Premier Danielle Smith announced that the province intends to introduce legislation which aims to stabilize default electricity rates by being set for each provider every two years. It is predicted that the changes will come into effect on January 1, 2025. 

"This will significantly reduce spikes in prices for Albertans unable to sign a competitive contract, including rural Albertans who may not have other options available, and those who have poor credit or other financial difficulties such as seniors and other vulnerable populations," the province stated.

Currently, under the Regulated Rate Option (RRO), the Alberta Energy System Operator (AESO) sets the price, with providers being able to purchase up to 120 days in advance. 

Premier Smith made the announcement, alongside Minister of Affordability and Utilities, Nathan Neudorf, on Thursday. She said that the unpredictable power costs make it hard for families to plan their household budgets.

"In 2023, the average price of the RRO was 22 cents per kilowatt hour, due to spikes in electricity. However, if we had had this new policy in place, the Market Surveillance Administrator estimated the average price would have been half as expensive, at 11 cents per kilowatt hour," Premier Smith explained. 

eccPremier Danielle Smith announced that the province intends to introduce legislation which will stabilize default electricity rates by being set for each provider every two years. (Graphic credit to Government of Alberta)

Premier Smith said if the policy had been in place previously, Albertans could potentially see savings of nearly $800 annually. 

"We'll also be requiring power providers to inform customers exactly what rate they're on, and to advise them that they can leave for a competitive rate at any time they choose," she added.

Apart from this, the government will also be seeking to change the name of the default electricity rate. Smith said naming the rate as a Regulated Rate Option is misleading. 

"The ‘regulated’ [part] is confusing to consumers and gives them a false sense of protection that the rate is protected by the government. Based on recommendations from the RRO Working Group, Alberta’s government intends to introduce legislation this spring to rename the default electricity rate to the Rate of Last Resort."

According to the province, by changing the name to the Rate of Last Resort, consumers will be able to better understand the rate they are paying and encourage them to find the best option for them.

"In addition, anyone who signs on to the rate of last resort will be able to choose a different competitive rate plan at any time, this will essentially become the price to beat," The Premier added. 

Alberta's competitive retail electricity market gives Albertans the choice of over 50 competitive price retailers that provide fixed and variable rate contracts.

"Tens of thousands of Albertans moved off the default rate in 2023, and those still on the rate should consider their options. Those who are looking for assistance with their utility bills or are experiencing a dispute with their provider should contact the Utilities Consumer Advocate," the province encouraged. 

Government statistics cite that approximately 29 per cent of residential customers purchase electricity through the default electricity rate, while another estimated 32 per cent of eligible commercial customers and 46 per cent of farm customers purchase electricity through the default electricity rate.

Alberta NDP Leader Rachel Notley, however, was critical of the announcement, saying that it was, 'a plan to make a plan'.

"There was nothing in today’s announcement to protect Albertans this summer from the record-breaking rate spikes like we saw last year."

Albertans have three options when purchasing their electricity and natural gas utilities: the default RRO, a competitive contract for a variable (floating) rate, or a competitive contract for a fixed rate.

"In Alberta, customers who don't sign a competitive contract will receive the default electricity rate from their local RRO provider. Default electricity rates currently fluctuate month-to-month based on market prices for electricity in Alberta. These rates are set by the Alberta Utilities Commission (AUC) and are not determined by the government."

Currently, the RRO for electricity is listed as 14.457 cents per kilowatt hour for consumers of Direct Energy Regulated Services, while ENMAX has listed their rate as 12.814 cents. This month's rate is slightly higher than March 2024. In August 2023, the RRO was over 30 cents for most consumers, some of the highest rates in the past several months. 

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