Alberta’s New Legislation Aims to Help Consumers by Stabilizing Electricity Costs
Premier Danielle Smith announces that her government is set to introduce legislation and regulations to offer consumers more electricity rate choices.
One of the changes includes updating default electricity rates every two years to bring stability to the market.
A government news release stated, “This will notably reduce price spikes for Albertans who are unable to select a competitive contract, especially rural Albertans, individuals with limited options, or facing financial challenges.”
The province will also rename the default electricity rate currently known as the “regulated rate option” or RRO.
Ms. Smith mentioned that most Albertans are automatically enrolled in this rate option when signing up for electricity service.
“The rate fluctuates monthly based on electricity price changes, leading to price volatility and spikes,” she stated during an April 18 press conference.
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“We believe this will inform Albertans that this rate should be chosen only when other options are unavailable as everyone in our province needs clarity and certainty regarding cost rates,” she added.
She mentioned that the term RRO was misleading, and legislation will be proposed to change it to “rate of last resort” this spring.
“The rate of last resort will be set every two years for each provider so customers face fewer price spikes and more cost certainty,” Ms. Smith explained.
Minister of Affordability and Utilities, Nathan Neudorf, highlighted that the changes are aimed at assisting individuals in selecting the best electricity service option available.
He stated, “Knowledge empowers individuals, and Albertans should be informed of their choices. This will also make life more affordable for all as it lowers utility prices.”
As per government data, 29% of residential customers, 32% of commercial customers, and 46% of farmers use the default electricity rate.
The province also intends to introduce new guidelines for utility providers, including contacting customers within 90 days of service to inquire about their preference for a competitive rate or remaining with the default rate.
Utility companies will also need to provide information to customers about accessing the government’s Utilities Consumer Advocate resources.
Furthermore, providers are required to remind consumers of their rate options on monthly bills.
Currently, there are 50 competitive price retailers offering fixed and variable rate contracts in Alberta.
These changes were based on recommendations from the RRO Working Group, according to the government.
Mr. Neudorf mentioned that these changes should be implemented by January 1, 2025.
Other Measures
The announcement follows the province’s decision to adjust electricity market regulations to reduce costs by addressing power generators’ practice of withholding energy from the grid to secure higher rates.
Electricity suppliers in Alberta can submit offers to the energy market, known as the power pool, hourly. The Alberta Electric System Operator distributes electricity, starting with the lowest-priced offers up to meeting the power needs for that hour.
Some producers have intentionally held back supply and offered it at higher rates to increase revenue if the power pool requires extra supply.
While this practice is not illegal, it has been criticized by the provincial government for leading to increased costs for consumers.
The new rules, announced in March, will cap the offer price of natural gas-generating units from large providers if net revenues exceed a specific threshold.
The Canadian Press contributed to this report.
