late as the mid-1920's, e l e c t r i f i c a t i o n of many of these smaller communities was occurring simultaneously with moderniza-t i o n of e x i s t i n g systems i n the major c i t i e s . Despite the lack of population data for a l l centres,8 Table I, "Timetable of Power Development i n Alberta, 1888-1921", suggests that larger communities generally obtained e l e c t r i c i t y f a c i l i t i e s before the smaller ones. However, as i l l u s t r a t e d i n Figure 1, "Map of Generating Stations and Transmission F a c i l i t i e s , 1921", there was no s i g n i f i c a n t s p a t i a l pattern of a c q u i s i t i o n of e l e c t r i c i t y f a c i l i t i e s i n communities with less than 2000 population. The consensus of opinion among members of the industry i s that the timing of the f i r s t a c q u i s i t i o n of e l e c t r i c i t y f a c i l i t i e s was r e l a t e d more to the l e v e l of community leadership or the e x i s t -ence of an i n d i v i d u a l w i l l i n g to invest i n and operate such f a c i l i t i e s , than to community siz e or loca t i o n . This i n i t i a l period may be characterized as the f i r s t stage i n the development of an e l e c t r i c power system. Figure 2, e n t i t l e d "Stage 1 i n the Development of an E l e c t r i c Power System", i l l u s t r a t e s the pattern of independent nodes of low demand-small supply centres separated from each other by r e l a t i v e l y great distances. On a map of generating stations, areas of "Stage 1" 8. Population s t a t i s t i c s are a v a i l a b l e for census years only. 14 Table I Timetable of Power Development i n Alberta 1 8 8 8 - 1 9 2 1 DATE CITY POPULATION INSTALLED 1 9 0 1 1 9 1 1 1 9 2 1 CAPACITY ( 1 9 1 8 ) 1 8 8 8 Calgary 4 0 9 1 4 3 7 0 4 6 3 3 0 5 1 5 , 0 0 0 KW 1 8 9 1 Edmonton 2 6 2 6 2 4 9 0 0 5 8 8 2 1 8 , 0 0 0 KW 1 8 9 3 Lethbridge 2 0 7 2 8 0 5 0 1 1 0 9 7 3 , 0 0 0 KW 1 9 0 4 Red Deer 3 2 3 2 1 1 8 2 3 2 8 3 2 0 KW 1 9 0 3 Wetaskiwin 5 5 0 2 4 1 1 2 0 6 1 5 0 0 KW 1 9 0 6 High River 1 1 8 2 1 1 9 8 1 1 0 KW 1 9 0 6 Fort Sask. 3 0 6 7 8 2 9 8 2 72 KW 1 9 0 7 Cardston 6 3 9 1 2 0 7 1 6 1 2 75 KW 1 9 0 7 Macleod 7 9 6 1 8 4 4 1 7 2 3 3 0 0 KW 1 9 0 7 Raymond 1 4 6 5 1 3 9 4 8 0 KW 1 9 0 7 Lacombe 4 9 9 1 0 2 9 1 1 3 3 1 6 0 KW 1 9 0 7 Pincher Creek 3 3 5 1 0 2 7 8 8 8 1 2 0 KW 1 9 0 8 Claresholm 6 3 9 1 2 0 7 1 6 1 2 1 2 5 KW 1 9 1 0 Nanton 5 7 1 7 1 0 75 KW 1 9 1 0 Carmanguay 2 8 6 3 0 0 5 0 KW 1 9 1 1 Medicine Hat 1 5 7 0 5 6 0 8 9 6 3 4 4 0 0 KW 1 9 1 1 Camrose 1 5 8 6 1 8 9 2 1 7 5 KW 1 9 1 1 S t e t t l e r 1 4 4 4 •1416 1 5 0 KW 1 9 1 2 Bassano 5 4 0 7 9 0 . 50 KW 1 9 1 2 Didsbury 7 2 6 8 4 2 50 KW 1 9 1 2 Gleichen 1 0 1 5 8 3 6 6 8 2 5 KW 1 9 1 2 I n n i s f a i l 3 1 7 6 0 2 9 4 1 5 5 KW 1 9 1 2 Vermilion 6 2 5 1 2 7 2 50 KW 1 9 1 4 Coronation 6 4 5 6 0 KW 1 9 1 5 Vegreville 1 0 2 9 1 4 7 9 1 2 5 KW 1 9 1 6 Drumheller 2 4 9 9 8 0 KW 1 9 1 6 Hanna 1 6 3 4 70 KW 1 9 1 7 Okotoks 2 4 5 5 1 6 4 4 8 3 0 KW 1 9 1 7 Olds 2 1 8 9 1 7 7 6 4 3 5 KW 1 9 1 7 Hardisty 3 5 1 5 1 7 4 3 KW 1 9 1 7 Wainwright 7 8 8 9 7 5 3 0 KW 1 9 1 7 Magrath 9 9 5 1 0 6 9 50 KW 1 9 1 7 Vulcan 6 4 1 5 0 KW 1 9 1 8 Oyen 3 9 0 2 0 KW 1 9 1 9 Lamonte 1 9 7 ^ . 4 1 9 2 5 KW* 1 9 1 9 To f i e l d 5 8 6 5 0 0 - 6 KW* 1 9 2 0 Bashaw 4 3 3 19 KW* 1 9 2 0 Mundare 1 5 2 4 9 7 1 2 KW* 1 9 2 0 Provost 3 2 9 4 6 5 3 5 KW* 1 9 2 0 Viking 1 5 3 3 5 7 6 KW* 1 9 2 1 Grande P r a i r i e 1 0 6 1 4 0 KW* 1 9 2 1 Capacities (from numerous sources). Source: Denis, Leo G., E l e c t r i c a l Generation and Di s t r i b u t i o n i n Canada, Part I I , Directory, Ottawa, Commission of Conservation, 1 9 1 8 . Q Grande Prairie Map of Generating Stations and  Transmission Facilities in Alberta. 1921 Source Table I, Timetable of Power Development in Alberta, 1 8 8 8 -1921 i and from Calgary Power Ltd. files. Transmission Lines — 69k.v. and over Year Generating Facilities Installed Prior to 1905 • 1906 to 1910 1911 to 1915 e 1916 to 1921 o O Hydroturbine plant Edmonton o o o © Vermilion © 9 Red Deer 0 © o © o © o © o oo o o © o o Drumheller Calgary O Q © © O © 9 Lethbridge 9 Medicine Hat 16 Figure 2 Stoge I in the Development of on Elect r ic Power System s p a t i a l organization are i d e n t i f i e d by the existence of genera-tin g stations which are not connected to transmission l i n e s . The early growth of Alberta's e l e c t r i c i t y industry i s best i l l u s t r a t e d by i t s development i n Calgary. The Eau C l a i r e operation's i n i t i a l t o t a l load consisted of 200 sixteen candle-power e l e c t r i c l i g h t globes i n the c i t y ' s major hotels.° When the plant opened i n 1889 to serve t h i s market, generating capa-c i t y was considerably i n excess of demand. However, load growth was so rapid that capacity f e l l s e r i o u s l y behind demand by 1893. 1 0 9. G.G. White, op. c i t . , p. 8. 10. Ibid, p. 8. 17 To meet these new demands Eau C l a i r e b u i l t a small hydro-e l e c t r i c power dam on the Bow River near c e n t r a l Calgary.11 Unfortunately the r i v e r regime and e l e c t r i c i t y load were almost completely out of phase, with high water levels i n the " o f f -peak" summer months and i n s u f f i c i e n t water levels i n the "peak" winter months.12 The company generated hydroelectric power when water levels permitted, and f i l l e d e l e c t r i c i t y shortages with steam power from the older plants.13 The system proved c o s t l y and u n r e l i a b l e , but managed to meet Calgary's needs u n t i l the turn of the century. During the f i r s t decade of t h i s century, Calgary's popula-t i o n grew from about 4,000 to 40,000.^ As a r e s u l t , the City of Calgary i t s e l f opened a small steam plant i n 1905 to replace Eau C l a i r e ' s inadequate f a c i l i t i e s . 1 5 This municipal operation 11. This hydroelectric power i n s t a l l a t i o n was a c t u a l l y b u i l t by a subsidiary, the Calgary Water Power Company. 12. "Peak" load ref e r s to the highest l e v e l of e l e c t r i c i t y demand i n a given period. "Off-peak" refers to demand levels considerably below "peak" l e v e l s . 13. G.G. White, op. c i t . , p. 8. 14. Calgary's population grew from 4,091 i n 1901 to 43,704 i n 1911. - ' 15. G.G. White, op. c i t . , p. 18. 18 proved inadequate only six years later and was replaced by the larger Victoria Park Steam Plant.I 6 The City of Calgary's streetcar railway, which had opened in 1909, created much of this additional demand. I n i t i a l l y , the streetcar railway had three miles of streetcar lines, and four trolley cars. A separate DC generating station of 300 KW capacity was installed to power the railway and was rapidly increased in capacity as track and power lines were extended to 22 miles with 18 cars in 1910, 40 miles with 30 cars in 1911, and 60 miles with 57 cars in 1912.17 The system switched over . to AC power when the Victoria Park Steam Plant opened in 1911. Early in the second decade, developments in the Calgary area marked the beginning of significant changes in the pattern of the e l e c t r i c i t y industry. A new company, the Calgary Power Company,18 built the Horseshoe Dam and a 6,000 hp run-of-river hydroelectric generating station 50 miles up the Bow River from Calgary,19 selling power to the City of Calgary to augment the output of the Victoria Park Steam Plant. 16. Ibid, p. 18. 17. Ibid, p. 15. 18. There is no relationship between the new Calgary Power Company, and the original Eau Claire subsidiary, which ceased commercial operations in 1905. 19. G.G. White, op. c i t . , p. 24. 19 The most s i g n i f i c a n t factor permitting the development of the Bow River s i t e was the introduction into Alberta of the suspension i n s u l a t o r . This device, which had been developed a few years e a r l i e r i n the eastern United States, permitted the erection of transmission lines for r e l a t i v e l y great distances with limited e l e c t r i c i t y losses.20 As a r e s u l t , the e l e c t r i c i t y industry was freed for the f i r s t time from the r e s t r i c t i o n s of operating s o l e l y at the urban scale. It also permitted the u t i -l i z a t i o n of low-cost generating s i t e s located at a considerable distance from the market. As Calgary Power experienced the same basic water regime i n the Bow River which Eau C l a i r e had experienced nearly twenty years e a r l i e r , Calgary Power was unable to provide a continuous, r e l i a b l e supply of e l e c t r i c i t y to the City of Calgary. The company generated hydroelectric power when water levels i n the Bow River permitted, and f i l l e d r e s i d u a l demand by operating the V i c t o r i a Park Steam plant which had been leased from the Ci t y . Only i n the mid-1920's, a f t e r investment i n more run-of-river 20. Technically, the suspension i n s u l a t o r permitted the transmission of e l e c t r i c power over distances of more than 150 miles. Economically, maximum transmission distance i s a function of voltage, load factor and the comparative cost advantage of the remote generating s t a t i o n over a market generating s t a t i o n . This point i s f u l l y discussed i n Chapter IV. 20 generating f a c i l i t i e s and storage dams, was Calgary Power freed from i t s reliance on the steam plant.^1 In spite of the d i f f i -culties of river flow, however, the cost of hydroelectric power delivered to Calgary was half the cost of generation in the steam plant.^2 The development and growth of Calgary Power's f a c i l i t i e s in the period to 1925 did not alter significantly the basic pattern of the industry's development for two major reasons. F i r s t , Calgary Power's development was unique, coming at a time when the many smaller communities in the province were acquiring small generating f a c i l i t i e s designed to supply e l e c t r i c i t y only to the community in which they were installed. Second, the transmission f a c i l i t i e s from the Bow River sites to Calgary were not used in any way to group a number of small markets. The basic pattern of one market for each generating station remained unchanged. This change came only in the late 1920's, when markets were aggregated and served jointly by common generating f a c i l i t i e s . Areal Expansion and Corporate Consolidation 1926-1948 During the period 1926 to 1948, the e l e c t r i c a l industry in 21. Statement by Mr. H.R. Biles, Commercial Department, Calgary Power Limited, Calgary, Alberta, personal interview, June, 1965. 22. Ibid. 21 Alberta experienced a reduction i n the number of generating stations and power companies, and at the same time, an increase i n the number of market areas served by the remaining power companies. The l i n k i n g of i n d i v i d u a l markets to the more e f f i -cient p r i v a t e l y owned producing units by means of transmission lines was the key to th i s development. F i r s t , transmission l i n e s increased the scale of the markets by accretion and offered opportunities for further economies by increasing the system load factor and the r e l i a b i l i t y of service. Second, power companies r e a l i z e d that as a r e s u l t of reduced prices and increased r e l i a b i l i t y , the e l a s t i c i t y of demand would allow rapid increases i n consumption to take place i n areas where high e l e c t r i c i t y prices and unr e l i a b l e service had prevailed. The increased magnitude of demand would, i n turn, permit the r e a l i -zation of economies of larger scale operation and the u t i l i z a -t i o n of more economical generating s i t e s . Alberta's private power companies, Calgary Power, Union Power and Mid-West U t i l i t i e s embarked on independent but simult-aneous a r e a l expansion programmes. The timing of these program-mes resulted from several factors: the sustained population growth i n the mid-1920's, the introduction of e l e c t r i c a l a p p l i -ances into the consumer market and the gradual obsolescence of many small town systems. These factors created an environment i n which incomplete network development was imminent. If one 22 company delayed i t s expansion plans, the possibility existed that a second company might develop i t s proposed new market territory, closing the door to expansion for the f i r s t company. As a result, there was a desire on the part of each of the com-panies to pre-empt market areas. Calgary Power, the province's largest power producer, pro-vides the best example of t e r r i t o r i a l expansion. After success-f u l l y regulating the flow of the Bow River and achieving a r e l i -able power supply, the company obtained a franchise in 1926 in High River, a community mid-way between Calgary and Lethbridge.23 Towns between High River and Calgary soon signed agreements and were connected to the transmission lines. By 1930, transmission lines had been erected in a narrow corridor linking Edmonton, Calgary and Lethbridge. In most cases, previously existing dis-tribution lines in the community were u t i l i z e d . In others, the distribution system was rebuilt and in some communities, power poles were erected for the f i r s t time. The new pattern of in-complete transmission networks is seen in Figure 3, "Map of Generating Stations and Transmission F a c i l i t i e s , 1930." East of Edmonton, Mid-West U t i l i t i e s Limited initiated i t s programme of areal expansion in 1927 by purchasing old generating 23. G.G. White, "Giant Strides", The Relay, Calgary, A l -berta, XXI (Winter, 1961), p. 33. Map of Generating Stations and  Transmission Facilities in Alberta, I93Q Distribution • Communities served with central electric power Source Data collected by author from Calgary Power Ltd. files, Canadian Utilities Ltd. fi les, from newspapers, and numerous directories. o o Q. o U c a> c a> o» Transmission Lines 6 9 k.v. and over less than 69 k.v. (ft 0> Vermilion " i — ! ? Lloydminster Generating Plants internal La and combustion steam n 0 - 8 0 Kw. 81 - 250 Kw. 2 5 1 - 6 0 0 Kw. over 6 0 0 Kw. hydroturbine plant Medicine Hat Lethbridge or t\3 C O 24 stations in Vermilion and Lloydminster, and by replacing old steam generators with a diesel unit in Vermilion.24 Transmis-sion lines were extended between the two c i t i e s as well as west of Vermilion toward Edmonton. Because i t s diesel units had no particular locational or cost advantages except some economies of larger scale generation, Mid-West U t i l i t i e s operated at a loss after the Depression interrupted i t s expansion programme in 1930. Alberta's third private power producer, the Union Power Company, extended service north, east and west from Drumheller. Unlike Mid-West U t i l i t i e s , Union Power's advantage was genera-tion of e l e c t r i c i t y using low cost coal from local mines as well as increased economies of scale. Construction of transmission f a c i l i t i e s started in 1925, spreading areally each year u n t i l halted by economic d i f f i c u l t i e s during the Depression. By this time, Union Power had created a small transmission system of i t s own centered on Drumheller. Coincident with this areal expansion of transmission lines to more and more market areas was a reduction in the number of small scale production f a c i l i t i e s . The year 1926 represents the end of the period of the small scale generating f a c i l i t y . From 24. "History of Canadian U t i l i t i e s " , 1960, unpublished report from the f i l e s of Canadian U t i l i t i e s Limited, Edmonton, Alberta, pp. 2-3. 25 t h i s year onward, numerous small power plants were systematically closed down when lower cost e l e c t r i c i t y was made availa b l e with the connection of the community to a transmission network. A comparison of Figures 1 and 3, maps for the years 1921 and 1930, shows the extent of change i n t h i s i n t e r v a l of only nine years. During the 1920's, the e l e c t r i c i t y industry i n Alberta evolved from a simple pattern of proximate production and market-ing s i t e s to one of a large generating s t a t i o n serving a number of dispersed market areas linked by transmission f a c i l i t i e s . This growth changed a power system from one operating at the urban scale to one operating on a regional scale. The basic i pattern of the new system was that of d e f i n i t e paths of e l e c t r i -c i t y 'flow' outward from a c e n t r a l generating s t a t i o n through transmission lines to two or more market nodes. This pattern characterized the second stage of the industry's development. Figure 4, "Stage 2 i n the Development of an E l e c t r i c Power System", presents schematic i l l u s t r a t i o n s of the e l e c t r i c i t y industry at that time. Each transmission l i n e i s a "one-way s t r e e t " t r a n s f e r r i n g e l e c t r i c i t y outwards from a c e n t r a l gener-ating s t a t i o n to two or more dispersed nodes of e l e c t r i c i t y con-sumption. The concept of a single c e n t r a l generating s t a t i o n serving numerous markets through an incomplete network i s c e n t r a l to the second stage of development. The two basic forms c h a r a c t e r i s t i c of the second 26 F i g u r e 4 Stoge 2 in the Development of an Electric Power System A. Market Area Generating Station B. Remote Generating Station stage of development are presented in Figure 4. If the genera-ting station is located at the major market node (A), transmis-sion lines radiate outwards from this major market area to other consumption nodes. If the generating f a c i l i t y is located at a remote low cost generation site (B), e l e c t r i c i t y flows outward from the generating station to each market, or from the genera-ting station to a major market node and from there outwards to secondary market centres. The depression of the 1930's forced a stabilization in the demand for e l e c t r i c i t y in the domestic market, and a reduction in industrial demand. As a result, expansion programmes were cancelled. The financially troubled Mid-West U t i l i t i e s merged with Union Power to form Canadian U t i l i t i e s Limited. To minimize the possibility of e l e c t r i c i t y shortages result-ing from generator failures or breaks in transmission lines, the c i t i e s of Lethbridge and Edmonton signed emergency interchange agreements with Calgary Power. At the time Calgary Power's transmission f a c i l i t i e s extended to the limits of the two c i t i e s . The interchange agreement with the City of Lethbridge was opera-ted irregularly, but the agreement between Calgary Power and the City of Edmonton played an important role in the early depression years. Edmonton purchased between 20 percent and 65 percent of i t s total annual e l e c t r i c i t y requirements from Calgary Power 28 during the period 1930 to 1935,25 amounts representing between 9 percent and 25 percent of Calgary Power's total output for each year during that period. Edmonton increased i t s generating capacity from 23,000 KW to 45,000 KW in late 1935, thereby rest-oring the City to a state of self-sufficiency, and leaving the interchange agreement virtually :-unused u n t i l the 1940's.26 The outbreak of the Second World War ended depression con-ditions in Alberta. The erection of a large ammonia plant for the production of ammunitions, the scattering of air training centres throughout the province and the generally rising level of prosperity rapidly increased demand for e l e c t r i c i t y . With the exception of the large Calgary Power expansion programme designed solely to meet the demands of the ammonia plant, however, there was adequate existing capacity - i f effectively managed -to meet the increased demand. Figure 5, "Map of Generating Stations and Transmission F a c i l i t i e s , 1942", depicts this basic pattern of the industry between 1939 and 1948. To meet the e l e c t r i c i t y demand of the Alberta Nitrogen 25. Data for this and for similar calculations has been taken from "12-Month Load Summation Figures" charts for the entire period 1912-1965 which show station generation, regional load, company load, and other data on a monthly basis and for 12-month running summaries. 26. "Some Facts about Calgary Power Limited", Calgary Power Limited, Calgary, Alberta, February, 1964, p. 21. LP i r Map of Generating Stations and  Transmission Facilities in Alberta, 1942 Distribution • Communities served with central electric power Transmission Lines — 6 9 k.v. and over — less than 69 k.v. Source Calgary Power Company Transmission Dpt. Map Grande Prair ie 3 0 plant located i n the outs k i r t s of the City of Calgary, Calgary Power b u i l t a storage dam on Lake Minnewanka, added 5 0 feet to the Kananaskis Reservoir and constructed an 1 8 , 0 0 0 KW generating s t a t i o n at the new Cascade Dam (Figure 6 ) . 2 7 g y 1 9 4 5 ? the n i -trogen plant load alone was equal to the t o t a l City of Calgary load for the year 1 9 4 0 . 2 8 A 2 , 0 0 0 KW expansion i n the Canadian U t i l i t i e s ' Drumheller plant, and small increases i n i t s stations i n the Grand P r a i r i e area were the only other capacity increases during the war years. The key to meeting the war year demand was intercorporate co-operation designed to increase the load factor of a l l e l e c t -r i c power systems as a whole. The f u l l and active use of the interchange agreement between Calgary Power and the City of Edmonton was basic to thi s co-operation. Edmonton continuously operated i t s generating f a c i l i t i e s at near capacity, permitting Calgary Power to store a d d i t i o n a l water during periods of low demand and to generate more power i n i t s Bow River system when demand increased on both a d a i l y and a seasonal basis. However, long term, non-emergency system int e g r a t i o n did not take place u n t i l the 1 9 5 0 ' s . 2 7 . Ibid, p. 2 1 . . 2 8 . Data extracted from "12-Month Load Summation Figures". Map of Bow River Hydro Plants, December, 1964 Cascade Plant 36 MW. > B A N F F Ghost Plant 51.0 MW. Three Sisters Plant 3.0 MW. •s -s ro Calgary Interlakes Plant 5.0 MW. Source: Harold Randle, "Some Aspects of Calgary Rawer Ltd. Operations," June, 1964, Unpublished Paper prepared for the Engineering and Operating Division of the Northwest Electric Light and Power Association Meeting at Banff, Alberta 32 The immediate post war years were ones of rapid expansion. The war brought sudden prosperity to Alberta, and the pent-up demand of thousands of families who could not afford electric power in the late 1930's was released in 1946 and 1947. Calgary Power and the Cities of Lethbridge and Edmonton met these demand increases without further additions to capacity, but Canadian U t i l i t i e s was forced to i n s t a l l two war-surplus generators to meet the demand u n t i l two 7,500 KW units arrived in late 1947.29 During the twenty-three-year period from 1926 to 1949, the basic pattern established in the late 1920's was not altered. Minor capacity expansion helped to meet specialized e l e c t r i c a l needs such as those of the munitions plant and the air training centres. Increased residential and industrial demand was met by further co-operation between individual operators. These inter-changes heralded the developments which followed in the 1950's. Spatial Integration, 1949-1965 The evolution of the power industry towards industrial maturity began in the early 1950's. Emergency developments during the war and immediate post-war years were followed between 1949 and 1952 with a series of developments designed to form a solid base for the rapid increases in demand expected in the following 29. "History of Canadian U t i l i t i e s " , op. c i t . , p. 5. 33 decade, and for greater industry efficiency through industry-wide integration and co-operation. To meet interim demand, Calgary Power and Canadian U t i l i -ties erected an interchange between their respective market areas south and west of Drumheller, whereby Canadian U t i l i t i e s was permitted to s e l l off-peak power to Calgary Power during the latter company's construction programme on the Bow River. In 1950 and 1951, Calgary Power purchased between 40 and 60 percent of the total Canadian U t i l i t i e s ' output.30 x D meet i t s anticipated demand, Calgary Power installed 84 MW31 of capacity in the new Kanaskis, Spray, Rundle and Three Sisters plants on the Bow River (Figure 6).32 The f i r s t instance of long term direct co-operation between power companies occurred when the City of Medicine Hat and Cal-gary Power jointly agreed on a new generating station to serve the needs of Medicine Hat and eastern Alberta. The City of Medicine Hat buil t a natural gas fired steam generating station of 30 MW, leasing 25 MW of the capacity to Calgary Power.33 30. Data extracted from "12-Month Load Summation Figures". 31. 1 MW (megawatt) equals 1000 KW. 32. "Some Facts About Calgary Power Limited", op. c i t . , p. 22. 33. Ibid., p. 22. 34 This agreement gave the City the advantages of obtaining greater economies of large scale operation to f i l l i t s urban needs, than i f i t had b u i l t a 5 MW unit for i t s own needs, and gave Calgary Power an inexpensive source of power with which to serve i t s new market area i n eastern Alberta. In conjunction with these capacity increases, additions were made to the transmission system. A comparison of Figures 5 and 7, maps of Alberta's e l e c t r i c i t y industry i n 1942 and 1954 shows the growth i n transmission f a c i l i t i e s which took place i n the l a t e r years of that twelve-year period. During the period 1949 to 1952, Calgary Power's Seebe Con-t r o l Centre played an increasingly important r o l e . This c o n t r o l centre, which was opened i n 1947 to operate the Bow River hydro-e l e c t r i c plants, was expanded i n 1952 to a s s i s t i n the province-wide co-ordination of a l l power plants owned by Calgary Power, Canadian U t i l i t i e s , and the C i t i e s of Edmonton, Lethbridge and Medicine Hat which were linked to each other through the trans-mission g r i d . The operator at the centre d i r e c t l y c o n t r o l l e d a l l plants i n the Bow River system with the exception of the run-o f - r i v e r Bearspaw plant located near Calgary, and directed the co-ordination of a l l other plants i n the interconnected system according to operational p r i n c i p l e s l a i d down by a committee of Map of Generating Stations and  Transmission Facilities in Alberta, 1954 Distribution Transmission Lines • Communities served with central electric power — — 132 k.v. and over — 3 3 k.v. to 72 k.v. Under 33 k.v. Source- Alberta Power Comission, 1954Annual Report — a l • Vermil ion^9mw Generating Plants internal i.e. and steam combustion steam £ 0 - 8 0 Kw. o S 8 1 - 2 5 0 Kw. # CT JE 251-600 Kw. O E a> S over 6 0 0 Kw. hydroturbine plant I3.5mw CD 36 of a l l power producers.34 The next step i n e s t a b l i s h i n g a modern, e f f i c i e n t system to meet the needs of the remaining years of the 1950's, 1960's and 1970's, was the a c q u i s i t i o n of s p e c i a l purpose generating f a c i l i t i e s . The 1954 commissioning by Canadian U t i l i t i e s of an 8.5 MW natural g a s - f i r e d gas turbine i n Vermilion was the f i r s t such a c q u i s i t i o n . Gas turbines•have the advantages of easy and rapid loading and unloading and a low unit c a p i t a l cost. As such, they are i d e a l l y suited for peaking power or emergency reserve needs. However, t h e i r high rate of f u e l consumption l i m i t s them largely to these r o l e s . This unit was i n s t a l l e d to complement the large baseload power s t a t i o n which was being developed at the same time. This Canadian U t i l i t i e s baseload f a c i l i t y was the Battle River c o a l - f i r e d steam-turbine of 37 MW capacity located near Forestburg and opened i n 1956. The plant u t i l i z e d some of Alberta's least expensive coal, mined within s i x miles of the plant.35 The Battle River s t a t i o n became the major generating 34. Statement by Mr. T.D. Stanley, Production Superinten-dent, Calgary Power Limited, Calgary, Alberta, personal i n t e r -view, June 1965. 35. L.S. S t o r r i s , Canadian U t i l i t i e s Limited, Power Deve-lopment Programme, Edmonton, Alberta, Stone and Webster Canada Ltd., 1959, p. 5. (Coal was provided on long term contracts, with price e s c a l a t i o n clauses to take care of i n f l a t i o n , at $1.65 for run of mine coal, and $0.90 per ton for screenings. The plant was to use 80,000 tons per year of screenings, with the balance being run of mine coal.) 37 s t a t i o n i n the Canadian U t i l i t i e s system, superceding the Drum-h e l l e r plant which was l e f t for frequency c o n t r o l and as emer-gency reserve. A second steam turbine of 37 MW was added to the plant i n 1964, with a t h i r d of 150 MW scheduled for operation i n 1970.36 This l a t t e r unit i s to be owned by Canadian U t i l i -t i e s , with a portion of the capacity leased to Calgary Power i n an agreement s i m i l a r to that of 1952 between Calgary Power and the City of Medicine Hat. Calgary Power also u t i l i z e d inexpensive coal for i t s new baseload plant. The s t a t i o n was located on Lake Wabamun, 50 miles west of Edmonton, within two miles of a large open-pit co a l mine developed s p e c i f i c a l l y for the generating s t a t i o n . Calgary Power i n s t a l l e d a 72 MW generator i n 1956, a second 72 MW generator i n 1958 and a 150 MW generator i n 1962.37 These units were operated continuously at f u l l capacity with the ex-ception of the late spring and summer months when lower demand was coupled with high water levels on the Bow River, at which 36. Statement by Mr. W.G. S t e r l i n g , Chief, Production En-gineer, Canadian U t i l i t i e s Limited, Edmonton, Alberta, personal interview, June 1966. 37. The f i r s t unit was f i r e d with natural gas u n t i l the coal mine was ready for f u l l time operation. Because a l l units need natural gas for the s t a r t i n g up process a f t e r any shutdown, and because demand charges for natural gas. are high, the f i r s t u nit continues to be natural gas f i r e d . 38 times i t became more economical to use some of the hydro units to generate a portion of the system's baseload. After the introduction of the Wabamun baseload plant, Cal-gary Power converted the Bow River hydro sites to peaking power stations by install i n g additional generators.38 As the Bow River plants were no longer needed for baseload power, the flow of the tributary streams was regulated so that additional water storage took place during the offpeak hours, with the greater generation taking place during hours and seasons of high demand. Additions to the transmission system were made to link these new plants. Two hundred and forty KV transmission lines were erected from Calgary Power's Wabamun power plant to the cit i e s of Edmonton and Calgary. In addition, the Canadian Uti-l i t i e s power system was further interconnected with that of the City of Edmonton and Calgary Power with the erection of a 138 KV line between Vermilion and the Calgary Power-City of Edmonton substation located to the south of Edmonton. Between 1956 and 1963, a l l increases in the transmission f a c i l i t i e s were designed to permit the province's grid system to transfer more power within the province. A few low capacity extensions to the trans' mission system were made to permit rural e l e c t r i f i c a t i o n and to connect additional outlying communities. 38. See details i n Table II, p. 40 39 Between 1956 and 1963, no new power stations were opened, but capacity expansions were made to vir t u a l l y every station in the system. Table II shows the capacity increases which were made to the interconnected system between 1952 and 1965. The result of these new plants, additional transmission f a c i l i t i e s and capacity expansions is a complete network grid system, as seen in Figure 8, "Map of Generating Stations and Transmission F a c i l i t i e s , 1965". The 1952-1956 developments effectively united the power industry in the major populated area of the province into one market area served by five interconnected power producers, namely: Calgary Power, Canadian U t i l i t i e s , and the Cities of Edmonton, Lethbridge and Medicine Hat. This third stage of development of the e l e c t r i c a l industry is characterized by many dispersed markets, linked by one large interconnected trans-mission system energized by numerous special purpose generating stations. Figure 9,'Stage III in the Development of a Power System", is a schematic i l l u s t r a t i o n of the industry when i t has achieved a grid, or completed network, status. In such a grid, i t is impossible to determine the direction of current 'flow 1. Current 'flow' is a function of the degree to which each station is ener-gized, and the level of demand at each market centre. The pattern of current 'flow' in a grid changes in direct response T a b l e I I S y s t e m G e n e r a t o r C a p a c i t y I n c r e a s e s 1 9 5 2 - 1 9 6 5 4 0 Y e a r C a l g a r y C a n a d i a n " E d m o n t o n L e t h - M e d i c i n e G R I D A N N U A L P o w e r U t i l i t i e s " - b r i d g e H a t T O T A L P E A K ' r ^~^_ (MW) I N C R E A S E 1 9 6 5 150MW 1 5 0 H E P ( l a t e ) 1 9 6 4 3 3 MW 3 3 6 0 . 8 S T : ' \ . 1 9 6 3 75 MW 75 1 1 6 . 9 S T 1 9 6 2 1 5 0 MW 3.0 MW ' 1 8 0 . 4 9 . 5 S T G T 1 9 6 1 ' ' 9 1 . 4 1 9 6 0 8 0 MW , 7 5 MW 1 0 MW . 1 6 5 6 6 . 9 H E P S T G T 1 9 5 9 3 0 MW 3 0 4 7 . 4 G T 1 9 5 8 72 MW 3 0 MW . 1 0 MW 1 1 2 9 6 . 2 S T G T G T 1 9 5 7 18 MW 18 ' 2 8 . 5 H E P - : / '• • 7 : ' • 1 9 5 6 72 MW 3 2 MW 1 0 4 5 6 . 7 S T S T 1 9 5 5 2 0 MW 3 0 MW 50 7 1 . 3 H E P S T 1 9 5 4 4 0 MW 8 . 5 MW 4 8 . 5 2 4 . 3 . H E P G T 1 9 5 3 3 0 MW . 3 0 4 1 . 0 . S T 1 9 5 2 8 4 MW 3 0 MW 1 1 4 . 2 8 . 2 • H E P • ; . S T ST = Steam turbine G T G a s T u r b i n e H E P = H y d r o e l e c t r i c p o w e r I!.4mw -a _ , - o O/ Map of Generating Stations and  Transmission Facilities in Alberta, 1965 Distribution Transmission Lines • Communities served with central electric power 132 k.v. and over 33 k.v. to 7 2 k.v. Under 3 3 k.v. Source Alberta Power Comission, 1965Annual Report Generating Plants internal i.e. and steam combustion sleam 12.5--plant capacity in megawatts • hydroturbine plant F i g u r e 9 Stage 3 in the Development of on Electric Power System Only a portion of the secondary transmission system is shown to give an idea of its extent and its own interconnection with substations Service area of company Service area of company "B" Service area of company V .Companies X "B; and "Care 3 separate firms ^ - Interconnection Symbol O Substation Primary Transmission System Secondary Transmission System 43 to the varying output levels of peaking power stations. In addition to capacity increases i n most generating sta-tions between 1956 and 1965, there were three important develop-ments within the interconnected g r i d . F i r s t , i n 1962, Canadian U t i l i t i e s exchanged i t s 8.5 MW gas turbine i n Vermilion for a 30 MW unit, placing the smaller unit near Valleyview i n the Peace River d i s t r i c t . There the 8.5 MW unit was f i r e d by sour f l a r e gas, a by-product of the petroleum industry which was normally burned as waste. Because of the low cost of t h i s ener-•i gy supply, the unit was able to be operated as a baseload plant. A second unit of 10 MW capacity was added to the plant i n 1964. Second, with the load growth i n the Canadian U t i l i t i e s ' Peace River area, p a r t i c u l a r l y i n the c i t i e s of Valleyview and Grande P r a i r i e , Calgary Power and Canadian U t i l i t i e s signed an' interchange agreement and b u i l t a 138 KV l i n e between the Waba-mun s t a t i o n and the new Valleyview plant. This transmission l i n e e f f e c t i v e l y united the major s e t t l e d area of the province with the remoter a g r i c u l t u r a l and petroleum production areas north and west of Valleyview into one large p r o v i n c i a l market. With the completion of that l i n e i n 1964, more than 95 percent of the population of the province was served by the single pro-v i n c i a l g r i d . The t h i r d and f i n a l development was the completion i n 1964 of the Big Bend hydro power development to the north and west of 44 Red Deer on the Brazeau River. This power st a t i o n , with an i n i t i a l capacity of 150 MW, was used primarily as a baseload f a c i l i t y , and operated i n response to the need to regulate the flow of the Brazeau River. This multi-purpose development, j o i n t l y financed by Calgary Power and the Government of the Province of Alberta, was designed with a secondary purpose of increasing the flow of the North Saskatchewan River during the winter months, thereby minimizing p o l l u t i o n and r e l a t e d problems i n the Edmonton area. Summary of the Industry's Growth 1888-1965 The primary c h a r a c t e r i s t i c s of the development of Alberta's e l e c t r i c i t y industry from 1888 to 1965 were an increase i n the scale of operation r e s u l t i n g from continuous growth i n e l e c t r i -c i t y consumption, the introduction of large generating f a c i l i t i e s and the gradual interconnection of a l l production units and con-sumptions centres i n the province. U n t i l 1925, s p a t i a l expan-sion took the form of increasing the number of generating sta-tions located throughout the province, each s t a t i o n serving adjacent e l e c t r i c i t y consumers. From this point u n t i l the 1950's, i n d i v i d u a l generating stations serving adjacent markets were closed, and transmission lines erected between these nodes and a large, low unit cost generating s t a t i o n . Figure 10, "Maps Showing Areas of S p a t i a l Organization i n F i g u r e 10 45 Mops Showing Areos of Spotiol Organization in Alberta's  Electricity Industry - Selected Years i A. 1930 -QGrande Prairie! Edmonton : SIISINI Red Deet^ : Vermilion • • Stages In Development of Electric Power Systems Stage I r / A Stags 2 II III Stage 3 ::::: ^ -.:/ 0f Drumhelier: /^Jf" Calgary o Cities not integrated into electric system 1^ Cities integrated into electric system Jrfedicine Hat Q:: £^ Lethbridge B. 1942 "^Grande Prairie : Edmonton /CY- ^ / Vermilion ^ Drumhelier i '^ -Calgary : Medjcine Hot Qr '• Lethbridge :. III/-^Grande Prairie; C. 1954 Edmonton I Red Deer j % Drumhelier; Calgory + Medicine Hat I I I I Lethbridge 46 Alberta's E l e c t r i c i t y Industry - Selected Years", permits a ready visual appreciation of this expansion of each form of spatial organization. The years 1930 (A), and 1941 (B) were characterized by a number of small areas served by separate in-complete transmission networks. By 1954 (C), three separate incomplete networks, and three c i t i e s with their own e l e c t r i c i t y generating f a c i l i t i e s were joined to form a complete network or e l e c t r i c i t y grid. Only the incomplete network served by the generating station in Grande Prairie remained. By 1965 (D), this region was linked into the grid, which also expanded into frontier areas to connect additional e l e c t r i c i t y consumers. CHAPTER III ECONOMIES OF SCALE AND SPATIAL INTEGRATION Throughout the development of Alberta's e l e c t r i c i t y i n -dustry, s p a t i a l change took two d i s t i n c t i v e forms. F i r s t , i s o -lated nodes of production and consumption were joined with small incomplete transmission networks energized by a single production centre. Second, these incomplete networks were l a t e r integrated into interconnected e l e c t r i c i t y g r i d s . Both of these changes were rel a t e d to the economies of large scale production associated with large capacity generating u n i t s . Large scale production i n Alberta was accomplished through the s p a t i a l interconnection of numerous market areas to the regions large generating s t a t i o n s . The basic economy of scale l i e s i n the s i z e of the gene-r a t i n g u n i t . For each type of generating u n i t , l the c a p i t a l cost per KW of capacity i s reduced by increasing unit s i z e . This economy r e s u l t s from the lower material and labour inputs required i n the manufacture of one large unit, as compared to the manufacture of two or more units of s i m i l a r t o t a l capacity 1. A l l generators are b a s i c a l l y the same. There are, however, four types of prime movers - namely hydro turbines, steam turbines, gas turbines, and a v a r i e t y of d i e s e l , gaso-l i n e and steam engines. (Figure 11). In addition, large-scale units u t i l i z e improved technological innovations which are not applicable to smaller sized u n i t s . Economies of scale are present also i n the f u e l and opera-t i o n a l costs of larger-sized u n i t s . Demand for large quantities of f u e l permits economies of scale i n mining or i n transporta-t i o n r e s u l t i n g i n lower cost f u e l contracts.2 Unit labour costs vary s i g n i f i c a n t l y with the siz e of generating units within a s t a t i o n (Figure 12), because of the reduced operating s t a f f per KW of capacity, and i n part to reduce per KWH main-tenance costs.3 Another economy i s r e l a t e d to minimization of reserve ca-pacity. A l l systems must have s u f f i c i e n t reserve capacity to withstand an extended breakdown i n one unit without a d i s c o n t i -nuation of e l e c t r i c i t y service to any customer. The rule of 2. W. S t e r l i n g , Thermal Power Generation, unpublished paper, Canadian U t i l i t i e s Limited, Edmonton, Alberta, 1966, Table I, p. 11: Capacity Index No. of f u e l cost/KWH 18 MW 1.00 45 MW 0.98 90 MW 0.86 3. Wessenauer, G.O. et a l , 'Some Problems on a Large Power System with Large Generating Units', WPC Melbourne 1962, III 0/7 p. 1855. - as unit capacity increases by a factor of four, f u e l savings a t t r i b u t e d to siz e are only 1.77o. F i g u r e 11 49 Capital Costs per MW by Index Numbers  for Various Size Generating Stations 120 100 8 0 6 0 4 0 2 0 1 0 0 3 0 0 5 0 0 7 0 0 MEGAWATTS 9 0 0 a) o •a <U r-l oo u u o to #* a) r-. C O • O • <r CD M OO G M i—I CU o u PH CU B o CO •.-I CN i-i M 4-> CU -H cd S g CO 4-1 CO CU 3= CU o u o cu c O J3 .-I CU S <u oo <u <U u 4-1 cu CO 15 >. o CO PM Figure 12 50 Maintenance and Operating Costs bv Index  Numbers for Various Size Generating Stations 120 100 80 60 40 2 0 100 300 500 700 MEGAWATTS 900 B <u at +J CJ CO C cu to u a) u m C o o o PL, ^ 01 cu M U o ed cu T3 ed •-4 C o o rs CO „ B cu — I-I O X • o u M cu M cu B — o CO CO 4-> ••-) C • • * • I-I 60 00 cd c I-I •H 4J 4-1 • cd a • <u o c CSJ • cu <J3 o C ^ i-l <u cu oo CU u cd cd 4^ c .-J cu o CO XI CO 4-> .-1 <u •r4 a) > S cu CJ i-4 o CO thumb governing reserve requirements i s that minimum excess capacity^ must be equal to the siz e of the largest unit, or 10 percent of the peak load, whichever i s greater.5 i n a small system, two alter n a t i v e s are av a i l a b l e to the power company, both involving diseconomies. It i s possible to use either a small number of large generating units, with a large reserve, or a large number of small generating units, with a small re-serve. In the former case, the diseconomy r e s u l t s from a high percentage of normally unused excess capacity, and i n the l a t t e r the diseconomy takes the form of higher per KW costs for the smaller u n i t s . A l l systems must have spinning reserves^ so that a d d i t i o n a l loads can be c a r r i e d the instant that new demand i s created. The addition of a large load, such as an e l e c t r i c reduction furnace, puts a s t r a i n on generating equipment i n a small system, but the additi o n of the same load i n a large system poses v i r -t u a l l y no problem. The p r o b a b i l i t y of simultaneous start-up of 4. Excess capacity i s defined as i n s t a l l e d system capa-c i t y i n excess of the largest demand i n a given year. 5. Statement by Mr. T.D. Stanley, Production Superinten-dent, Calgary Power Ltd., Calgary, Alberta, personal interview, June 1965. 6. Spinning reserves are defined as the amount of capa-c i t y that i s instantaneously a v a i l a b l e to take care of addition a l load. 52 a l l heavy-duty equipment i n a system, or sudden unexpected i n -creases i n load i s reduced i n large systems. Consequently, a small saving i s r e a l i z e d i n large systems because of the redu-ced l e v e l of spinning reserves required at every l e v e l of demand. The f i n a l major economy accrues through the use of s p e c i a l purpose generating equipment for each p o s i t i o n on the load dur-ation curve. The r e l a t i o n s h i p between fi x e d costs and opera-tin g costs, as w e l l as operational f l e x i b i l i t y of each type of unit determines i t s s u i t a b i l i t y f o r either baseload or peak-load use. Among thermal generators, conventional steam plants have high c a p i t a l costs, low operating, costs, but s i g n i f i c a n t t e c h n i c a l d i f f i c u l t i e s and diseconomies i n responding to r a p i d fluctuations i n demand. Their low cost of operation when oper-ating at f u l l capacity for long periods of time make them s u i t -able for baseload generation. Conversely, the low c a p i t a l cost, higher operating cost and inherent operational f l e x i b i l i t y make gas turbines more a t t r a c t i v e for peaking power generation. In a system with both thermal and hydroelectric generating units, the inherent operational f l e x i b i l i t y of h ydroelectric genera-tors, i n s p i t e of t h e i r high c a p i t a l cost, makes them suitable for generating peaking power. In order to u t i l i z e s p e c i a l pur-pose generating equipment, a system must be s u f f i c i e n t l y large so that numerous large units with low unit costs can be used. The r e a l i z a t i o n of economies of scale i s a function of the 53 location and magnitude of demand, the e x i s t i n g load factor, the levels of a v a i l a b l e technology and the physical a v a i l a b i -l i t y of low cost, accessible s i t e s for e l e c t r i c a l generation. As demand for e l e c t r i c i t y grew i n Alberta, the power companies aimed fo r greater and greater economies of generation through the i n s t a l l a t i o n of larger generators. S p a t i a l Integration: The Key to Incomplete Networks During the period 1888 to 1925, domestic, commercial and str e e t l i g h t i n g were the largest markets for e l e c t r i c i t y i n Alberta. Growth i n e l e c t r i c i t y demand resulted from the addi-t i o n of more hotels, r e t a i l o u t l ets, i n d i v i d u a l domestic r e s i -dences, and street l i g h t i n g systems to the existent e l e c t r i c a l load. The major non-lighting use f o r e l e c t r i c i t y was the Cal-gary E l e c t r i c Streetcar Railway which opened i n 1905. E l e c t r i -c i t y demand grew from about 20 KW i n 1888 to that which required a 30,000 KW capacity to serve Calgary,? and an a d d i t i o n a l 15,000 KW for the remainder of the province.8 7. The t o t a l capacity designed to serve Calgary as com-posed of 12,000 KW Horseshoe Plant, 8,000 KW Kananaskis Plant, and 10,000 V i c t o r i a Park Steam Plant. 8. This figure has been determined by adding the capaci-t i e s of the three plants serving Calgary to the t o t a l of the plant capacities of Table !.• 54 Calgary Power's development of the Bow River plants re-sulted d i r e c t l y from a desire to obtain economies of large scale generation. The attempt f a i l e d because of inadequate knowledge of the problems associated with the r i v e r p o t e n t i a l . Once experimentation and a d d i t i o n a l investment solved these problems, linkages of t h i s low cost source of e l e c t r i c i t y to numerous small markets were attempted. The two important features inherent i n the l i n k i n g of small scattered markets to an e x i s t i n g larger e l e c t r i c i t y sys-tem were the "market cr e a t i n g " character of low cost e l e c t r i -c i t y i n a previously high cost market and a large developed base on which to finance expansion. Under these conditions, a "pioneering stage of development"^ emerged i n which the power companies expected that derived revenue from expansion would cover only the incremental cost of operation i n the area for a period of about f i v e years.10 As the demand was small i n r e l a t i o n to that of the p r i n c i p l e c i t y served by the power company, the demand of the new community connected to the sys-tem did not require that a d d i t i o n a l generating capacity be 9. Statement by Mr. D.A. Hansen, General Sales Manager, Calgary Power.Limited, Calgary, Alberta, personal interview, June 1966. 10. Ibid. Statement by Mr. D.A. Hansen. 55 i n s t a l l e d immediately. As the new markets grew with customer connections and with increased consumption per customer, the revenue from a new market area gradually payed i t s f u l l share of system costs. Rate reductions designed to stimulate demand accompanied a small town's connection to a larger e l e c t r i c i t y system. For example, before a town was connected to a large system i n 1929, power was sold according to the following rate schedule:H 1 - 39 KWH used per month at 18^ per KWH less 10% discount 40 - 149 KWH used per month at 18<£ per KWH less 20% discount 150 - 249 KWH used per month at 18«£ per KWH less 30% discount excess KWH used per month at 18^ per KWH less 40% discount There was a minimum charge of $2.50 per month and a 20 percent discount for prompt payment. A f t e r the town was connected with Union Power system, the e l e c t r i c l i g h t rate was reduced to-.*-1 - 25 KWH per month at 12^ per KWH 26 - 50 KWH per month at li per KWH excess KWH per.month at 5<£ per KWH A discount of 10 percent for prompt payment was given. A res-i d e n t i a l customer using 100 KWH- of e l e c t r i c i t y per month paid $12.10 with discounts under the old schedule and $7.42 under the new one. Commercial, i n d u s t r i a l , and street l i g h t i n g rate 11. G.B. Watson, "History of the Union Power Company Ltd., Drumhelier, Alberta", undated report from the f i l e s of Canadian U t i l i t i e s Limited, Edmonton, Alberta, p. 6. 12. Ibid., p. 7. 56 structures were s i m i l a r l y reduced. These rate reductions permitted a "snow b a l l e f f e c t " within the system which became the key for future developments. Newly reduced rates permitted increased demand and the use of larger and more economical generation and transmission equip-ment, which further reduced unit costs, permitting rate reduct-ions and so on. This c i r c u l a r economic process was the key to the further rapid growth and development of the e l e c t r i c i t y industry. As demand placed upon an e l e c t r i c i t y system r e l y i n g on one large generating complex grew, the cost reductions created a continually widening gap between i t s cost and that of the i s o l a t e d generating s t a t i o n . These increasing r e l a t i v e advan-tages of the e l e c t r i c i t y systems encouraged further linkages to be made i n d i s t i n c t ways: f i r s t , , the greater the cost advan-tage, the more a t t r a c t i v e connection to the c e n t r a l system became, and second: the greater the cost, advantage, the greater was the distance at which transmission linkages could be erected economically. Under those circumstances, the following formula was used to determine i f transmission l i n e would be extended to include new market areas: Transmission lines would be extended i f C D - Cc £ Cp when C D was the t o t a l cost of e l e c t r i c i t y generation at a remote s i t e (decentralized system) 57 CQ was the t o t a l cost of e l e c t r i c i t y generation i n an "at market" s i t e (centralized system) Of was the cost of providing necessary transmission f a c i l i t i e s between the remote s i t e and the market. As c e n t r a l stations increased t h e i r s i z e and as a r e s u l t re-duced costs and improved r e l i a b i l i t y , the r e l a t i v e low cost attractiveness of the incomplete network v i s - a - v i s the i s o l a -ted generating s t a t i o n was increased. Under these circumstances the a r e a l extent and the pro-duction lev e l s of the e l e c t r i c i t y companies operating incom-plete network transmission systems r a p i d l y increased. Between 1918 and 1930, Calgary Power, the company with both the l a r -gest transmission system and a complete set of s t a t i s t i c s , ex-panded i t s capacity from 30,000 KW i n 1918 to 50,000 KW i n 1930. Load growth increased from 40 m i l l i o n KWH i n 1918 to 120 m i l l i o n KWH i n 1930 and to 435 m i l l i o n KWH i n 1947, as seen i n Table I I I , E l e c t r i c Load i n Alberta, Selected Years. The rate of load growth due to a c q u i s i t i o n of new market areas through transmission l i n e linkages was more than double (600%) the load growth (250%) of the City of Calgary. S p a t i a l Integration: The Key to Complete Networks In the period to 1950, increases i n the magnitude of demand for e l e c t r i c i t y resulted i n the development of incom-T a b l e I I I 58 E l e c t r i c a l L o a d i n A l b e r t a , S e l e c t e d Y e a r s (__ m i l l i o n s o f KWH) C i t y o f C a l g a r y C a l g a r y P o w e r ( i n c i t y ) C i t y o f E d m o n t o n C i t y o f L e t h b r i d g e C a n a d i a n U t i l i t i e s C i t y ( M e d i c : H a t 1 9 1 2 2 8 . 0 3 3 . 4 1 3 . 6 1 9 1 8 3 3 . 0 3 9 . 4 1 9 . 7 1 9 2 1 3 9 . 5 4 7 . 4 2 6 . 9 1 9 2 5 5 1 . 5 6 1 . 8 3 4 . 3 1 9 3 0 8 2 . 5 1 2 0 . 7 5 2 . 6 8 . 1 1 9 3 9 8 1 . 9 1 4 2 . 9 6 9 . 6 1 0 . 7 < 1 9 4 2 1 1 0 . 9 2 9 8 . 6 8 8 . 4 1 1 . 9 1 9 4 7 1 4 7 . 0 4 3 4 . 1 1 3 3 . 9 1 8 . 5 1 9 5 2 2 3 2 . 8 7 6 4 . 8 2 3 6 . 0 3 1 . 2 6 5 . 7 • 3 4 . 6 1 9 5 4 2 8 7 . 4 9 8 9 . 7 3 1 2 . 4 3 5 . 4 1 0 1 . 2 3 8 . 6 1 9 5 9 5 8 1 . 7 1 , 8 4 8 . 2 5 9 6 . 5 6 1 . 3 2 0 9 . 9 7 6 . 0 1 9 6 4 9 4 8 . 4 2 , 9 6 4 . 8 9 3 4 . 6 9 7 . 8 4 5 2 . 1 1 2 6 . 8 S o u r c e : D a t a c o m p i l e d f r o m " M o n t h l y L o a d S u m m a t i o n S u m m a r i e s " o b t a i n e d f r o m C a l g a r y P o w e r L i m i t e d , J u n e 1 9 6 5 . 59 plete transmission networks. But the a d d i t i o n a l increases i n demand between 1950 and 1965 permitted the use of more than one large generating s t a t i o n i n each system, as w e l l as the i n t e -gration of incomplete networks to form a s p a t i a l l y integrated province-wide complete network. ' Table III provides a d e t a i l e d i n d i c a t i o n of this growth i n load. Between 1947 and 1964, Calgary Power's demand i n -creased by a factor of six, from 435 m i l l i o n KWH to 2,965 m i l l i o n KWH. The figures for the same two years for the City of Edmonton were 134 m i l l i o n KWH and 935 m i l l i o n KWH. The smaller Canadian U t i l i t i e s system increased i t s load from 66 m i l l i o n KWH i n 1952 to 452 m i l l i o n KWH i n 1964, a growth factor of seven i n a twelve-year period. Such large increases permit-ted a systematic integrated development pattern to take place. System i n t e g r a t i o n allowed not only the use of larger genera-t i n g u nits, b u f also minimization of reserve capacity,' expan-sion co-ordination and new d a i l y operating patterns. Minimization of Reserve Capacity. A s i g n i f i c a n t development i n the province's power industry between 1962 and 1965 was the addition of large economical generating units to provide base-load power. However, since the i n s t a l l a t i o n of large genera-t i n g units began, no power company has been able to s a t i s f y i t s own needs for emergency reserve capacity. Yet necessary system 60 reserve needs of 10 percent of annual peak load, or reserve ca-pacity equal i n s i z e to that of the largest i n d i v i d u a l unit have been s a t i s f i e d . S t a t i s t i c s for i n s t a l l e d capacity, peak load, adjusted peak load, actual reserves, required reserves and December peak generation, shown i n Table IV, System and Grid Reserves 1962-1964, indicate use and s p a t i a l integration i n pro-v i d i n g adequate system reserves. The value of pooling capacity reserves was demonstrated during the winter of 1964 when the grid's largest generating unit f a i l e d at the time of peak demand and when the planned ex-pansion of an equivalent-sized hydro unit scheduled for that same year was delayed s i x months. With the f a i l u r e of i t s 150 MW thermal unit, Calgary Power immediately implemented i t s " i n t e r r u p t i b l e " option i n some s p e c i a l i n d u s t r i a l contracts and thereby reduced the normal peak load by an estimated 60 MW to the recorded peak t o t a l of 599.7 MW.^ At the time of this peak load, Calgary Power's peak generation was i n the neigh-bourhood of 460 MW.14 The remaining demand of 140 MW was f i l l e d with power purchased from other members of the g r i d system. 13. Statement by Mr. D. Hansen, General Sales Manager, Calgary Power Limited, Calgary, Alberta, personal interview, June 1966. 14. 460 MW was Calgary Power's peak generation for the month of December 1964. Generation at time of peak load could have been f r a c t i o n a l l y lower at t h i s time. T a b l e I V 61 S y s t e m R e s e r v e s a n d G r i d R e s e r v e s 1 9 6 2 - 1 9 6 4 ( A l l F i g u r e s i n MW) 1 9 6 4 C a p a c i t y P e a k A d j u s t e d * A c t u a l R e q u i r e d D e c . P e a l L o a d s P e a k R e s e r v e s R e s e r v e s G e n e r a t i c L o a d s C a l g a r y P o w e r 6 0 8 5 9 9 5 9 9 9 • 1 5 0 4 6 0 C a n a d i a n U t i l i t i e s 1 5 6 1 1 7 1 1 7 3 9 3 3 1 4 4 E d m o n t o n 3 2 0 2 3 7 2 3 7 9 0 75 3 1 1 L e t h b r i d g e 3 1 . 7 2 3 . 1 2 3 . 1 7 . 6 1 0 2 8 . 5 M e d i c i n e H a t 4 0 . 5 2 5 . 0 3 9 . 8 1 5 . 5 . 3 0 3 9 . 8 G R I D 1 , 1 5 5 1 , 0 0 2 9 9 0 1 6 8 . 5 1 5 0 1 9 6 3 C a l g a r y P o w e r 6 0 8 5 7 9 5 1 9 8 8 1 5 0 5 9 5 C a n a d i a n U t i l i t i e s 1 2 6 9 8 9 8 28 3 3 7 9 . 5 E d m o n t o n 3 2 0 2 1 0 2 1 0 1 1 0 75 2 3 0 L e t h b r i d g e 3 0 . 7 2 0 . 0 2 0 . 0 1 5 . 3 . 1 0 . 2 2 . 3 M e d i c i n e H a t 4 0 . 5 2 2 . 8 2 2 . 8 1 5 . 3 2 0 . 3 8 . 5 G R I D 1 , 1 2 5 9 2 9 8 6 9 2 5 5 1 5 0 1 9 6 2 C a l g a r y P o w e r • 5 1 4 5 2 3 . 7 4 6 3 6 0 1 5 0 5 0 9 C a n a d i a n U t i l i t i e s 8 6 5 9 . 9 5 9 . 9 2 6 3 3 6 1 . 5 E d m o n t o n 2 4 0 1 9 1 1 9 1 4 9 75 1 9 1 L e t h b r i d g e 3 0 . 7 1 8 . 9 1 8 . 9 1 2 . 6 1 0 1 8 . 9 M e d i c i n e H a t 4 0 . 5 1 9 . 9 1 9 . 9 2 0 . 6 3 0 3 9 . 5 G R I D 9 1 1 . 2 8 1 3 . 4 7 5 2 . 4 1 5 8 . 8 1 5 0 S o u r c e : D a t a a c c u m u l a t e d f r o m A n n u a l R e p o r t s o f t h e A l b e r t a P o w e r C o m m i s s i o n a n d f r o m C a l g a r y P o w e r d a t a s h e e t s e n t i t l e d " M o n t h l y P e a k s " s h o w i n g p e a k p o w e r o u t p u t f o r e a c h i n d i v i d u a l . " A d j u s t e d p e a k l o a d t a k e s i n t o a c c o u n t C a l g a r y P o w e r ' s e l e c t r i c i t y s a l e s o n a n i n t e r r u p t i b l e b a s i s . I f f o r a n y r e a s o n C a l g a r y P o w e r c a n n o t s u p p l y i t s f u l l d e m a n d , i t m a y c u t u p t o 6 0 MW o f p o w e r t o t h e s e c u s t o m e r s . . N o p o w e r c u t s w e r e n e c e s s a r y i n 1 9 6 2 a n d 1 9 6 3 , b u t i n D e c e m b e r 1 9 6 4 , C a l g a r y P o w e r e x c e r c i s e d t h i s o p t i o n . 62 In 1963, s i m i l a r trouble occurred i n the Canadian U t i l i -t i e s system when i t s new 30 MW gas turbine unit was shut down for an unscheduled six-month maintenance period during the peak winter months.^ Generation f e l l short of the peak by at least 18.5 MW, with the remaining demand f i l l e d by other members of the g r i d . 1 6 A further "reserve" problem solved by the use of system interconnection i s the need to conserve water i n a hydro system. The t o t a l c a p a b i l i t y of the Calgary Power System, i s the t o t a l output of the thermal units at 100 percent load factor, plus the e l e c t r i c a l equivalent of the annual volume of water flow through i t s hydroelectric power plants. I f a f a i l u r e occurs i n i t s Wabamun thermal plant during the lower demand season and Calgary Power decided to meet the r e s u l t i n g demand deficiency on i t s own, extra stored water could be used i n i t s hydroelect-r i c plants. Excess water use i n one season, however, can create a water shortage i n another. Therefore to prevent possible 15. Statement by Mr. W.G. S t e r l i n g , Chief Production Engineer, Canadian U t i l i t i e s Limited, Edmonton, Alberta, per-sonal interview, June 1965. 16. 18.5 MW r e f e r s to the difference between Canadian U t i l i t i e s ' peak load and peak generation for the month of Dec-ember 1963. If peak load and peak generation had not occurred simultaneously, the difference between them would have been f r a c t i o n a l l y greater. 63 service discontinuation from future water shortages, Calgary Power purchases "off-peak" power from the other u t i l i t i e s to conserve water and to provide continuous r e l i a b l e service. Similar purchases can be made i n years of very low p r e c i p i t a -t i o n and run-off. Reserve minimization through system pooling also permits capacity expansion co-ordination. From 1956 to 1965, Alberta's e l e c t r i c i t y companies adopted a policy i n conjunction with the Alberta Power Commission of co-ordinating expansion programmes so that the reserve needs of the t o t a l g r i d could be met at any given time. During t h i s period, no company had s u f f i c i e n t re-serves to meet i t s own needs. From Table II (Chapter I I ) , i t i s apparent that each unit added was of s u f f i c i e n t s i z e to meet the i n d i v i d u a l company's increasing demands for roughly a four-year period. I f , however, each new company had i n s t a l l e d a generating unit when i t was necessary to meet i t s own new load growth and reserve requirements, each company would have i n s t a l -led i t s generator at least one year, and possibly two years e a r l i e r . Each company would then have had an unnecessary and uneconomic amount of excess capacity. Daily Operating Economies. Expansion programming, reserve minimization and the use of larger s p e c i a l purpose generating units are economies i n the Alberta e l e c t r i c a l industry brought 64 about by the s p a t i a l i ntegration of i n d i v i d u a l e l e c t r i c i t y systems. These economies a f f o r d long-term c a p i t a l savings to the i n d i v i d u a l firms and to the industry as a whole. In addi-tio n , there are d a i l y operational savings to be r e a l i z e d through s p a t i a l i ntegration. The key to analyzing operational economies i s the concept of incremental cost operation. Incremental costs i n the elec-t r i c i t y industry are those per KWH operating costs d i r e c t l y a t t r i b u t a b l e to the generation of a d d i t i o n a l amounts of e l e c t -r i c i t y such as f u e l costs and use-related maintenance costs, and are therefore separate from fi x e d costs. Fixed costs i n the e l e c t r i c i t y industry include c a p i t a l costs, other overhead costs and labour costs. The design of a system i s aimed at t o t a l cost minimization 1 with each element designed to f i l l a p a r t i c u l a r r o l e . Once units have been i n s t a l l e d , however, they compete with each other d a i l y for operation on an incremental cost basis. As load i n -creases, a d d i t i o n a l units come into operation according to the p r i n c i p l e of operating the unit with the lowest incremental cost. When there i s competition between a hydro and a thermal unit, the opportunity cost for stored water i s used as the incremental cost for h y d r oelectric generation. An example of operational savings accruing to firms i s 65 a v a i l a b l e i n an analysis of a three-day, hour by hour, record of load and unit generation figures for the Alberta g r i d . The actual pattern of unit operation for these three days i n March 1966 i s not to be construed as representative of set- patterns of operation, but i s i l l u s t r a t i v e of the operational f l e x i b i l i t y of s p a t i a l l y integrated companies that achieve operational econo-mies . Table V and Figure 13 give hour to hour data for March 7, 1966, which i s representative i n load and operating patterns for the three-day period from March 7 to March 9. The d i s p a r i t y between load and generation for each u t i l i t y represents the amount of e l e c t r i c i t y that i s e i t h e r "purchased" or " s o l d " by the other u t i l i t i e s . Since the c i t i e s of Edmonton, Medicine Hat and Lethbridge, and Canadian U t i l i t i e s - N o r t h l a n d U t i l i t i e s group are a l l connected d i r e c t l y to Calgary Power transmission l i n e s , a l l sales and purchases are said to be made between the smaller u t i l i t i e s and Calgary Power. The c i t i e s of Edmonton and Lethbridge use the interconnect-ions by "buying" power during periods of rapid increases i n demand and " s e l l i n g " power during periods of rapid decreases i n demand. This operating pattern minimizes spinning reserves and uneconomic adjustments i n thermal units to rapid demand changes. "Purchases" and " s a l e s " are also made when demand i s steady to "balance o f f " and therefore to have no net interchange each day. Table V Alberta System Load, Generation and Electricity Interchange for Monday, March 7, 1966 ( A 1 1 Figures in Megawatt-hour3) O X ca z o O M X Cd Z CL, cd U O Z o oa <; 3 cd Z CH Cd Cu o Cd z • H EH s O I a H g x Z X M H O u> < ai M X Cd a w S O Cd z Z 5 DG 0 O x M a EH Q H 0 OS < Z < Z as CO 3 O O O w SB s (-1 s H H ca Q z cd cd Cd M Cd Cd CJ OS CJ pa os x w H H w z rJ M na o Cd z z Z O OS OS O Cd Cd M X 0 X EH X < H <! H CJ os 0 OS Cd Pi 0 rJ O Cd z Cd z z Z £1 Cd z O CJ r-t 0 O Z Cd 05 O E H 2 S oS z 3 . H 3 Z Z OS X H O CJ z OS z Cd O X HI H H §ss oa cd Z 3 Cd CJ CJ Z Cd OS CJ Cd Z X <c En X 3 u O OS CO Cd EH n z CJ M Cd CJ • OS Cd Cd H z 1: :00 70.00 264.0 352.5 39.2 13.4 -25.8 93.0 -2.0 2: :00 53.8 262.0 338.3 39.3 13.0 -76.3 87.0 -2.0 3: :00 49.9 262.9 334.1 39.3 13.1 -26.2 86.0 0.0 4 :00 49.4 262.9 335.8 39.3 13.0 -26.3 85.0 -1.0 5: :00 50.8 263.9 338.0 39.4 12.8 -26.6 85.0 0.0 6: :00 59.2 261.9 338.7 39.3 13.3 -26.0 90.0 +4.0 7: :00 101.0 260.9 375.4 39.4 13.6 -25.8 106.0 +3.0 8; :00 138.5 285.8 424.3 39.3 14.5 -24.8 130.0 0.0 ' 9 :00 . 207.6 260.9 488.3 39.3 18.1 -21.2 154.0 -3.0 10 :00 238.9 262.9 510.2 39.9 19.7 -19.2 171.0 -1.0 11 :00 258.4 259.8 522.6 39.2 20.7 -18.5 178.0 -1.0 12 :00 263.6 261.8 527.6 39.2 21.4 -17.8 183.0 0.0 13 :00 230.4 261.9 506.1 39.2 19.0 -20.2 174.0 -4.0 14 :00 225.4 260.8 497.5 39.4 19.4 -20.0 171.0 -1.0 15: :00 207.0 260.8 479.4 39.3 19.4 -19.9 170.0 -1.0 16 :00 191.1 263.8 467.6 39.6 20.0 -19.6 170.0 -1.0 17 :00 212.0 261.0 481.8 39.3 19.7 -19.6 175.0 +3.0 18 :00 222.1 260.8 495.9 39.3 19.2 -20.1 174.00 -1.0 19 :00 227.2 261.9 503.3 39.2 19.8 -19.4 168.0 -1.0 20 :00 274.8 260.9 539.3 39.1 20.6 -18.5 181.0 +5.0 21: :00 260.4 260.7 524.9 39.5 20.4 -19.1 174.0 +1.0 22: :00 227.7 259.9 496.5 39.8 19.4 -20.4 167.0 +1.0 23 :00 166.9 261.8 441.1 39.6 18.1 -21.5 148.0 +1.0 24 :00 117.0 264.0 390.2 39.2 16.2 -23.0 122.0 +1.0 10.0 8.0 8.3 8.2 7.9 9.3 9.8 12.2 13.8 16.5 17.3 19.0 17.5 17.4 17.0 17.6 18.4 16.5 15.9 18.6 20.1 17.2 15.4 12.8 0.0 55.1 +1.2 0.0 55.0 -U9 0.0 51.7 -2.5 0.0 51.3 -2„9 +0.1 55.0 -3.1 -0.5 52„5 -2.5 -0.2 58.6 +1.6 +0.1 72.0 -3.3 +0.3 79.0 -3.8 0.0 83.9 +3.5 +0.1 91.8 +6.5 +0.1 93.0 + 7.0 +0.1 89.2 +2.0 0.0 82.4 +1.6 0.0 80.6 +0.9 0.0 • 81.0 -0.5 +0.1 83.1 -0.7 0.0 86.0 -0.4 0.0 90.9 -2.3 -0.1 95.3 +1.5 0.0 91.9 +5.9 0.0 86.8 +2.1 0.0 76.4 0.0 -0.1 67.4 + 5.0 .4 .5 .4 .2 22.0 21.1 20.9 20.9 20.9 20.9 21.8 28.0 28. 30. 32. 34. 30.8 30.7 30.5 29.9 29.3 30.5 30.7 34.0 33.4 31.9 28.8 24.8 8.2 +13.8 33.1 45.7 -12.6 +8.1 8.2 +12.9 33.9 48.7 -14.8 +7.7 8.3 +12.6 30.8 45.9 -15.1 +7.4 8.3 +12.6 30.4 45.9 -15.5 +6.7 8.3 +12.6 34.1 49.8 -15.7 +6.3 8.2 +12.8 31.6 46.8 -15.2 +7.4 8.2 +13.6 36.8 48.8 -12.0 +8.0 19.5 + 8.5 44.0 55.8 -11.8 +8.0 21.1 + 7.3 50.6 61.7 -11.1 + 7.9 21.1 + 7.4 53.4 59.3 - 6.1 +8.3 23.4 + 7.0 59.4 61.7 - 2.5 +8.5 23.7 + 10.5 58.8 62.3 - 3.5 +8.5 23.6 + 8.5 58.3 64.8 - 6.5 +8.3 21.0 + 9.7 51.7 59.8 - 8.1 +8.1 20.8 + 9.7 50.1 58.9 - 8.8 +8.4 20.8 + 9.1 51.1 60.1 - 9.6 +8.4 20.8 + 8.5 53.8 63.0 - 9.2 +8.4 24.9 + 5.6 55.5 61.5 - 6.0 +8.5 26.6 + 4.2 60.2 66.6 - 6.4 +8.5 26.7 + 7.2 61.2 66.9 - 5.7 +8.5 24.6 + 8.8 58.5 61.4 - 2.9 +8.5 24.4 + 7.5 54.9 60.3 - 5.4 +8.4 19.4 + 9.1 47.9 57.0 - 9.1 +8.1 8.3 +16.5 42.3 53.8 -11.5 +7.9 TOTALS 4,103.3 6,288.0 10,709.4 943.6 417.8 -525.8 3,442.0 344.7 0 1,809.6 +14.9 607.4 427.5 +239.9 IBS.4 1137.4 -225.0 +192.8 Source: Mr. T.D. Stanly, Calgary Power Ltd. CP = Calgary Power Limited CU = Canadian Uti l i t i e s Limited (includes Northland U t i l i t i e s ) ON ON Figure 13 Hourly Load Curves and Generation Curves for 67 Canadian Utilities' Two Major Power Territories-The North and The South. Note- Both Canadian Utilities' generating stations are able to operate at near optimum conditions because of the spatial interchange permitted by the interconnections with Calgary Power Ltd. 70 60 50 40 30 20-Battle River Generation Curve \ Southern Territory Load Curve Two units at Battle River fluctuate in unison. • 40 30 20 10 Northern Territory Load Curves Valley v iew and Fairview Generat ion C u r v e s Power Interchange with Calgary Power (net inter-change per hour) To C P . To C.U. 68 Edmonton "purchased" power from the g r i d when one unit was being prepared for loading between 5:00 a.m. and 7:00 a.m. (after having been shut down for the lower demand of the week-end) . Edmonton also made two power "purchases" i n the afternoon, the f i r s t during the rapid increase i n demand between 3:00 p.m. and 4:00 p.m. and the l a t t e r during the evening peak between 6:30 p.m. and 8:00 p.m. The use of the interchange by the City of Lethbridge i s less orderly than that of the City of Edmonton because of the great r e l i a n c e by Lethbridge on the more f l e x i b l e gas turbines for most of i t s generation. Figure 13 shows the load and generation of Canadian U t i l i -t i e s ' two power t e r r i t o r i e s and indicates the economies of oper-ation achieved through .interchange. The 8.5 MW unit at Valley-view, operating continuously at f u l l load, provided the Northern T e r r i t o r y baseload. The remainder of the power needs during the early morning was provided by the large surplus generation of Canadian U t i l i t i e s ' Battle River station, i n the Southern T e r r i t o r y through an interchange with Calgary Power. The large generation deficiency i n the Northern T e r r i t o r y at th i s t ime gave the Battle River s t a t i o n a better load factor and a more e f f i c i e n t operation. As t o t a l demand increased throughout the province with the approach of sunrise, a ra p i d increase i n generation i n the Northern T e r r i t o r y (provided by the e a s i l y loaded gas turbine 69 and d i e s e l u n i t s ) slowed down the r a t e of increase i n demand placed on the B a t t l e R i v e r p l a n t , a l l o w i n g slower, more econo-m i c a l l o a d i n g of i t s u n i t s . An agreement between Canadian U t i l i t i e s and Calgary Power permitted the o p e r a t i o n of the B a t t l e R i v e r and V a l l e y v i e w p l a n t s at f u l l c a p a c i t y during the peak p e r i o d s , the p r o v i s i o n of most of the remaining peaking power w i t h the d i e s e l generators at F a i r v i e w and the u t i l i z a -t i o n of Calgary Power i s hydro p l a n t s , through g r i d interchange, f o r any peaks above the c a p a b i l i t y of these Canadian U t i l i t i e s u n i t s . ^ Canadian U t i l i t i e s c o uld then pay back the power "pur-chases" dur i n g the peak periods w i t h power " s a l e s " i n off-peak p e r i o d s . The e f f e c t of t h i s s p a t i a l i n t e g r a t i o n of Canadian U t i l i -t i e s i n t o the g r i d system i s the f u l l e r and more economic load-i n g of i t s B a t t l e R i v e r p l a n t . In a d d i t i o n , by reducing the s i z e of the d a i l y f l u c t u a t i o n s between lowest and highest load, and by reducing the r a p i d i t y of these changes, f u r t h e r economies were r e a l i z e d . Peak power costs were minimized by u t i l i z i n g one peaking p l a n t f o r the whole Canadian U t i l i t i e s market area, r a t h e r than the two peaking p l a n t s t h a t would have been r e q u i r e d 17. Statements by Mr. T.D. Stanley, Production Superinten-dent, Calgary Power L i m i t e d , Calgary, A l b e r t a , and Mr. W.G. S t e r l i n g , Chief Production Engineer, Canadian U t i l i t i e s L i m i t e d , Edmonton, A l b e r t a , personal i n t e r v i e w , June 1 9 6 6 . 70 had the areas not been connected. Power "sales" to and "pur-chases" from Calgary Power at different times of the day allowed the Canadian U t i l i t i e s system to operate without recourse to additional generating units or to rapid changes in demand being placed upon conventional steam generating plants. The pattern of industry growth i n the 75-year period from 1890 u n t i l 1965 was that of a gradually evolving search for economies of scale, economies of specialization and economical generation sites. The search for these cost-reducing benefits was restricted by the levels of demand and technology of the appropriate time. Once major growth in the e l e c t r i c i t y industry was i n i t i a -ted, a snowball effect developed in which a larger scale of operation resulted in greater economies which in turn permitted a further increase in the scale of operation and so on. At f i r s t , when demand was small, the increased size of operation and economies influenced only the urban area operation. Then, with continuing increases in demand, improvements in technology and reduction of costs, the scale was expanded to the topogra-phic scale. Finally, with s t i l l further increases i n these factors, the scale of operation expanded to the chorographic scale. These spatial changes were accompanied, in the transi-tion from the f i r s t stage of development to the second, by a 71 reduction i n the number of companies serving the expanded mar-ket. On the other hand, the s p a t i a l i n t e g r a t i o n marking the change from the second stage of development to the t h i r d was marked by corporate co-operation rather than corporate conso-l i d a t i o n , although from an operational point of view, the pro-v i n c i a l scale of operation i n 1965 varied only s l i g h t l y from what i t would be i f i t was i n the hands of one corporation. CHAPTER IV ELECTRICITY TRANSMISSION: THE KEY TO SPATIAL INTEGRATION Although the use of large, s p e c i a l purpose generating sta-tions i s the primary factor i n the least cost s o l u t i o n to elec-t r i c i t y supply, production costs are only a part of the t o t a l cost equation. To achieve least cost e l e c t r i c i t y supply within a region, i t i s necessary to integrate s p a t i a l l y a l l generating f a c i l i t i e s and market areas. This i n t e g r a t i o n i s achieved through the l i n k i n g of a l l elements with a transmission network v or g r i d , the e l e c t r i c i t y industry's " s p a t i a l i n t e g r a t i o n appa-ratus". In Chapter III, these linkages were considered simply as the means of s p a t i a l integration, but t h e i r role, i n t o t a l system design was not discussed. In order to discuss t h i s f u l l r o l e , i t i s f i r s t necessary to understand the te c h n i c a l cha-r a c t e r i s t i c s and cost structure of e l e c t r i c i t y transmission. Transmission f a c i l i t i e s are i n many ways as complex as generating f a c i l i t i e s because of t h e i r own load factors, reser-ve factors, capacities and economies of scale. Transmission f a c i l i t i e s have the ro l e of both permitting economies of large scale generation and of putting severe l i m i t s on the degree to which s p a t i a l i n t e g r a t i o n can take place. An appreciation of these permissive and l i m i t i n g roles of transmission can take place only a f t e r the i n t e r r e l a t e d technology and costs of trans-73 mission are understood. Basic C h a r a c t e r i s t i c s of Transmission Systems T r a d i t i o n a l l y , economic geographers have considered trans-mission f a c i l i t i e s simply as a means of "transporting" e l e c t r i -c i t y from place "A" to place " B " . l Analysis normally takes the form of comparing the cost of development of remote power s i t e s with that of "at market" s i t e s . Transmission f a c i l i t i e s are seen as extra costs involved i n marketing power generated at remote s i t e s of inexpensive primary energy sources. These s i t e s are developed only i f the cost of generation plus transmission to market i s cheaper than the cost of generation at market. However, the major factor i n the t e c h n i c a l design and spa-t i a l l ocation of transmission lines i s the desire to serve a dispersed market with large-scale generating units operated at optimal e f f i c i e n c y through incremental cost loading. Minimum t o t a l cost, including both generation and transmission, i s nor-mally best achieved by u t i l i z i n g greater economies of scale i n generation wherever possible. Distance and l e v e l of aggregate demand di c t a t e the l i m i t s i n transmission l i n e construction which w i l l achieve these generating economies. An analysis of 1. P a r t i c u l a r l y , Gerald Manners, The Geography of Energy, London: Hutchison University Library, 1964, pp. 69-115. 7 4 the impact of transmission f a c i l i t i e s i s possible i f the econo-mic and t e c h n i c a l c h a r a c t e r i s t i c s of e l e c t r i c a l transmission are outlined. The basic variables i n e l e c t r i c a l transmission are voltage and capacity. Transmission capacity i s s i m i l a r to that i n gene-r a t i o n - i t dictates the upper l i m i t of the "amount" of e l e c t r i -c i t y that can be transferred. Voltage i s e l e c t r i c a l pressure and determines the maximum capacity or output of a transmission l i n e . Transmission capacity varies i n a geometric proportion to voltage. Doubling voltage levels quadruples transmission capa-c i t y . The economies of scale of high voltage transmission f a c i -l i t i e s o f f s e t the diseconomies of increased c a p i t a l costs and l i n e losses i n substations. A 132 KV l i n e has an approximate capacity of 40 KW, and a 240 KV l i n e has a capacity of about 150 KW.2 The c a p i t a l costs per mile of the 240 KV l i n e are only s l i g h t l y greater than twice that of a 132 KV l i n e . Consequen-t l y , i f . s i m i l a r load factors at d i f f e r e n t voltages are achieved, e l e c t r i c a l transmission costs i n the higher voltage lines are lower on a unit basis, once minimun transmission distances have 2. Statement by Mr. H.B. LeBourveau, Manager of Operations, Calgary Power Limited, Calgary, Alberta, personal interview, June 1965. 3. Ibid. 75 - been reached. As the cost /KWH/mile i s reduced with higher voltage, i t i s evident that greater distances can be more economically over-come with higher voltage transmission. However, to use higher voltages for transmission, i t i s necessary to i n s t a l l substa-tions to increase voltage for transmission and then to reduce voltage for d i s t r i b u t i o n to the consumer. For each voltage l e v e l there i s therefore a minimum economic distance as more . investment i n substations i s necessary for greater voltage changes than for lesser voltage changes.^ Transformation costs are not normally s i g n i f i c a n t at the lower voltage l e v e l s . For high voltage transmission and transformation under Alberta con-d i t i o n s , 200 miles i s considered the minimum economic trans-mission distance for 500 KV l i n e s , 75 miles for 240 KV lines and 15 miles for 138 KV lines.5 It i s not meaningful to give . figures for maximum transmission distances, because these vary with unique patterns of demand and d i s t r i b u t i o n of po t e n t i a l power s i t e s . If the location of a single market area coincides with the s i t e of cheapest e l e c t r i c a l generation, e l e c t r i c a l transmission i s not economically f e a s i b l e . Conversely, i f the 4. Ibid. Statement by Mr. H.B. LeBourveau. 5. Statement by Mr. E.J. McLeod, Transmission Superinten-dent, Calgary Power Limited, Calgary, Alberta, personal i n t e r -view, June 1966. 76 market area i s distant from a l l primary energy sources, but there are remote s i t e s of inexpensive generation, the maximum economic transmission distance for each voltage l e v e l i s increased. Ma-ximum economic distance for e l e c t r i c a l transmission i s a funct-ion of the r e l a t i v e abundance and location of large supply and demand areas, the transmission voltage and the l e v e l of demand. Transmission costs vary d i r e c t l y with load factors because there are no costs d i r e c t l y r e l a t e d to transmission l i n e use. If a transmission system operates continuously at f u l l load, the unit cost i s minimized. On the other hand, i f lines oper-ate at only 50 percent load factor, the u n i t cost of trans-mission i s doubled. Therefore, maximum transmission distances vary s i g n i f i c a n t l y with load factors, as i l l u s t r a t e d in. the following hypothetical example. A given area contains two s i t e s of possible generation: a remote s i t e 200 miles from market and an "at market" s i t e . The cost of baseload generation (80 percent load factor) at the remote s i t e i s two mills/KWH; the cost of generation at the market s i t e i s four mills/KWH. I f the cost of transmission i s one and a h a l f m i l l s per KWH, the cost of generation plus trans-mission i s less than the alternate cost of generation at market. However, peakload generation costs (40 percent load factor) at these same two points may be four mills/KWH and s i x mills/KWH re s p e c t i v e l y . The cost of transmission i s therefore three m i l l s / K W H . The c o s t o f t r a n s m i s s i o n and g e n e r a t i o n i s g r e a t e r t h a n t h e c o s t o f g e n e r a t i o n o f " a t m a r k e t " power. I n t h i s i n s t a n c e , t r a n s m i s s i o n o f b a s e l o a d power i s e c o n o m i c a l , w h i l e t r a n s m i s s i o n o f p e a k l o a d power i s e c o n o m i c a l l y u n a t t r a c t i v e . On t h e b a s i s o f the t e c h n i c a l and economic c h a r a c t e r i s t i c s d i s c u s s e d above, the t h r e e f o l l o w i n g g e n e r a l i z e d s t a t e m e n t s c o n c e r n i n g t h e r o l e o f t r a n s m i s s i o n f a c i l i t i e s i n d e t e r m i n i n g the s p a t i a l p a t t e r n o f the e l e c t r i c i t y i n d u s t r y a r e deduced. I n t h e development o f a. remote power s t a t i o n , a company's a b i l i t y t o b u i l d b o t h the s t a t i o n and the c o n n e c t i n g t r a n s -m i s s i o n l i n e s i s p r o p o r t i o n a l t o : (1) t h e r e l a t i v e g e n e r a t i n g c o s t advantages o f the remote power s i t e o v e r the " a t m a r k e t " - s i t e , (2) the t r a n s m i s s i o n v o l t a g e , (3) the l o a d f a c t o r o f t h e l i n e , and i n v e r s e l y p r o p o r t i o n a l t o : ( 4 ) t h e d i s t a n c e between t h e market a r e a and the remote power s i t e . I n the e r e c t i o n o f a t r a n s m i s s i o n l i n e between e x i s t i n g power s t a t i o n s t o a c h i e v e a d d i t i o n a l o p e r a t i o n a l and system d e s i g n b e n e f i t s , a company's a b i l i t y t o e r e c t t h e t r a n s m i s s i o n l i n e s i s p r o p o r t i o n a l t o : (1) t h e magnitude o f a d d i t i o n a l s a v i n g s a v a i l a b l e t h r o u g h j o i n t s t a t i o n o p e r a t i o n and d e s i g n , 78 (2) t h e t r a n s m i s s i o n v o l t a g e , ( 3 ) t h e l o a d f a c t o r o f t h e l i n e , and i n v e r s e l y p r o p o r t i o n a l t o : (4) t h e d i s t a n c e between t h e e x i s t i n g power s t a t i o n s . I n the development o f a c e n t r a l l y l o c a t e d g e n e r a t i o n s t a -t i o n and i t s c o n n e c t i o n t o an e x t e n d e d market a r e a , a company's a b i l i t y t o e r e c t t h e s t a t i o n and t h e n e c e s s a r y t r a n s m i s s i o n l i n e s i s p r o p o r t i o n a l t o : ( 1 ) t h e r e l a t i v e c o s t advantages o f the l a r g e s c a l e p l a n t d e s i g n e d to ( s e r v e a l a r g e ' m a r k e t o v e r the c o s t o f two o r more a l t e r n a t e s m a l l e r s t a t i o n s needed t o f i l l the same r o l e , (2) the t r a n s m i s s i o n v o l t a g e , ( 3 ) t h e l o a d f a c t o r , and i n v e r s e l y p r o p o r t i o n a l t o : (4) t h e t o t a l a d d i t i o n a l t r a n s m i s s i o n l i n e d i s t a n c e . I n an i n t e r c o n n e c t e d t r a n s m i s s i o n g r i d , e l e c t r i c i t y f l o w s a t e v e r y v o l t a g e l e v e l between a l l i n p u t t r a n s f o r m e r s o r gene-r a t i n g s t a t i o n s and a l l o u t p u t t r a n s f o r m e r s o r market a r e a s i n a l i n e o f l e a s t r e s i s t e n c e . I f a l a r g e i n c r e a s e i n demand i s e x p e r i e n c e d a t one e x t r e m i t y o f a g r i d , and t h e p e a k l o a d p l a n t s e l e c t e d t o i n c r e a s e g e n e r a t i o n i n r e s p o n s e t o i n c r e a s e s i n a g g r e g a t e demand i s l o c a t e d a t a n o t h e r e x t r e m i t y o f the g r i d , t h e f l o w o f e l e c t r i c i t y from a l l power s t a t i o n s t o a l l market a r e a s a u t o m a t i c a l l y t a k e s p l a c e i n t h e most e f f i c i e n t manner 79 provided that a l l c i r c u i t s are open. In any system, there i s , therefore, continuous subtle change i n the s p a t i a l r e lationships between i n d i v i d u a l generating stations and i n d i v i d u a l market areas. These changes automatically reduce l i n e losses and therefore system costs. This feature permits a company with discontiguous market areas to operate i t s system without the a d d i t i o n a l costs of transmission which would be necessary without interconnection, or without the diseconomies of operating two power systems, each with the diseconomies of smaller scale operation. Alberta's E l e c t r i c i t y Transmission System Examples of these features of transmission f a c i l i t i e s are evident throughout the development of the e l e c t r i c i t y industry i n Alberta. Since 1912, when e l e c t r i c i t y transmission lines were f i r s t introduced into the province, there has been rapid growth i n the mileage of transmission l i n e s , increase i n the voltage levels used and changes i n the use to which these l i n e s have been put. With few exceptions,^ o r i g i n a l transmission lines are s t i l l i n existence, even though they have been re-6. In some cases, such as the o r i g i n a l 72 KV li n e from the Horseshoe plant to the City of Calgary, o l d lines were dismantled a f t e r having been replaced by new 132 KV l i n e s . 80 b u i l t and are now used.for d i f f e r e n t purposes than o r i g i n a l l y intended. A f t e r the f i r s t lines were constructed to bring Bow River hy d r o e l e c t r i c power to the City of Calgary, transmission lines were b u i l t outward from Calgary to l i n k the many small communi-t i e s i n a narrow corridor between Edmonton and Lethbridge and provide them with c e n t r a l l y generated e l e c t r i c i t y . In the late 1940's, as the capacity of these o r i g i n a l 69 KV lines became inadequate for the transmission of s u f f i c i e n t volumes of elec-t r i c i t y to meet increasing demand, 132 KV lines were b u i l t to f i l l t h is primary r o l e . These larger lines moved bulk power between main substations, while the 69 KV lin e s became relega-ted for moving power between main substations and smaller commu-n i t i e s . S i m i l a r l y , i n the late 1950's, 240 KV lines replaced the 132 KV lines b u i l t ten years e a r l i e r . The 132 KV lines were then used for secondary transmission, with the o r i g i n a l 69 KV lines being used f o r r u r a l d i s t r i b u t i o n . The r e s u l t i n g pattern i n 1965 (Figure 8) was a heirarchy. of transmission l i n e s , each responsible for a s p e c i f i c function i n the area which i t served. The p o s i t i o n of the transmission l i n e i n the heirarchy was determined by it's voltages and loca-t i o n . In the densely populated areas of the province, the main transmission f a c i l i t i e s were 240 KV l i n e s , t r a n s f e r r i n g power from the Wabamun, Big Bend and Edmonton power plants to the . 8 1 large substations near Calgary and Edmonton. The distribution system of each city, and the province's secondary transmission network were connected to these substations. A l l small and medium-sized communities in the area between Calgary and Edmon-ton, plus most communities from Peace River to Lethbridge and Medicine Hat were served by the secondary transmission lines at 132 KV. These lines receive their power from the main 240 KV - 132 KV substations in the Edmonton-Calgary axis, from the Bow River plants, and from the generating stations operated by Canadian U t i l i t i e s , Medicine Hat and Lethbridge. The numerous villages and hamlets in the province were supplied by either 69 KV or 33 KV lines connected to 132 KV-69 KV substations. In-dividual farms were served by 16 KV lines, which operated as rural distribution lines rather than as low voltage trans-mission lines. By 1980, new transmission lines w i l l be construc-ted so that a l l primary transmission w i l l take place at 240 KV with a l l 132 KV lines operating as secondary transmission f a c i -l i t i e s . ? In Alberta, as in other areas where major population con-centrations are linked to each other by transmission f a c i l i t i e s , i t is relevant to speak of the main settled area of the province 7. Statement by Mr. J.G. McGregor, Chairman, Alberta Power Commission, personal interview, June 1966. 82 as one market. Viewed i n t h i s way, i t i s evident that most ge-nerating stations were located within the l i m i t s of this market area. If a l l points within the large market area were equally advantageous s i t e s of e l e c t r i c a l generation, minimum cost elec-t r i c i t y supply would be a function of reducing t o t a l e l e c t r i c a l transmission costs. In t h i s case, the most e f f e c t i v e point would be the e l e c t r i c a l "centre of g r a v i t y " of the t o t a l market area. As a l l places are not equally suited to the generation of e l e c t r i c i t y , a primary transmission network l i n k i n g a l l genera-, tin g stations and a l l nodes of e l e c t r i c a l demand within the market area developed. The primary transmission lines permit the operation of a l l stations (as i f they existed at one point) and the de l i v e r y of e l e c t r i c a l energy to a l l market areas. In this instance, a greater t o t a l mileage of transmission f a c i l i -t i e s e x i s t than i f a l l generating stations existed at the elec-t r i c a l "centre of gravity". Investment i n a d d i t i o n a l trans-mission f a c i l i t i e s i s the extra cost involved i n u t i l i z i n g these advantageous s i t e s of generation. Alberta's transmission system approximates a pattern of transmission f a c i l i t i e s which most e f f i c i e n t l y transfers power from stations to markets while permitting maximum generating e f f i c i e n c i e s . Most transmission f a c i l i t i e s transfer power within the major s e t t l e d market area. Only a few transmission lines 83 l i n k remote generating stations with the c e n t r a l market area. These links include the lines connecting Calgary with the Bow River power stations, the l i n e connecting the Big Bend s t a t i o n with the main north-south axis, and the l i n e through B r i t i s h Columbia connecting the Bow River power stations with the Leth-bridge area. A further example of deviation of the power stations away from th i s "centre of g r a v i t y " of the market i s the general loca-t i o n of the major power stations r e l a t i v e to major consumer nodes. The p r i n c i p a l market i s the Calgary area, with i t s large r e s i d e n t i a l zones and e l e c t r i c i t y intensive industries, whereas most power generating capacity was closer to Edmonton. Large power stations are located west of the major market area, whereas secondary markets are located to the east of the Edmon-ton-Calgary axis. Therefore, some of the costs of the primary transmission lines within the g r i d must be a t t r i b u t e d to "trans-f e r r i n g " e l e c t r i c i t y toward the market centre of gravity. However, this deviation i s not economically s i g n i f i c a n t and i s not believed to have raised the cost of e l e c t r i c power to the consumer.8 Transmission f a c i l i t i e s are the links i n an e l e c t r i c a l 8 . Statement by Mr. H.W. LeBourveau, Manager of Operations, Calgary Power Limited, Calgary, Alberta, personal interview, June 1965. 84 system which permit the r a t i o n a l i z a t i o n of the industry so that the most e f f i c i e n t pattern of production, operation, and d i s -t r i b u t i o n can take place. Although transmission f a c i l i t i e s b ring substantial costs to the industry as a whole, these costs are small i n r e l a t i o n to the derived b e n e f i t s . Throughout the development of the power industry i n Alberta, there has been a continuously increasing r e l i a n c e on transmis-sion f a c i l i t i e s for economical operation. The o r i g i n a l use of transmission f a c i l i t i e s permitted the industry to develop remote s i t e s of low cost prime energy sources. As these s i t e s were developed and t h e i r f u l l p o t e n t i a l r e a l i z e d , transmission f a c i -l i t i e s were extended to a d d i t i o n a l market areas because the cost of both generation and transmission using the advantageous s i t e s provided a more v i a b l e and economic a l t e r n a t i v e to 'at market' power production. A d d i t i o n a l l y , when area! expansion was no longer possible because a l l major market areas were linked with c e n t r a l e l e c t r i c power stations, transmission f a c i l i t i e s were used to bring i n d i v i d u a l power systems together so that t o t a l power system design, construction and operation could be c a r r i e d on i n the most e f f i c i e n t manner. Furthermore, the economic c h a r a c t e r i s t i c s of e l e c t r i c a l transmission d i c t a t e that as demand increases within an e l e c t r i c power system, the unit costs of transmission are reduced at the same time as t h e i r d i r e c t benefits increase, thereby creating a c i r c u l a r process i n which e l e c t r i c i t y costs are further reduced. CHAPTER V SUMMARY AND CONCLUSIONS This study of the s p a t i a l behaviour of Alberta's e l e c t r i -c i t y industry comprises a d e s c r i p t i o n of the industry's s p a t i a l patterns as the industry developed through time and an analysis of e l e c t r i c i t y generation and transmission, the two major e l e -ments i n an e l e c t r i c i t y system. The major trends throughout i t s development include: the increasing use of large, s p e c i a l pur-pose generating units, an expansion i n the a r e a l scale of opera-tion , and growth i n the s p a t i a l complexity of transmission f a c i -l i t i e s . The key to these development trends was the desire on the part of power companies to minimize costs, which was the only acceptable method of p r o f i t maximization permitted by the industry's public regulatory bodies. Cost minimization lay i n u t i l i z i n g , to the greatest extent possible, the s i g n i f i c a n t economies of large scale e l e c t r i c i t y generation which are evident i n each cost element of generation. These economies were harnessed i n Alberta by l i n k i n g a l l market areas and a l l production units through the erection of a net-work of transmission f a c i l i t i e s . Transmission f a c i l i t i e s were in e v i t a b l y b u i l t whenever t h e i r costs were less than the po-t e n t i a l benefits to be gained through the accretion of market areas and the i n s t a l l a t i o n of larger, more economical genera-86 t i n g units than would have been possible without the i n s t a l l a -t i o n of the transmission f a c i l i t i e s . Throughout this gradual process of increasing the scale and complexity of e l e c t r i c i t y system operation, the industry grew through three d i s t i n c t stages of development, i d e n t i f i e d and described i n terms of the varying s p a t i a l patterns of prod-uction f a c i l i t i e s , transportation linkages and market nodes. The s p a t i a l organization of one stage of development was d i s -tinguished from that of another by the degree of transmission f a c i l i t y linkage between producing and consuming centres. As transmission f a c i l i t i e s were increased i n both a r e a l extent and s p a t i a l complexity, a base was established for that area's evo-l u t i o n to the next highest form of s p a t i a l organization. During i t s evolution, the e l e c t r i c i t y industry changed completely from an i n i t i a l pattern of numerous i s o l a t e d market areas, each containing i t s own production f a c i l i t i e s , to a f i n a l pattern of a single interconnected e l e c t r i c i t y g r i d i n which there was no unique functional r e l a t i o n s h i p between an -i n d i v i d u a l generation s t a t i o n and a p a r t i c u l a r market node. Early generating stations were small, crude and expensive and the uses for e l e c t r i c i t y were lim i t e d . Therefore, i n i t i a l e l e c t r i c i t y systems contained only a small production f a c i l i t y and a small number of consumers located close to the generating s t a t i o n and connected to i t only by low capacity d i s t r i b u t i o n 87 l i n e s . Numerous i s o l a t e d generating stations, operating indepen-dently within a region, formed the s p a t i a l pattern characteris-t i c of the f i r s t stage of development. As technological improvements were made i n generation and d i s t r i b u t i o n , and as means were established f o r the longer d i s -tance 'transmission' of e l e c t r i c i t y , many small i s o l a t e d pro-duction plants were r e t i r e d and replaced by a single thermal generating plant or integrated r i v e r basin development with numerous linkages to i n d i v i d u a l markets. This pattern of one generating s t a t i o n serving numerous market nodes characterize the second stage i n the development of an e l e c t r i c i t y system. In t h i s second stage, demand with i n the connected market area was only s u f f i c i e n t to require the output of one large generating s t a t i o n . The least cost e l e c t r i c i t y supply s o l u t i o n lay i n u t i l i z i n g t h i s single generating s t a t i o n to serve the t o t a l market rather than i n b u i l d i n g two or more smaller sta-tions to serve separate segments of the t o t a l market. At that same time, demand was not s u f f i c i e n t to require numerous, spe-. c i a l purpose generating s t a t i o n s . In the second stage of deve-lopment, the consumer gained the advantages of a continuous, r e l i a b l e , low cost source of e l e c t r i c i t y , and the power produ-cer reduced his unit generating costs, representing savings considerably larger than the a d d i t i o n a l costs of erecting trans-mission l i n e s to l i n k the generating s t a t i o n to the markets. 88 As. i n d i v i d u a l s t a g e 2 e l e c t r i c i t y systems e x t e n d e d t h e i r power t e r r i t o r i e s t o ward each o t h e r , and as t h e demand f o r e l e c t r i c i t y w i t h i n each system i n c r e a s e d d r a m a t i c a l l y , f o r m e r l y i n d e p e n d e n t e l e c t r i c i t y n e t w o r k s , each r e l y i n g on a s i n g l e g e n e r a t i n g s t a t i o n o r g e n e r a t i n g complex, were i n t e r c o n n e c t e d w i t h each o t h e r t o form an e l e c t r i c i t y g r i d . I n a g r i d , o r t h e t h i r d s t a g e p a t t e r n o f development, power p r o d u c e r s found t h a t t h e a d d i t i o n a l advantages o f s p e c i a l purpose g e n e r a t i n g u n i t s , peak l o a d m i n i m i z a t i o n and more e c o n o m i c a l o p e r a t i n g p a t t e r n s were a v a i l a b l e . I n h a r n e s s i n g t h e s e p r o d u c t i o n bene-f i t s t h r o u g h t h e l i n k i n g o f a l l p r o d u c t i o n c e n t r e s and market a r e a s , the r o l e o f t r a n s m i s s i o n f a c i l i t i e s was changed from t h a t o f s i m p l e t r a n s p o r t a t i o n a r t e r i e s s e n d i n g e l e c t r i c i t y o u t -wards from g e n e r a t i n g s t a t i o n s t o s p e c i f i c market a r e a s , to t h a t o f a complex t r a n s p o r t a t i o n g r i d moving power from some o r a l l o f the g e n e r a t i n g s t a t i o n s t o t h e a g g r e g a t e market a r e a . E l e c t r i c i t y moved w i t h i n t h e g r i d , b u t i n no u n i q u e p a t t e r n between i n d i v i d u a l g e n e r a t i n g s t a t i o n s and s p e c i f i c market a r e a s . I n t h e e a r l y development o f A l b e r t a ' s e l e c t r i c i t y i n d u s t r y , t r a n s m i s s i o n f a c i l i t i e s were f i r s t u s ed t o l i n k a remote h y d r o -e l e c t r i c g e n e r a t i n g complex t o t h e major market a r e a . The sim-p l i c i t y and economy o f h y d r o e l e c t r i c g e n e r a t i o n p r o v i d e d the s t i m u l u s - : f o r t h i s development. L a t e r , e x t e n s i o n s o f t r a n s -89 mission f a c i l i t i e s were made to bring the advantages of low cost r e l i a b l e h y d r o e l e c t r i c power to small communities pre-v i o u s l y without e l e c t r i c i t y or with small i n e f f i c i e n t i s o l a t e d generating s t a t i o n s . Further growth i n aggregate demand resulted i n the i n s t a L l a t i o n of s p e c i a l purpose generating stations, the operation of which was accomplished through intercorporate cooperation using a common transmission g r i d . Because of the low density of Alberta's population and the lack of major e l e c t r i c i t y i n -tensive i n d u s t r i e s , a p r o v i n c i a l g r i d was not developed u n t i l the mid-1950's. The establishment i n Alberta of trunk transmission f a c i l -i t i e s to serve the g r i d as a whole permitted increased f l e x i -b i l i t y i n locating a d d i t i o n a l generating sta t i o n s . As the s p e c i f i c f u n c t i o n a l r e l a t i o n s h i p between a given generating s t a t i o n and a. s p e c i f i c market area was blurred i n the g r i d system, increases i n aggregate demand could be s a t i s f i e d by locating a new generating-station almost anywhere within the'-g r i d . Therefore, the l e a s t cost generating l o c a t i o n within the g r i d could be chosen for system expansion with l i t t l e con-cern for transmission f a c i l i t y costs. In regions d e f i c i e n t i n low cost sources of primary energy, generating f a c i l i t i e s can be located outside the g r i d when the cost of generation and transmission to v i r t u a l l y any point on the g r i d i s less than 90 the cost of generation at any point within the grid. In an e l e c t r i c i t y system, the f l e x i b i l i t y in choosing a location for an additional generating station is therefore proportional to the level of sophistication of the transmission grid. Additions to transmission grid capacity, particularly on trunk routes involving the use of higher voltage levels, bring further economies to the industry because of the economies of scale of transmission. These economies are particularly import-ant in maintaining a low cost e l e c t r i c i t y system as they help to defray the cost of developing higher cost sources of primary energy. ' By the year 1965, the settled area of the Province of Alberta was served with an e l e c t r i c i t y grid which had achieved the highest form of spatial organization. Between 1964 and 1980, additions w i l l take place to the existing generating and transmission capacity, but these additions w i l l not alter in any basic way the existing form of spatial organization. Stage 3 in the development of an e l e c t r i c i t y system represents the highest form of spatial organization. In this stage, there is no unique relationship between individual generating sta-tions and particular market areas. Only modifications of this stage of organization are possible through the use of more and larger special purpose generating f a c i l i t i e s and higher voltage transmission f a c i l i t i e s . A f u t u r e p o s s i b i l i t y f o r A l b e r t a i s t h e i n t e g r a t i o n o f the p r o v i n c i a l g r i d i n t o a l a r g e r w e s t e r n Canadian e l e c t r i c i t y s y s t e m encompassing t h e p r o v i n c e s o f A l b e r t a , B r i t i s h Columbia and Saskatchewan. Such an e x p a n s i o n i n t h e a r e a l s c a l e o f o p e r a t i o n w o u l d r e s u l t i n b e n e f i t s n o t a v a i l a b l e t o any o f the p r o v i n c e s i n d i v i d u a l l y . I n a d d i t i o n t o p e r m i t t i n g g r e a t e r economies o f l a r g e s c a l e o p e r a t i o n s , the advantages o f t h r e e d i s t i n c t t i m e zones w o u l d a c c r u e . These time zone b e n e f i t s w o u l d i n c l u d e a d r a s t i c r e d u c t i o n i n t o t a l s y stem peak demand, an i n c r e a s e d l o a d f a c t o r , and a more g r a d u a l d a i l y p a t t e r n o f l o a d changes. However, the c e n t r e s o f p o p u l a t i o n o f the t h r e e p r o v i n c e s a r e w i d e l y s e p a r a t e d from each o t h e r , and any d e c i -s i o n t o i n t e g r a t e c o m p l e t e l y t h e e l e c t r i c i t y i n d u s t r y o f the t h r e e p r o v i n c e s w o u l d r e s u l t i n t h e e r e c t i o n o f s i g n i f i c a n t m i l e a g e s o f h i g h v o l t a g e , h i g h c a p a c i t y t r a n s m i s s i o n l i n e s . F o r t h e s e r e a s o n s , the p o s s i b i l i t y o f i n t e g r a t i o n w i t h t h e Saskatchewan e l e c t r i c i t y i n d u s t r y i s remote. However, w i t h i n c r e a s e d r e s o u r c e e x p l o i t a t i o n i n the Rocky Mountains . w h i c h form the p r o v i n c i a l boundary w i t h B r i t i s h Columbia, a l a r g e i n d u s t r i a l e l e c t r i c i t y market may be e s t a b l i s h e d w h i c h w i l l i n c r e a s e e l e c t r i c i t y demand i n t h e l a r g e , s p a r s e l y popu-l a t e d a r e a s between t h e p o p u l a t i o n c e n t r e s o f b o t h p r o v i n c e s . An i n c r e a s e d i n d u s t r i a l demand i n t h i s a r e a c o u l d p r o v i d e the n e c e s s a r y s t i m u l o u s f o r the e x p a n s i o n and s p a t i a l i n t e g r a t i o n two d i s t i n c t p r o v i n c i a l power t e r r i t o r i e s . Alberta's e l e c t r i c i t y g r i d has been established to pro-vide the province with a continuous, r e l i a b l e , low cost supply of e l e c t r i c i t y . 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Ullman, E.L. and Isardj'.'W. "Towards a More A n a l y t i c a l Economic Geography: The Study of Flow Phenomena," Annals of the  Association of American Geographers, XXXXI (June, 1951), 179-87. Ullman, E.L. "Human Geography and Area Research," Annals of  the Association of American Geographers, XXXXIII (March, 1953), 54-66. Warren, H.V. "Some Pertinent Factors i n Energy Studies," Canadian Geographer, V (Spring, 1961), 17-23. White, G.G. " F i f t y Years of Power Production from Horseshoe Plant," The Relay, Calgary, Alberta, XXI (Spring, 1961), 5-29.' • White, G.G. "Giant S t r i d e s , " The Relay, Calgary, Alberta, XXII (Winter, 1961-62), 29-46. White, G.G. "Marking Time," The Relay, Calgary, Alberta, XXI (Autumn, 1961), 6-27. White, G.G. "Slow, But Sure.'" The Relay, Calgary, Alberta, XXI (Summer, 1961), 4-23. Wessenauer, G.O. et a l . "Some Problems on a Large Power System With Large Generating Units," World Power Conference, III 0/7, Melbourne 1962, 1850-1867. Zelinsky, W. "Has American Industry Been Decentralizing: The Evidence for 1939-1951 Period," Economic Geography, XXXVLII (July, 1962), 251-269. D. UNPUBLISHED MATERIALS "Calgary Power Limited - Energy Sales and U t i l i z a t i o n , 1964," Calgary Power Limited, Calgary, Alberta, 1964. H a l l , R.D., U t i l i t y Director, Ci t y of Lethbridge, personal l e t t e r , July 14, 1966. 100 Harle, J.A. "Report Upon the Probable Power Requirements of A l b e r t a , " University of Alberta, Edmonton, 1956. "History of Canadian U t i l i t i e s , " Canadian U t i l i t i e s Limited, Edmonton, Alberta, 1960. 'Power Development Programme," Stone and Webster Canada Limited, Edmonton, A l t a . , May, 1959. E. PERSONAL INTERVIEWS In most cases, charts, diagrams, unsourced short reports etc. were provided during the interview. When th i s information was used i n the body of the thesis, i t was a t t r i b u t e d to the interview, rather than to an u n t i t l e d , undated report. Alberta Power Commission, Edmonton, Alberta. McGregor, J.G., Chairman, June, 1966. Calgary Power Limited,. Calgary, Alberta. B i l e s , H.R., Commercial Department, June, 1965. Engelboom, G.A., Commercial Superintendent, June, 1965. Hansen, D.A., General Sales Manager, June 1965 and .' June, 1966. King, W.A., Superintendent of Farm E l e c t r i f i c a t i o n , June, • 1965. LeBorveau, H.B., Manager of Operations, June, 1965 and June, 1966. McKenzie, G.W., Commercial Supervisor, Edmonton Di v i s i o n , June, 1965. McLeod, E.J., Transmission Superintendent, June, 1966. M i l l i g a n , C.H., Director of Public and Employee Relations, June, 1965. Parkinson, G.E., Superintendent of Farm E l e c t r i c Services Limited, (subsidiary of Calgary Power Limited), June, 1966. - : _ . 101 Spurway, A.H., Production Department, June, 1965. Stanley, T.D., Production Superintendent, June, 1965 and June, 1966. Canadian U t i l i t i e s Limited, Edmonton, Alberta. Bagshaw, J.E., Manager of Sales, June, 1965 and June, 1966. Balke, W., Transmission Department, June, 1965. Boole, E., Transmission Department, June, 1966. Sterling, W.G., Chief Production Engineer, June, 1965 and June, 1966. Stahl, L., Information Services, June, 1965 and June, 1966. Schlosser, J., Sales Department, Northland U t i l i t i e s Limited, a f f i l i a t e of Canadian U t i l i t i e s Limited, June, 1965. City of Edmonton, Battistella, F., Chief Design Engineer, Power, Water Supply and Purification Plant, June, 1965. McClary, R„E., Distribution System Planning ..Engineer, June, 1965. 

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