Alberta changes electricity buying rules to relieve rate shock

Alberta utilities can now buy electricity four months ahead, instead of six weeks.

January 30, 2013   by The Canadian Press

EDMONTON—The Alberta government has announced changes to electricity rules aimed at giving consumers a break from high power bills and ensure value for money on future big-ticket power lines.

Energy Minister Ken Hughes said that utilities that sell power to two out of every three Albertans on the so-called regulated rate option will now be able to buy the juice four months ahead of time, rather than on the old deadline of six weeks.

Hughes said that will bring more cost certainty for companies, and reduce the risk of price spikes brought on by heat waves or cold snaps.

Albertans “want the lights to go on, and they want a fair price for their power,” Hughes told a legislature news conference. “There will be less (price) fluctuation, and overall prices are being managed as tightly as possible.”


Hughes also announced that an 11-month freeze on the administrative portion of power bills, instituted to coincide with a review of the pricing system, is now being lifted. Any fee hikes held in abeyance since last February will now be added to power bills, but over a graduated period to avoid price “shock,” he said.

Hughes couldn’t quantify the cost to consumers from the fee thaw, but said it will be “very modest.”

Hughes made the announcement as part of his department’s response to an independent panel report on the electricity pricing system. The report by the Retail Market Review Committee was commissioned last February by Premier Alison Redford to look for long-term solutions to soaring power bills.

About one-third of Alberta’s power customers buy their power on fixed contracts through private retailers under the province’s deregulated system. The remaining two-thirds have not signed up for a contract and, by default, buy their electricity at the government-mandated regulated rate option, which has been susceptible to steep rises in price.

Hughes said he rejected the committee’s suggestion to eliminate the regulated rate option. He said some Albertans don’t see the need to sign fixed contracts and he doesn’t believe it’s the government’s job to force them.

Hughes also announced that the arm’s-length Alberta Utilities Commission will have greater authority to review the costs associated with new power lines, given that taxpayers foot the bill for the projects.

The government came under fire for green-lighting three major multibillion-dollar power lines last year that critics say are not needed. One line is near Edmonton, while the other two run north-south down the eastern and western sides of the province.

The lines bypassed the normal public needs assessment because they were deemed critical infrastructure by former premier Ed Stelmach.

Hughes said the transmission companies will now be forced to prove all the related costs for the projects are necessary. Under the old rules, consumers had to show why they believed the costs were unreasonable.

“We are shifting the burden of proof,” said Hughes.

©The Canadian Press

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