*Updated November 2024: The NDP price cap on electricity was lifted by the Alberta government in the fall 2019 provincial budget. This article will remain on our website to provide historical context.
On April 18, 2024, the Alberta government announced the RRO would be renamed to the Rate of Last Resort (RoLR). The proposed change was done to provide more clarity to electricity consumers and encourage them to explore other retail energy options. The RoLR will be set at a fixed rate every two years rather than month-to-month as was the case for the RRO. The RoLR came into effect on January 1, 2025. We have updated certain sections of this article with the term RoLR.
To learn more about the RoLR, check out our in-depth article.
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 will your energy bill 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, now known as the Rate of Last Resort (RoLR), 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 into 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 a RoLR (formerly 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 RoLR (formerly RRO), which means medium to large businesses are ineligible for the cap.
To learn more about the price cap, or to find out more about other ways to save on your energy bill, visit the Government of Alberta website or contact us at EnergyRates.ca.
