Purpose, structure and delivery of default rate will be discussed
On the eve of a provincial election, the Alberta government has struck an independent committee to review the electricity retail market and make suggestions on how to reduce price volatility, a sore point for many consumers.
“Albertans pay, on average, about the same for electricity as people in most other provinces,” said Ted Morton, minister of energy. “However, our prices do fluctuate from month-to-month for those who are not on a fixed-rate contract, and sometimes quite significantly. We recognize the volatility of the variable rate is a concern for many families, and it is a concern for government.”
As part of its review, the four-person committee will examine how the default rate is calculated and determine ways to mitigate price fluctuations. The committee will also review whether Alberta needs a default rate, and if needed, discuss ways it could be better designed and delivered. The committee will also look at the all-in cost of electricity, and consider how charges other than energy use are determined and approved for payment by consumers.
“The current system has been in place for more than a dozen years and has worked well,” said Morton. “But like with any long-running program, we believe there is room for improvement, and we want to find it.”
Not everyone is happy with the government’s decision. Liberal Energy Critic Kent Hehr says he doesn’t expect a new committee to provide Albertans with much relief from skyrocketing power bills.
“Everyone knows deregulating electricity was a colossal failure,” Hehr says. “It seems like the best we can expect from the PC government is yet another consultation, another committee, another report that will eventually collect dust on a shelf somewhere, its recommendations ignored by a do-nothing government that’s long lost its way.”
Hehr says that before the PCs deregulated electricity, Alberta had among the lowest power bills in the country but since deregulation, rates among the highest in Canada and Alberta businesses have had to shut down their operations during periods of spiking electricity costs.
He accuses the Redford government of delaying tactics before a provincial election.
“Re-announcing this committee is just another Redford delaying tactic,” Hehr says. “Rather than just admitting that the PCs screwed up with deregulation, they’ve put together yet another committee that won’t report until after the election’s over. It’s just another way to bury an issue that’s important to Albertans.”
Hehr says what the Alberta government should do is stabilize power prices by allowing utilities to buy electricity up to a year in advance and increasing the powers of the market surveillance administrator to oversee power companies and mitigate price spikes.
The review committee will be chaired by Ted Pound, current member and former chair of the Utilities Consumer Advocate Advisory Board, and will also include Dr. C.R. (Sid) Carlson, adjunct professor at the University of Alberta’s School of Business; Rick Cowburn, a consultant and principal of Vidya Knowledge Systems Corp; and Nat Treadway, a consultant and member of Distributed Energy Financial Group LLC.
“Every family, business and industry in our province relies on electricity to meet their daily needs,” said Pound. “We will carefully consider each group’s concerns to ensure we are making the right recommendations for all Albertans.”
The committee members will consider expert advice from several regulating bodies, including the Alberta Utilities Commission (AUC) and the Market Surveillance Administrator (MSA). Electric distribution owners, electric retailers, and associations representing municipalities, power producers and consumers will be invited to present to the committee.
The Utilities Consumer Advocate (UCA) will represent consumers’ interests to the committee including issues around pricing and procurement of electricity. Individual consumers will also have an opportunity to provide input directly through an online survey, details of which will be made public in May.
Approximately 70 per cent of consumers pay the variable (default) rate, an indication that many Albertans are not comfortable signing a contract for their electricity usage. Currently, consumers who prefer stable electricity rates have the option of signing a contract with one of 11 service providers or requesting an equalized, monthly payment plan. Information on these companies is available on the Utilities Consumer Advocate’s website at www.ucahelps.alberta.ca.
The review is part of a four-point plan announced by Premier Alison Redford. Other measures include:
- requesting the AUC to freeze ancillary costs included on Albertans’ power bills including distribution, transmission, rider and administration charges  until the completion of the review;
- amending a regulation affecting deposits for energy marketers and fixed-rate contracts to ensure more options are available for consumers who need them; and
- supporting the AUC in its efforts on performance based rates, which will serve as an incentive for industry to find efficiencies with electricity distribution.
The committee will make recommendations to government by early summer of this year.