Alberta changes electricity buying rules in hopes of relieving rate shock

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 Tuesday. “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.

Vittoria Bellissimo of the Industrial Power Consumers Association of Alberta said utilities commission oversight is critical, and might have prevented the three lines from getting approved all at once.

“If you were to look at how to minimize costs for consumers, you would certainly not try to have everything built at the same time. That’s just a recipe for disaster,” said Bellissimo.

Wildrose critic Joe Anglin said Hughes is treating a symptom, but not the underlying disease of an energy-rich province paying some of the highest power bills in Canada.

“I applaud the minister for making the decision to raise the amount of time that a retail company can purchase electricity,” said Anglin.

“(But) that’s got nothing to do with the volatility. All that volatility is actually in the wholesale market.

“That’s the one that kills consumers.”

Anglin also said that given administrative costs can end up being as much as half a power bill, the post-freeze cost to consumers may not be as “modest” as Hughes promised.

NDP Leader Brian Mason said the entire process is just one more Band-Aid on a system that has seen nothing but confusion and price spikes since portions of it were needlessly privatized more than a decade ago.

“Only regulating prices, starting with consumer prices, will ensure that Albertans can turn on the switch, have a bill that they understand, the light comes on, and they’re paying the lowest possible price,” said Mason.

“That’s all, I think, consumers need to do or should have to do.

“They shouldn’t have to become experts in hedging and so on in order to pay their electricity bill.”

Liberal critic Kent Hehr said the extended buying window is a step in the right direction, but said the larger problem of hefty bills for consumers remains.

“What we need here is a market that works,” said Hehr.