Alberta’s NDP government implemented a price cap that came into effect on June 1, 2017; however, it is only recently that Alberta’s energy rates have climbed high enough to meet the cap. Now that the price cap is in effect, though, how is your energy bill going to be affected by the change?
What is the price cap all about?
The idea behind the implementation of the price cap is embedded in the NDP’s decision to reform Alberta’s electricity system. The government was looking for a way to protect Albertans from sudden price spikes and the uncertainty of energy so that the electricity system could better accommodate the Alberta families and businesses that are most vulnerable to the resource’s price volatility. As a result, a four-year cap on power prices was imposed in order to ensure Albertans wouldn’t have to pay more than 6.8 cents per kilowatt hour for electricity.
That price cap came into effect in June of 2017, but it has only had to be enforced recently as Alberta’s electricity rates have begun to climb beyond the limits of the cap.
What does this mean for Alberta’s families and businesses?
It means that, starting on June 1, 2017 and up until recently, if you are on a regulated rate option (RRO) energy plan, you’ve been paying market rates of under 6.8 cents per kWh; however, now that the market rates have exceeded 6.8 cents per kWh, you’re bill will be capped so that you are only charged the 6.8 cents per kWh. This will remain in place until May 31, 2021: until that date, you will continue to pay either the market rate or the cap rate of 6.8 cents per kWh—whichever is lower.
What does this mean for your most current bill?
If you are on an RRO plan, then you are already saving on your electricity bill. Right now, without the cap, the market electricity rate is 7.872 per kWh. How will this translate onto your April bill? Well, the typical Edmonton home uses an average of 600 kWh of power per month. Without the cap, your energy charge would amount to $47.23 based on that consumption at the current market rate. With your energy rate capped at 6.8 cents per kWh, your energy charges would compare at $40.80.
However, it is important to note that the cap only covers the energy charge; taxes, distribution charges, and transmission fees are not covered by the cap and will add to your bill (although the government has suggested that these fees will also be brought into consideration in future attempts to improve Alberta’s electricity system).
Does everyone benefit from these changes?
Another important point to note is that not everyone qualifies for the cap. Your rate is only protected if you are on an RRO energy plan, and your rate cap may vary slightly if you are a customer of a Rural Electrification Association. Additionally, businesses must not consume more than 250,000 kWh annually in order to qualify for the RRO, which means medium to large businesses are ineligible for the cap.