Alberta Energy rejects call to force consumers to switch to fixed-rate contracts

Alberta Electricity Rate Reforms enhance AUC oversight, shift cost burdens to utilities, extend regulated rate purchasing to 120 days, and curb price volatility, strengthening consumer protection and retail market transparency on transmission and distribution charges.

Increased scrutiny of new power line costs and less volatility in month-to-month electricity prices will mean greater protection for Alberta electricity consumers.

“We recognize that Albertans are concerned about all of the charges on their electricity bills,” said Ken Hughes, Minister of Alberta Energy, in announcing these changes. “We are taking thoughtful, co-ordinated steps to ensure the best of both worlds: protection for consumers, and market forces to keep costs down.”

To increase scrutiny, the Alberta Utilities Commission AUC will have greater authority to review costs associated with new power lines. The AUC will receive more information sooner in the process, so it can better ensure that all costs are justified. As well, the burden of proof will shift. Transmission companies will be required to prove that all costs are reasonable instead of consumers being forced to challenge costs they believe are unreasonable.

To further protect consumers, Hughes is asking the AUC to determine the best process to pay for new transmission lines over the long term, to minimize cost impacts on monthly bills.

The decision to move on transmission costs runs parallel to government's response to a report from the Retail Market Review Committee. The committee's mandate was to look at the regulated rate option and the overall competitiveness of the retail market. The 391-page report contained 41 recommendations. Government is acting immediately on two recommendations, rejecting six and accepting 33 in principle.

A key recommendation being implemented immediately will reduce month-to-month price volatility for consumers by improving rules around how regulated rate providers purchase electricity. Currently, providers can only purchase power 45 days in advance for the regulated rate option. The province will extend that to 120 days to bring more stability and predictability to the marketplace. Extending the purchasing window allows providers to average prices over a longer period of time so the effects of severe weather or short-term plant shut-downs will be smaller.

The government has rejected all six recommendations associated with eliminating the regulated rate option. “Almost 65 per cent of Albertans choose the regulated rate option, and we respect that choice,” said Hughes. “This government will not force consumers to sign contracts.”

The 33 recommendations accepted in principle are focused on giving consumers better retail choices and greater information, protecting vulnerable Albertans and strengthening consumer advocacy. One of the recommendations is to make the Utilities Consumer Advocate an independent agency, with greater capacity to advocate on behalf of Albertans. An MLA team will further consult with stakeholders and determine how best to implement this and other remaining recommendations.

The committee also recommended lifting the freeze on applications for new distribution charges, and Hughes has requested that the AUC do so. The province asked the AUC to freeze the rates last year as electricity prices were rising rapidly across Alberta. Applications will need to go through the AUC process to ensure any distribution costs charged to consumers are reasonable and levied fairly.

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